Fiscal Cliff

HAMISH_MCTAVISH

Graham_Devon wrote: »

It's just numbers at the moment. To be paid for by future generations.

At least, thats what Peston told me once on Newsnight!

Peston is wrong though...

It's like the ECB. They just magic up bailout money from nowhere. A lot of it is new money, money that will be paid back by future generations as it's "unwound". Though it's unlikely it will ever be unwound IMO. Living standards will just decline instead, hence 3rd world countries.

This is what a Professor of Economics at Oxford University has to say about it....

No sensible person is arguing that current increases in debt should be permanent – instead they should be reversed, gradually, once the economy recovers.

Until the economy recovers, investment is being held back by lack of demand, not a lack of savings, so the crowding out issue does not arise. I think you could make a good case that, by stifling the economy today through austerity, you are damaging productive capacity in the future.

So in the current circumstances it is austerity, not increasing debt, which is harming future generations.
http://mainlymacro.blogspot.co.uk/2012/10/the-burden-of-government-debt.html

Thrugelmir

Graham_Devon wrote: »

Living standards will just decline instead,

Not if house prices are allowed to correct.

HAMISH_MCTAVISH

And what a nobel prize winning economist has to say about it....

A debt inherited from the past is, in effect, simply a rule requiring that one group of people — the people who didn’t inherit bonds from their parents — make a transfer to another group, the people who did. It has distributional effects, but it does not in any direct sense make the country poorer.

Really, this isn’t complicated — and the fact that everyone in public life gets it wrong doesn’t change the logic.
http://krugman.blogs.nytimes.com/2012/10/12/on-the-non-burden-of-debt/

HAMISH_MCTAVISH

Thrugelmir wrote: »

Not if house prices are allowed to correct.

They already were.

Unnecessarily.

Which is what has caused this whole mess and the pointless decrease in living standards we've seen over the last few years.

black_taxi_2

should be called---our USA debt is so bad were just going to do nothing bill

Fella

Giving Nobel prizes to economists is pretty much the same as giving them to astrologists.

No two economists ever agree & most of them get it wrong most of the time. I have no idea why anyone still talks about these people in tones of reverence. Monkeys & dartboards would do the same job.

Graham_Devon

HAMISH_MCTAVISH wrote: »

They already were.

Unnecessarily.

Which is what has caused this whole mess and the pointless decrease in living standards we've seen over the last few years.

First it's supply and demand with you.

Next you state they were allowed to correct "unnecessarily" which suggests it's not supply and demand.

I can't keep up.

Jnelhams

At some point the debts have to be paid, the endless circle of robbing Peter to pay Paul has to come to an end, and as always it will be the poor that suffer the most. Although that big photo of Cliff should be enough to scare anyone into signing the bill into law. :rotfl:

Jnelhams

“We used to think that you could spend your way out of a recession, and increase employment by cutting taxes and boosting Government spending. I tell you in all candour that that option no longer exists, and that in so far as it ever did exist, it only worked… by injecting a bigger dose of inflation… followed by a higher level of unemployment… ” – James Callaghan, Blackpool 1976

coastline

dtsazza wrote: »

It is all owed to someone - China is the simplistic answer. (In fact most Asian countries aren't in debt, they tend to run budget surpluses, especially from an international perspective.)

Also a lot of government debt is held by "individuals" - though usually on their behalf by pension schemes. Plus insurance companies that offer annuities for these pensions almost always back these up by government bonds.

So it's all owned by someone, and I think there's a nice pie chart somewhere that breaks down who owns UK debt, if you're particularly interested. It's not really a secret or an unanswerable question.

a bit about the UK..and USA..



http://www.economicshelp.org/blog/2215/readers-questions/uk-debt-held-by-oversees-investors/

http://www.economicshelp.org/blog/1407/economics/who-owns-government-debt/