We have a national debt of about £1.5T

[RexCathedra]

And the recession arrived in 1973 just like ALL the other US recessions of the last 50 years immediately following falling government sector deficits

It's almost as if there were other, non-fiscal, exogenous things that can promote or retard a nation's economic growth. It's almost as if the level of a nation's public debt isn't the be-all-and end-all of macroeconomics.

I don't think it's quite fair to have reality doing such a poor job tracking theory, and recommend we club together and replace this reality with a more theory-compliant one.

 

[RexCathedra]

we would have to have some extraordinary levels of deficits to raise inflation to
more normal historic levels as Japan have found out

No! No! You don't understand! We're always one Labour win away from Zimbabwemar!

 

[easynow]

Everyone is playing the same game so it doesn't really matter. It would nice to lower it a bit though...

 

[Kevlar]

I agree government sector deficit is not the be all and end all of macroeconomics
it is what it is the government creating more money than it destroys
but it is not the nations debt
no panacea but for a country like the uk which runs an external deficit
it is the only chance for its private sector to run an aggregate surplus

 

[jeremy fisher]

I would strongly advise you looking up the term " Decimated " before using it again in a debate.

As RexCathedra says the word decimation is derived from Latin meaning "removal of a tenth", which is more than likely in relation to the economy if we didn't pay back our debt or pay interest on it. Another definition from the oxford dictionary is "drastically reduce the strength or effectiveness of (something)" which would be a fair interpretation of the situation.

Having said that let's not let a word (however you want to interpret it) get in the way of the point. Not paying back our debt or even not paying back the interest on the debt would bring turmoil to the UK economy. The recent recession would be minor in comparison to the scale of impact it would have on us. It's just not an option, even though it sounds like a nice idea!

 

[Hampster Gull]

Our deficit is a symptom of a wider problem. We are not productive enough in comparison to our peers however we still want to live the high life. It has meant the slow decline of our currency and our power. Of course we can keep going with our deficits, just expectpur kids to be worse off than we are.

 

[Hampster Gull]

or on the other side of the account sheet
the total savings in sterling in the private sector of 1.5 T
how does the nation reduce to the government sector?
particularly ironic as those that bang on about this are the last to think that
the historical reality is the uk have run government sector deficits
9 years in ten for over 400 years!
get over it guys it's called sovereign monetary power
government spends and creates numbers in the accounts of households and firms
governments tax and destroys numbers from the accounts if households and firms
a government sector deficit= a private sector surplus
government sector debt = private sector savings
the more the merrier
until inflation is too high
and in the current globalised economy with countries competing to lower
the value of their currency for export advantage
and collective labour bargaining power at an all time low
excess productive capacity
we would have to have some extraordinary levels of deficits to raise inflation to
more normal historic levels as Japan have found out

Have read the first question a few times and don't understand it.

On the govt deficit = private surplus this ignores our national expertise at consumerism, which means mch of the clsurplus goes abroad. We are infamous at deficits with our trading partners.

 

[Kevlar]

the first question?
do you mean
how does the nation reduce to the government sector?
just pointing out we have a private sector too -households and firms
and they are running a surplus with our own government sector.
As you point out they are not running a surplus with the rest of the world
all three sectors must balance money spent is money received
so the government sector balance(+ or -)
+ the private sector sector balance
+ the external sector balance =0
so once the government sector deficit falls below the external deficit
the private sector moves into deficit.
for a country like the uk which runs an external deficit it is
impossible for the both its private and government sectors to both be in surplus
money is called a currency because it flows

 

[Hampster Gull]

So we need to trim our government spending in order to put people to better and more productive use which will enable us to reduce our external deficit. That means our currency may stop its slow decline and we may get back to wealth creation not destruction. Fair enough.