The economy is growing! We're out of recession! Yippee! Whoops - we're screwed.

[-:Undertaker:-]

http://www.snouts-in-the-trough.com/archives/5472

The economy is growing! We’re out of recession! Yippeee! Whoops – we’re totally scr*w*d!

I challenge anybody to go to this website of our rising national debt and watch it go up without feeling extremely nauseous http://www.nationaldebtclocks.org/de.../unitedkingdom

As the Tories claim we’re on the road to recovery and Ed Balls announces he can save £200m by cutting benefits to any pensioners who have more than fifty quid in the bank, the figures tell a different story. We’re caught in a classic death spiral of borrowing leading to higher interest payments leading to more borrowing leading to more interest payments…………..and even if economic growth meant that taxes collected by the government went up by a fanciful 3% (£20bn) a year, our debts would still increase for at least the next 5 years and probably for the next 10 years as public spending is also going up.

The numbers are almost too huge to grasp – our debt is increasing by around £3,888 per second: £233,000 per minute: £14,000,000 per hour: £329,000,000 per day: £2,300,000,000 a week: £120,000,000,000 per year.

But, rather than bleating on about the problem, what’s the solution? There are 3 main options:

1. The Government cuts public spending by about £100bn from £750bn a year to £650bn a year. This would probably lead to massive civil unrest and would be totally impossible for any government that wants to be re-elected

2. Britain defaults and tells its creditors to get stuffed. This would actually be easy to do. Many countries have defaulted and recovered quite quickly. The problem is that this would destroy many foreign banks, British banks and insurance companies that hold almost £1,000,000,000,000 of UK government debt. Moreover, it would leave us unable to borrow and we’d be forced to cut public spending down to £650bn to match tax revenues as in option 1 above – impossible to do without causing civil unrest.

3. That just leaves one way out of the death spiral – the problem is that nobody knows what this is.

We could probably just about still manage to cut back state spending (see Godfrey Bloom article I posted in this forum yesterday for specific areas of public spending to be slashed back) but the ability of the British state to remain solvent is fast disappearing - that's if its even possible to get out of now as we are entering the 'death spiral' phase.

It's a ticking timebomb (the debt) yet people seem to think that in a few years we'll be back to normal and everything will just be fine with growth back at 2% to 4% a year. The fact is that these debts need to be paid back, or we default.

Thoughts?

[Chippiewill]

Paid back when? As it happens, this is one of those cases when we have all the time in the world.

[-:Undertaker:-]

Paid back when? As it happens, this is one of those cases when we have all the time in the world.

Tell that to the people who fund government bonds/gilts.

Once you reach a certain amount of debt, the ability to pay back that debt (with massive interest payments) disappears. With our debt interest yearly payment already at the level of the Education budget, we're running out of time.

And again, I say this all using the governments figures - which don't include unfunded liabilities such as pensions, PFI etc.

[Chippiewill]

I take it you didn't realise that the debt is issued in our own currency? We NEVER have to pay it back, we still have an unpaid loan from 300 years ago for a war against france.

[-:Undertaker:-]

I take it you didn't realise that the debt is issued in our own currency? We NEVER have to pay it back, we still have an unpaid loan from 300 years ago for a war against france.

And if you have a currency backed by nothing (as we do) which is increasingly weighed down under public debts then you end up with an economic collapse because you'll have a currency to match the economy. But you know, I always love these arguments I hear on the debt - all sorts of clever arguments such as the one where some people claim we aren't in debt and then there's this one which claims we don't have to worry about it because 'we dont have to pay it back' - complete nonsense and look at the many defaults in world history to prove so.

The debt is serious, government spending is out of control - and I think we should sort it out.

[Chippiewill]

And if you have a currency backed by nothing (as we do) which is increasingly weighed down under public debts then you end up with an economic collapse because you'll have a currency to match the economy. But you know, I always love these arguments I hear on the debt - all sorts of clever arguments such as the one where some people claim we aren't in debt and then there's this one which claims we don't have to worry about it because 'we dont have to pay it back' - complete nonsense and look at the many defaults in world history to prove so.

The debt is serious, government spending is out of control - and I think we should sort it out.

We've never paid back our debt, THATS the historical precedent we have.

[FlyingJesus]

I wonder when England last paid off a debt in anything other than credit

[-:Undertaker:-]

We've never paid back our debt, THATS the historical precedent we have.

We don't pay it all off in once no, but we're constantly paying back debt even at this minute to bond/gilt holders. The problem is that our ability to keep paying existing debts is going to be lost if we continue to pile on the amount of debts that we are at the moment.

[Sieglinde]

well I guess this is good for the job side and money side

/not smart at this subject--

[Chippiewill]

We don't pay it all off in once no, but we're constantly paying back debt even at this minute to bond/gilt holders. The problem is that our ability to keep paying existing debts is going to be lost if we continue to pile on the amount of debts that we are at the moment.

Not its not, sure if you ignore inflation we're spiralling out of control but the fact is not only does inflation exist but we can tame it to an extent.