Thursday, November 27, 2008

National Debt

A video on National debt.

A few comments on video.
  • I think US National Debt is a serious problem. US National debt is already 73%, but the US bailouts and rescue packages are greater than the UK.
  • I mentioned the Labour government of 1931 increased taxes and cut unemployment benefits. Actually, it was a National government headed by Ramsey McDonald filled with mainly Conservatives. Most Labour MPs resigned.
  • It is OK if National Debt rises now, so long as it is reduced when the economy recovers.
  • The real fear if we were to have a deflationary decade of stagnant growth like in Japan. Unlike Japan, UK and US could not support a national debt of 195% - we simply don't have the necessary domestic savings.

UK National Debt

A week of stupid politics but good economics - Anatole Kaletsky


Anonymous said...

Had Bush lowered the debt even further during the good years, would the necessary public borrowing that is going on now been easier to handle?

Tejvan Pettinger said...

Absolutely. The problem is Bush never reduced the National debt. It was rising even during the boom years. The US now faces national debt of 73% of GDP, but, this is rising very fast.

It is a real concern.