Another way to think about government debt

September 24, 2013

A neat sum-up of why all the interminable hysteria over the Public Sector Debt is actually making a mountain-range-out-of-one-half-dug-molehill (although yes, it would be better if it was lower), and why the Government’s boasts about keeping interest rates low are in fact a confession of economic self-injury.

alittleecon

The Tory Party conference is coming up, so expect to hear lots about how they literally saved the country from becoming like Greece, tackling the deficit head on and paying down Britain’s debt. The reality’s a little different though. Mercifully, and despite their better efforts, the deficit has remained high, as the government’s cuts have been offset by higher welfare spending and lower tax take. The high deficit seems to be supporting the economy just enough to allow a weak recovery at the moment. The national debt however, continues to grow.

All the main parties want us to fear government debt and play on our wish for our children to have a better life by constantly talking about the burden we are placing on future generations. To a large extent, this scaremongering has worked. Most people hate austerity, but accept “there is no alternative”. We must get the deficit down.

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