Made me think

Pobby

I thought a pretty good program, well very good.

https://www.youtube.com/watch?v=DUXxx0sIiC8

https://www.youtube.com/watch?v=LQVyBo8HMsc

HAMISH_MCTAVISH

The problem with the whole concept of debt burdening future generations is that it's just, well, mostly codswallop*.

If government borrows £10,000 and builds a road, then....

-Previously we had £10,000 being hoarded, and no road

-Now we have the physical asset of a road, AND X number of people have been paid that £10,000 and re-spent it elsewhere in the economy, AND the people who lent the £10,000 have an income stream, AND the individuals in society gets the benefit of the road

-And in the future we have a road and the people who lent the £10K get the return of their capital.

Across the population the assets and liabilities cancel exactly, there is no net debt burden being passed to future generations.

Financial liabilities have passed to future generations, but so have the corresponding financial assets.

Without a time machine, it's pretty difficult to steal from future generations, as output and consumption tend to balance and you can't send the output of tomorrow back in time for today's generation to consume.

As for being "born bankrupt", that's also nonsense.

Those born in the 50's faced a far bigger national debt burden than those born today. But they seemed to turn out alright.







*There is somewhat more of a case to complain that deficit borrowing can aggravate an imbalance of trade between nations, but our borrowing is currently mostly from pension funds/banks and the BOE, only a small minority of gilts are bought by overseas investors. So not a big issue at present.

the_flying_pig

HAMISH_MCTAVISH wrote: »

...If government borrows £10,000 and builds a road, then....

-Previously we had £10,000 being hoarded, and no road

-Now we have the physical asset of a road, AND X number of people have been paid that £10,000 and re-spent it elsewhere in the economy, AND the people who lent the £10,000 have an income stream, AND the individuals in society gets the benefit of the road

-And in the future we have a road and the people who lent the £10K get the return of their capital.

Across the population the assets and liabilities cancel exactly, there is no net debt burden being passed to future generations.

Financial liabilities have passed to future generations, but so have the corresponding financial assets.

Without a time machine, it's pretty difficult to steal from future generations, as output and consumption tend to balance and you can't send the output of tomorrow back in time for today's generation to consume.

As for being "born bankrupt", that's also nonsense...

crikey.

pwopanomics 101.

Fella

HAMISH_MCTAVISH wrote: »

The problem with the whole concept of debt burdening future generations is that it's just, well, mostly codswallop*.

If government borrows £10,000 and builds a road, then....

-Previously we had £10,000 being hoarded, and no road

-Now we have the physical asset of a road, AND X number of people have been paid that £10,000 and re-spent it elsewhere in the economy, AND the people who lent the £10,000 have an income stream, AND the individuals in society gets the benefit of the road

-And in the future we have a road and the people who lent the £10K get the return of their capital.

Across the population the assets and liabilities cancel exactly, there is no net debt burden being passed to future generations.

Financial liabilities have passed to future generations, but so have the corresponding financial assets.

Absolute nonsense. The reason, as you very well know, is that the vast majority of the money being borrowed is NOT being used to purchase assets or build infrastructure.

sabretoothtigger

The road wont stay a road that long, not enough to say its worth 10k.
They break up, they need repair, if anything it becomes a liability. Our road has several 3 foot potholes, they cant look after the roads we got

Im not against roads but Iam against borrowing money from foreigners. This line of logic, the money spent circulates in the UK is ignoring that we are taking money from abroad.
Even if it were true that all money is british we'd still be wasting some of it this way. Let a private company waste it if they want to, if it was investment returnable they should be glad to collect the fees just dont charge us presuming its a good idea

If road needs to be built it needs to be paid for not borrowed. Even worse is when they build things not even needed, not sure we got roads to nowhere like some governments have done but UK does waste money at the same time as running up debts, its bad news for UK.

Ultimately we have to pay more tax to pay for polical waste, it stops business not enables. Funny how the opposite can occur to what was desired

CLAPTON

It is clearly true that discussing debt in isolation to assets is not very productive.
Whenever it is done you just know you are being deceived.

To say we get full value from goverment expenditure is also a somewhat doubtful view too; and so spending = value is probably not really so.

Borrowing represents the deficit i.e. the difference between two very large numbers, 'spending' and 'taxation/revenue'; it's likely to be so that the deficit is less than investment.

However that would be a matter for the record which can be looked up but today I am too lazy to do so.

My children have huge debts. They also have very delightful spacious houses and can easily afford the mortgage repayments. We (they) and not concerned about the burden in the future.

Given the options and having travelling extensively in countries with poor infrastructure I would prefer the Japanase (250% debt to gdp) or UK lifestyle with our high debt level and high infrasture levels compared to most of Africa.

grizzly1911

CLAPTON wrote: »

My children have huge debts. They also have very delightful spacious houses and can easily afford the mortgage repayments. We (they) and not concerned about the burden in the future.

Given the options and having travelling extensively in countries with poor infrastructure I would prefer the Japanase (250% debt to gdp) or UK lifestyle with our high debt level and high infrasture levels compared to most of Africa.

Debt isn't an issue if you can service it and repay it as you point out in your example you children are happy with their level of debt. I too would prefer to live somewhere like the UK.

This country has, is and will continue to generate the income to fully service it's debt and obligations, let alone repayments until the world balances out through globalisation -unless it takes some form of "protectionist" action. Whether we can last that long who knows?

If one of your offspring was to suddenly have their income capped or reduced year on year, with they may be come more worried, more so if they couldn't deleverage quickly or find alternative income streams.

System

Ah, I get it now. All this money that is being lent to Greece, Spain etc is being wisely invested in roads and housing, and in due course will provide useful assets for the inhabitants and a financial return to the investors?

So when we are told that another tranche of debt is "falling due" and must be "rolled over" or the state faces bancrupcy, it means they have suddenly found some more useful money-making projects to add even greater value to the economy?