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Increased government spending now means greater national debt. Governments get money by printing it. They get revenue by taxation. They can borrow by issuing de
by rswail 6y ago
Increased government spending now means greater national debt. Governments get money by printing it. They get revenue by taxation. They can borrow by issuing debt instruments.
A recovering economy and greater economic activity leads to greater tax revenue without necessarily increasing taxation rates.
This is a natural "budget stabilizer" effect that happens during recessions and expansions.
Debt funding is currently at historically low, almost zero/negative rates. Australia's debt-to-GDP is relatively low (42% prior to the current recession), our debt ratings are AAA.
- luckylion 6y ago> Increased government spending now means greater national debt. Governments get money by printing it. They get revenue by taxation. They can borrow by issuing debt instruments. That's just a path for hyper inflation when no increased production is included. Money is a placeholder for value. If you don't create value and print money, the money doesn't magically create the stuff that gives it value. It might not ruin a country, but I very much dislike this "whatever, the state can pay" hand-waving that just assumes the products magically appear if you just increase the money supply. There's no perpetual money machine, you can't just spend a billion as a state and generate 1.2bn in taxes, rinse & repeat.
- amanaplanacanal 6y agoI dunno. The US seems like a case study in this stuff. Large deficits every year, and even the more Conservative party is willing to pass a huge tax cut and nobody blinks an eye. The connection between income and spending appears to have been completely severed. And some people have been predicting hyperinflation for at least 40 years now.