Wednesday, October 22, 2008

National Debt Controversy

Question on National Debt.

Many readers are asking about the true value of National Debt as some commentators are suggesting the real value of national debt is closer to £2 trillion rather than the official figure of £613 billion.

See: Readers Question: What is true level of government borrowing?

Basically, I tried to use an analogy. if you have a loan of £10,000 and in 10 years, you knew you had to pay £7,000 for your children's education - would you include this spending commitment in your level of debt?

Also, if you acted as guarantor for your child's mortgage of £50,000, would you consider your level of debt to be £10,000 or £60,000?

(I know It's not a perfect analogy, but it helps to give a perspective we can more easily relate to)

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