tag:blogger.com,1999:blog-7820485130017459619.post4686439122906621995..comments2023-10-24T01:46:47.151-07:00Comments on CynicusEconomicus: Government Borrowing and Interest RatesUnknownnoreply@blogger.comBlogger5125tag:blogger.com,1999:blog-7820485130017459619.post-13643035917150731092013-12-11T12:10:47.725-08:002013-12-11T12:10:47.725-08:00"As such, even in a downturn, a government bo..."As such, even in a downturn, a government borrowing will have a negative impact, as it will redirect resources away from potentially productive investments, or raise the cost of borrowing limiting the 'bang per buck' of the money borrowed (as the cost of the money will be greater)."<br /><br />I take issue with this! During a prolonged recession, as we are experiencing now (whatever Osborne says) if spending is deliberately reduced, there is more money sucked out of the economy in much the same way as a rise in taxation would do. People have less and less to spend, hence businesses go under. When people are unemployed, they stop paying tax and start claiming benefits. If this situation is allowed to continue, the government's tax take is seriously depleted. This means the government cannot balance its books! Where is it going to get the extra money to pay its debts? It could cut spending further, but this just makes the deflation worse and you are back to square one. The government could sell off state assets and raise the money that way, but now an asset that was producing money for the country is now putting money into shareholders pockets. If there is no meaningful investment to get the economy moving, you are eventually back to square one. How does the government balance its books? The only real way it can...by increasing borrowing! <br /><br />The government has to keep borrowing in order to pay its past debts as the spending cuts it implemented caused deflation, job losses and so to make up for the fall in GDP, it has to borrow. Anonymoushttps://www.blogger.com/profile/10520109825385024927noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-21300580263552930742013-02-28T09:04:11.603-08:002013-02-28T09:04:11.603-08:00am so grateful you have always being of help to me...am so grateful you have always being of help to meAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-64519133036816218702011-09-23T19:02:58.718-07:002011-09-23T19:02:58.718-07:00Well, I realize this was written in 2008 - but thi...Well, I realize this was written in 2008 - but this helped me understand a lot better how borrowing and interest and federal debt all works. I've been trying to do some research.Dallas Colocationhttp://www.internap.com/colocation-provider-facility-overview/dallas-colocation/noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-73281722786711872122010-05-20T03:08:22.617-07:002010-05-20T03:08:22.617-07:00Hi,
I have seen your site & i must say it is a...Hi,<br />I have seen your site & i must say it is a very good on-line <a href="http://financeideas4u.blogspot.com" rel="nofollow">financial resources</a>.<br />All type of financial topics have been covered over here.<br />I will follow this blog to get some good finance info. thanks for sharing this.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-36756333803541353012008-07-16T12:22:00.000-07:002008-07-16T12:22:00.000-07:00Many thanks for your explanation - it will take me...Many thanks for your explanation - it will take me some time to work through it fully.<BR/><BR/>Honestly, I am not an economist and my lack of knowledge is not feigned! Only in the last few months have I really started to take an interest in economics, and I am finding your blog invaluable in helping to explain how it works - and how complex it is. <BR/><BR/>Most economists in the media make pronouncements like "A technical recession may occur, lasting for two or three quarters, followed by strong growth in 2009" and though I was sceptical before, I now know they are talking through their hats!Anonymousnoreply@blogger.com