Wednesday, April 14, 2010

The deficit delusion

All three of the main political parties are making the same noises regarding the economy. All three of them have creative - and largely unsubstantiated - plans for reducing the budget deficit.

None of them seem to understand that this is not enough. Not only is it just "not enough", it's far far too little.

None of them have any proper plans for tackling the real issue - the spiralling debt problems. What they are basically saying is that all they are going to do is reduce the speed at which they continue to recklessly spend money they don't have.

Nor is there any point in paying off any of the national debt while running a deficit. If you have £100,000 of debt, does it help to borrow £6000 more and pay off £3000 of that debt? of course not - you'll now be £103,000 in debt! As long as we continue to run a budget deficit then the national debt will continue to increase.

All this talk by the main parties about how they will tackle the budget deficit is deceitful and delusional. The deficit doesn't need to be halved or slashed - it needs to be eliminated entirely.

Everyone knows this, but no one is saying it. They won't say it because they know it won't be popular - but it is necessary. We have to reduce spending and/or raise taxes to the point where the budget is in surplus. Until that is done, our national debt will continue to increase and the harder it will be to administer the medicine required.

We can not continue to spend what we haven't got.

We can't even continue to spend slightly less of what we haven't got.

We must spend less than we have available and use the surplus to reduce the huge debt burden.

There is no other choice. To pretend there is is delusional.


Antisthenes said...

How come you and I understand the truth and 30 million voters do not?

Actually there is an alternative, hyper inflation, quicker. Knock of all those zeros off a trillion and national debt £1.40.

Funny how the politicians haven't thought of that or maybe they have and that is the master plan.

opsimath said...

You know what they say about prophets and their own land, don't you?

Thanks for the clarity of thought - sadly, I don't think many are listening - they will eventually, of course...

Anonymous said...

There will be more realistic people out there. Anyone that doesn't borrow, understand the concept that to be in so much debt cannot continue, to say it's worrying about where this is going, is an understatement.

How are we going to vote ourselves out of this one?