Balancing the Budget !
March 30, 2015
The main reason why you shouldn’t vote for a party just because it promises to ‘Balance The Budget’. A Government that gets rid of a public sector deficit will simply cause a growth in the nation’s Private Sector/Household deficits.
As election time draws near in the UK , and the US presidential election campaigns start to get underway across the Atlantic, we’ll no doubt hear a lot about this topic shortly, if we haven’t already. Apologies if you’ve heard this all before but the political and economic mainstream still don’t grasp it. Political parties will accuse their opponents of making “unfunded promises”, and of having “black holes” in their budgets etc . Nations’ finances will be likened to a household.
Except that Sovereign Governments, like the USA and UK are issuers of currency. They aren’t at all like a household. If a household has a deficit of say £10k pa then, generally speaking, spending cuts of £5k coupled with an extra £5k of earnings will fix the problem. How many times do we see see the same logic applied to countries too? It never works. It can’t work. Governments…
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