Increasing borrowing to reduce borrowing.

[Jim Graham]

We basically spent a lot of money to avoid a depression but we have nothing to show for it. No legacy of decent infrastrucure projects some of the money could have been used for instead.

 

The real issue is that when the economy went off the cliff the government was left with a 25% shortfall in income to fund the public sector. In previous recessions the shortfall was a lot less and the government borrowed money to keep things going. The problem in 2008 was that we already had massive debts and liabilities from borrowing even in the good times and the fall off in income was so huge that borrowing was only an option for a very short period of time.

 

You can't keep the public sector by borrowing £170bn a year AND borrow to stimulate the economy. The people who lend us the money only do so as long as we take steps to cut the overall borrowing requirement which reduces the risk of defaulting on the debt and them not getting their money back. It has little to do with Osborne. If he doesn't look as though he is cutting the risk to the lenders they'll stop lending. And then we'll be where Greece is. Osborne is struggling to work with what he has. There is no doubt he is struggling but Labour's plan of borrowing more is just laughable. There are too many assumptions in Balls plan that he has no control over. One of them is the assumption anyone would lend more to a Labour government and drop the requirement for austerity measures.

[MrSmith]

I think you're at risk of arguing yourself into a corner by implying that any form of economic stimulus is bad. Clearly that is not true.

 

What I think you are highlighting is two instances where economic growth was stimulated in the wrong way. I agree as it happens.

 

However, if we want to understand the mistakes and learn from them lumping the two instances together does not help. The solutions to both are very different.

 

problem 1: credit bubble. It's been discussed extensively on here want went wrong.

problem 2: short-run fiscal stimulus 2008-. The problem for me is not that it happened but how it happened. We basically spent a lot of money to avoid a depression but we have nothing to show for it. No legacy of decent infrastrucure projects some of the money could have been used for instead.

 

All I’m doing is pointing out the flaw in your argument that this government as caused a double dip recession, when you take into account that the previous growth (The good times or boom as some like to call it) was an illusion created by debt, without which we would have been in recession for years.

 

You can’t fix a debt fuelled economy with more debt.

[WeX]

One day JG and the uphill gardener will live a long and very productive life , on there own plannet.

 

You've lost the argument once you start only insulting people in your replies. I know what uphill gardener means by the way and you have been reported. I hope the mods take a dim view on such a childish insult.

[I1L2T3]

All I’m doing is pointing out the flaw in your argument that this government as caused a double dip recession, when you take into account that the previous growth (The good times or boom as some like to call it) was an illusion created by debt, without which we would have been in recession for years.

 

You can’t fix a debt fuelled economy with more debt.

 

There is no doubt the current policies have caused the second dip of the double dip. There is no serious plan for growth because Osborne believed it wasn't needed. The private sector was going to step in. It didn't.

 

It's perfectly rational to take on long-term debt for things like infrastructure. And we should be doing that for the right projects. The Tories are actually looking at doing that, albeit in a very light way.

[MrSmith]

There is no doubt the current policies have caused the second dip of the double dip. There is no serious plan for growth because Osborne believed it wasn't needed. The private sector was going to step in. It didn't.

 

It's perfectly rational to take on long-term debt for things like infrastructure. And we should be doing that for the right projects. The Tories are actually looking at doing that, albeit in a very light way.

 

OK we'll play it your way, when would you like the bust to happen, because sooner or later it must happen, we cannot continue to grow the economy indefinitely with money we don’t have.

They had three choices when the crap hit the fan, let it happen and suffer the consequences by allowing mass unemployment and a crash in living standards, put it off by stimulating the economy with more borrowing in the knowledge that the eventual crash would be much bigger, they’ve been trying that for the past decade with cheap credit. Or suffer stagnation for years.

[dutch]

Today public sector workers walk out over pensions.

Work hard all your live and never get a chance to enjoy or relax. When time comes you stop work your whole life has been ruined by working without a chance to live a healthy balanced life where work and relaxation can both be there in equal proportions.

 

There would be work for more people if not someone working 40 hours takes it all and others get 0 hours. Two people could have 30 hours a week each. Time to enjoy work and time to work in the garden.

There are people out of work that want to work but not 40 hours. There are people stressed and overworked, I know someone just quit job cause of stress and pressure.

 

Stress causes cancers and illnes. Still people keep on going being greedy wanting it all for themselves leaving others jobless. Many wil ruin their bodies, relationships and lose all connection with the joyfull parts of a balanced life.

 

Work, is often a major ingredient in relationships breaking up. S@xlive going down the drain.

This society refuses to admit its own mistakes. Too many personal selfish interests to be fulfilled to get nowhere but death after running round in circles getting nowhere.

 

Increase borrowing, just dont pay it back. Worst thing they can put you in jail but you could also die of an accident not related with financial matters.

Increase borrowing. One day the whole world decides to become one nation and starts again or a natural disaster could kill us all.

Whole debt could be wiped out instantly if everybody says enough is enough and people have the power to move on to something better.

People also have the power to want more and more and increase its possesions to the point of insanity.

[I1L2T3]

OK we'll play it your way, when would you like the bust to happen, because sooner or later it must happen, we cannot continue to grow the economy indefinitely with money we don’t have.

They had three choices when the crap hit the fan, let it happen and suffer the consequences by allowing mass unemployment and a crash in living standards, put it off by stimulating the economy with more borrowing in the knowledge that the eventual crash would be much bigger, they’ve been trying that for the past decade with cheap credit. Or suffer stagnation for years.

 

We will never be debt free. That isn't the plan. It's about managing the existing debt, taking new debt on at the best rates and ensuring the debt doesn't expand too quickly or beyond manageable levels.

 

Are you suggesting we stop issuing gilts, abolish NS&I?

[MrSmith]

We will never be debt free. That isn't the plan. It's about managing the existing debt, taking new debt on at the best rates and ensuring the debt doesn't expand too quickly or beyond manageable levels.

 

Are you suggesting we stop issuing gilts, abolish NS&I?

 

Where did I say anything about paying off the debt and becoming debt free?

I agree with your post though which is why we should be lowering our deficit, keeping the debt manageable and cutting the public sector back to a more manageable level.

[gnvqsos]

The thing is, gnvqsos's comments rely entirely on the benevolence of the bankers in his comments not wanting their money nor the interest on said money over the time of the holiday. This simply does not happen as the bankers will need to forgo their own incomes. Banking is a business to. gnvqsos's example is simplistic and pays no attention to the reality of the issue, neither does it address the actual problem. Its a lose/lose situation payed for by a brief respite from the farmers ills. Nothing is resolved and the problem has just been pushed further down the road, presumably for someone else to deal with.

 

You may like to note that my simple message is a reiteration of JMKeynes who was awarded numerous accolades for his original thinking which helped inspire the New Deal in 1930s USA.

 

"In the long run we are all dead"was an aphorism which cautioned against conservatism.

 

"We have nothing to fear but fear itself" FDR!

[Jim Graham]

It's perfectly rational to take on long-term debt for things like infrastructure. And we should be doing that for the right projects. The Tories are actually looking at doing that, albeit in a very light way.

 

But we are taking on long term debt to pay wages, benefits and pensions. There's no sense in that and that's why the loans we have come with a requirement to cut borrowing. There is no guarantee infrastructure projects will deliver economic benefits but some are better than others. Broadband seems a cost effective investment but High Speed Rail looks like chucking money away. Nuclear power would seem to be a better investment. But whatever we invest in borrowing to pay wages is just plain daft.