National News What to do next....Two trillion pound debt

Peterdev

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The country is in debt to the tune of two million million pounds. I can’t see how that is ever going to be paid back. The economy is in the worst situation ever, unemployment soaring. The retail sector looks screwed. I’d be interested to know how the government are going to sort out the finances with the continuing demands on it.
The budget is due. Presumably stamp duty will be reinstated at previous levels causing a housing crash. Not very much scope for tax increases.
These are not normal times
 

Peterdev

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I’d agree with that 100%. Destroying houses to enable a quicker journey for mostly businessmen is definitely wrong.
In the bigger picture it wouldn’t make much of a dent in the debt
 

Marked Ox

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The poor and sick will inevitably end up paying for it through reduced services and falling value of benefits as has been ongoing for years.
 

Yellowmania

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Scrapping HS2 would be a start
I live close to one of the construction points, forgetting the “is it cost effective argument” for the moment, the sheer waste of money I see with gangs of workers sitting around chatting endlessly (social distancing ain’t their thing apparently!) or sitting in vans all day is ludicrous. It’s so poorly managed.
 

Pete Burrett

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Maybe we need to take the same approach to national debt as the USA? They simply don't care how many trillions they are in deficit - it doesn't impact on their spending at all.

The need to 'balance the books' no longer seems to be the aim of a 'fiscally responsible' government anywhere in the world.
 

werthersoriginal

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Maybe we need to take the same approach to national debt as the USA? They simply don't care how many trillions they are in deficit - it doesn't impact on their spending at all.

The need to 'balance the books' no longer seems to be the aim of a 'fiscally responsible' government anywhere in the world.
Yes, paying back the debt doesnt seem to be a focus, s long as we can make the payments and interest rates stay low there isn’t a problem, according to both sides. However there is plenty of scope for tax increases, we pay quite low taxes compared to even the US and people on medium to higher incomes could certainly pay more.
 

Essexyellows

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It is just numbers on a spreadsheet.
The days of physical "money" are coming to an end, it will be replaced by data.
You will have a positive data balance or a negative one...............
 

Marked Ox

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Yes, paying back the debt doesnt seem to be a focus, s long as we can make the payments and interest rates stay low there isn’t a problem, according to both sides. However there is plenty of scope for tax increases, we pay quite low taxes compared to even the US and people on medium to higher incomes could certainly pay more.

Tax increases, good luck with that. At best, it will be tinkered with around the edges.
 

HampshireYellow

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It is just numbers on a spreadsheet.
The days of physical "money" are coming to an end, it will be replaced by data.
You will have a positive data balance or a negative one...............

That ship has sailed when it comes to government debt I’m afraid, no government anywhere in the world has a Scrooge McDuck-like vault of gold coins hidden away somewhere!
 

ljs

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I’d agree with that 100%. Destroying houses to enable a quicker journey for mostly businessmen is definitely wrong.
In the bigger picture it wouldn’t make much of a dent in the debt
Am I right in that you will only be able to get on HS2 at either London or Birmingham?

If so, it is a complete waste of money, and environment.
 

chuckbert

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One issue is that we all look at these deficits and think - if I was $100,000 in debt I'd be screwed.

Countries aren't in the same boat. In fact even rich people are (e.g. the story about Trump "According to a well-known anecdote, one day when he was $1 billion in debt, Trump pointed out a homeless man to his daughter and said, "See that bum? He has a billion dollars more than me." https://www.psychologytoday.com/us/blog/brainstorm/200905/donald-trump-failure)

There are a few articles out there describing why it's different. This one from The Conversation is old but good:

Or this quote in the wikipedia article: https://en.wikipedia.org/wiki/Deficit_spending
William Vickrey, awarded the 1996 Nobel Memorial Prize in Economic Sciences, commented:
"Deficits are considered to represent sinful profligate spending at the expense of future generations who will be left with a smaller endowment of invested capital."
"This fallacy seems to stem from a false analogy to borrowing by individuals. Current reality is almost the exact opposite. Deficits add to the net disposable income of individuals, to the extent that government disbursements that constitute income to recipients exceed that abstracted from disposable income in taxes, fees, and other charges. This added purchasing power, when spent, provides markets for private production, inducing producers to invest in additional plant capacity, which will form part of the real heritage left to the future. This is in addition to whatever public investment takes place in infrastructure, education, research, and the like. Larger deficits, sufficient to recycle savings out of a growing gross domestic product (GDP) in excess of what can be recycled by profit-seeking private investment, are not an economic sin but an economic necessity. Deficits in excess of a gap growing as a result of the maximum feasible growth in real output might indeed cause problems, but we are nowhere near that level. Even the analogy itself is faulty. If General Motors, AT&T, and individual households had been required to balance their budgets in the manner being applied to the Federal government, there would be no corporate bonds, no mortgages, no bank loans, and many fewer automobiles, telephones, and houses."
— 15 Fatal Fallacies of Financial Fundamentalism
[2]
 

SteMerritt

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It is just numbers on a spreadsheet.
The days of physical "money" are coming to an end, it will be replaced by data.
You will have a positive data balance or a negative one...............
Exactly, money is a bit of an abstract concept these days isn't it. Who, exactly, do we owe the money to?
 

werthersoriginal

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Am I right in that you will only be able to get on HS2 at either London or Birmingham?

If so, it is a complete waste of money, and environment.
Not sure what I think about HS2 but people always go on about how great TGV and Shinkansen are in France and Japan, so i don't know why they woudn't want similar built here. The environmental damage is much less than for an A road or motorway, there wasn't that much fuss about the immensely destructive M40.
 

SteMerritt

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there wasn't that much fuss about the immensely destructive M40.
I think there would be a lot of fuss if it was proposed to spend multiple billions on building another motorway next to an existing one, through people's houses and local green space, with the only benefit being it cuts 15mis off a journey time. That is, basically, what HS2 does over the current train line from London to Birmingham. The money could have been much better spent on improving the existing solutions.
 

ZeroTheHero

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Not sure what I think about HS2 but people always go on about how great TGV and Shinkansen are in France and Japan, so i don't know why they woudn't want similar built here. The environmental damage is much less than for an A road or motorway, there wasn't that much fuss about the immensely destructive M40.
The TGV (started being built in the late 60's) and the bullet train (started in the 60's as well) were purpose built from scratch and offered a hugely improved service over what was currently available, and have been expanded over the years (they are not just one route).

This *is* just one route that does not offer a huge time saving over the current journey and has already had an absolute fortune spent on it (you might ask to the financial benefit of whom?), with completion costs seemingly spiralling all the time. As per the original question, if the country is short of money then surely this must be one project that could be cut.
 

chuckbert

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With the airline industry ready to tumble down the gurgler, high-speed trains on major routes would probably be profitable. London-Manchester, York, Newcastle, Glasgow. People don't fly from Tokyo to Kyoto which is the same distance as London-Newcastle. The shinkansen takes the same time and costs a similar amount to a budget (not bargain basement) flight.
 

Malc

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Governments are getting more like football clubs every day - spend spend spend. I'll make an exception for the very high cost of Covid-19, it was necessary.

But that's a good question chuckbert. Just who do we own the money to? and will it ever be repaid? I don't think so.
 
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