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> Steps that pretty much failed spectacularly, considering current levels of debt. People often confuse the national debt and the budget deficit. The national
by jackgavigan 11y ago
> Steps that pretty much failed spectacularly, considering current levels of debt.
People often confuse the national debt and the budget deficit.
The national debt is like a credit card bill. To pay off that debt, you need to spend less (including the interest on the money you owe) than you get paid, so you can give the surplus to the credit card company, thereby reducing the amount you owe them. If you spend more than you get paid, your credit card debt goes up (i.e. you're running a budget deficit).
In other words, the budget deficit must be eliminated (i.e. turned into a budget surplus) before the government can begin to reduce the national debt.
In 2008, the UK government spent ~£150bn more than it earnt, so the national debt grew by that amount. Last year, it spent about £90bn more than it earnt, so the national debt is still rising. The good news is that the deficit is falling. The government aims to eliminate it by 2020, at which point they will be in a position to start reducing the size of the national debt.
- andyjohnson0 11y ago"at which point they will be in a position to start reducing the size of the national debt" Just to give some context to this, the UK national debt is currently £1.56 trillion [1]. Reducing this by anything other than a token amount is an enormous undertaking. [1] https://en.wikipedia.org/wiki/United_Kingdom_national_debt https://en.wikipedia.org/wiki/United_Kingdom_national_debt
- Ntrails 11y agoIf I'm reading the numbers right, we currently spend ~1bn a week on interest payments, out of a total budget of ~14bn a week? So ~7% of our spending each year is just to pay for debt already accrued.
- calibraxis 11y ago> "The national debt is like a credit card bill." Where you have the power to pay it off at will because you create the money. Assuming sovereign currency. (http://www.theguardian.com/commentisfree/2014/mar/18/truth-money-iou-bank-of-england-austerity http://www.theguardian.com/commentisfree/2014/mar/18/truth-m...) It's really funny-money. Bureaucratic number-shuffling to make debt peons. To force people to chase numbers all their lives. Ever wondered what money is to an entity which creates it by changing numbers on a computer?
- ohashi 11y agoYou can also make more money. If your tax base grows faster than budget deficit, you would eventually reach a balanced budget and could start reducing debt afterwards.