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Deficit Dominates Debate In Canada

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They're having quite an argument over there about what to do about a govt. deficit that the Conservatives fear could spiral to CDN $300m by 2014/15.

Meanwhile we are having riots over whether it really matters having one heading towards the squillions. How depressing.

http://www.bbc.co.uk/news/world-us-canada-13021359

EDIT: A few posters seem not to have noticed their deficit is in MILLIONS, ie denominated in thousandths of ours. We are in a different World, but I thought it illuminating that a country could be - rightly - rowing about something that we regard as small change.

Edited by bogbrush

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They're having quite an argument over there about what to do about a govt. deficit that the Conservatives fear could spiral to CDN $300m by 2014/15.

Meanwhile we are having riots over whether it really matters having one heading towards the squillions. How depressing.

http://www.bbc.co.uk/news/world-us-canada-13021359

...it's declining to £191 million ...our's is circa £160 million and Canada has half our population ...thought they were mineral and gas /oil rich ...where's it all going....?.... :rolleyes:

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...it's declining to £191 million ...our's is circa £160 million and Canada has half our population ...thought they were mineral and gas /oil rich ...where's it all going....?.... :rolleyes:

Billion don't you mean? Canada's deficit is really really good B)

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...it's declining to £191 million ...our's is circa £160 million and Canada has half our population ...thought they were mineral and gas /oil rich ...where's it all going....?.... :rolleyes:

The trick is they are in MILLIONS. We're not.

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Billion don't you mean? Canada's deficit is really really good B)

..wow...apologies ...mixed my millions and billions there.....don't know why they are panicking ...it's not even newsworthy.... :rolleyes:

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Wow, 200 million pounds as an annual deficit. Britain is borrowing that around every 11 hours. Countries really should be being run like in Canada, there is never a need for a country to borrow.

Maybe they could take Broon off our hands and put him in charge of the budget for 10 years - that should be time enough to destroy their economy.

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..wow...apologies ...mixed my millions and billions there.....don't know why they are panicking ...it's not even newsworthy.... :rolleyes:

Ah but it's getting upset about the millions that will stop them having a git like Balls saying the hundreds of billions don't matter.

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If a government did not run a deficit, where would the money come from? Serious question.

People making promises to each other, plus finite trustworthy means of exchange.

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If a government did not run a deficit, where would the money come from? Serious question.

Expansion of the monetary base as a result of the effects of FRB from private sector borrowing.

Those who make the decision to borrow in private sector borrowing are responsible for paying it back and bear the consequences of failure to repay. Public sector borrowing is undemocratic at a very granular level and those who make the undemocratic decisions to borrow bear no responsibility for repayment.

There are some who believe that private and public sector borrowing are completely fungible. I disagree because of the differences in choice to borrow and responsibility to repay.

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If a government did not run a deficit, where would the money come from? Serious question.

Serious answer, taxation.

Having a goal to balance the budget with perhaps a set percentage for investment projects (that's genuine investment for the long term as opposed to spending disguised as 'investment' in Labour-speak).

It might keep sprawling, interfering government down and limit the spread of quangos and the like. We would have to think about wealth creation as opposed to debt creation. Everything else would come down in price accordingly as we as a nation would have to live within our means, with the culture of a prudent (not in the Gordon Brown sense) government showing the way.

Of course, this is a silly idea given where we are. Imagine taking political heat for having a deficit in the millions (not billions).

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Serious answer, taxation.

Having a goal to balance the budget with perhaps a set percentage for investment projects (that's genuine investment for the long term as opposed to spending disguised as 'investment' in Labour-speak).

Hotairmail is correct. All our currencies have a Bank Of England (or Canada) promises to pay wording on it.. and of course BoE is part of the government.

All currencies in issue are back by debt (under present system), and without deficit, the total currencies stock will stay constant while

the economy (in gdp term) grows.

The other option is the HK/SG currency board system where you let other people print, then use those as 'reserve' and issue the equivalent

of local currencies.

So, deficit at approximately nonimal GDP is ok and good. 10% deficit with 4% nominal growth is a totally different story...

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Serious answer, taxation.

Having a goal to balance the budget with perhaps a set percentage for investment projects (that's genuine investment for the long term as opposed to spending disguised as 'investment' in Labour-speak).

It might keep sprawling, interfering government down and limit the spread of quangos and the like. We would have to think about wealth creation as opposed to debt creation. Everything else would come down in price accordingly as we as a nation would have to live within our means, with the culture of a prudent (not in the Gordon Brown sense) government showing the way.

Of course, this is a silly idea given where we are. Imagine taking political heat for having a deficit in the millions (not billions).

Canada went through a debt crisis in the 1990s (deficit to GDP of 9% in 1994). Paul Martin (the Finance Minister at the time) undertook a severe austerity program and finally got the meltdown in public finances under control.

The events of the 1990s are fresh enough in Canadians minds that they are very reluctant to accept even a small slippage in the goal of paying off at least some of the debt, especially given their good fortune with respect to minerals and hydrocarbons.

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Hotairmail is correct. All our currencies have a Bank Of England (or Canada) promises to pay wording on it.. and of course BoE is part of the government.

All currencies in issue are back by debt (under present system), and without deficit, the total currencies stock will stay constant while

the economy (in gdp term) grows.

The other option is the HK/SG currency board system where you let other people print, then use those as 'reserve' and issue the equivalent

of local currencies.

So, deficit at approximately nonimal GDP is ok and good. 10% deficit with 4% nominal growth is a totally different story...

That's not true at all. Currency can be issued without the government spending it into existence.

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To be fair if we had half the world's oil reserves in our dirt we'd be able to run whatever budget we liked to.

Or we could have done what Norway did and invest our oil money in a sovereign wealth fund.

Or we could have flogged it to our private sector buddies for a fraction of its worth like dear old Maggie did :)

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That's not true at all. Currency can be issued without the government spending it into existence.

Sure - we can adopt one of the few alternative systems and what you say may be true.

As it is, currencies are spent into existence by the HMG (where BoE is part of HMG).

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Is this equivalent to the fact that government debt is basically the mirror image of private sector wealth (I'm excluding external capital flows in this latter case).

Not wealth as wealth are valued at the margin - e.g., I buy your house for £100k more and suddenly your next door neighbour is also £100k 'wealthier'

with no action from HMG. Also, all gold 'wealth' at current market price is currently worth more than all the US farmland + Exxon mobile.

But currencies (and that includes gilts/T-bond) in private hands are indeed a mirror image of government debt (and that is what it says on the paper too...)

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They're having quite an argument over there about what to do about a govt. deficit that the Conservatives fear could spiral to CDN $300m by 2014/15.

Meanwhile we are having riots over whether it really matters having one heading towards the squillions. How depressing.

http://www.bbc.co.uk/news/world-us-canada-13021359

EDIT: A few posters seem not to have noticed their deficit is in MILLIONS, ie denominated in thousandths of ours. We are in a different World, but I thought it illuminating that a country could be - rightly - rowing about something that we regard as small change.

Can I suggest they pay the B of E a negative 300m transfer fee for Mervyn King?

It's win win. They get rid of their deficit immediately and we get rid of the c***.

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Can I suggest they pay the B of E a negative 300m transfer fee for Mervyn King?

It's win win. They get rid of their deficit immediately and we get rid of the c***.

:lol:

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Hold on, the Canadian budget deficit is more like 30B, not 200M. It's running at around 3% of GDP. Lots of stuff about it on the web, e.g.:

http://www.financialpost.com/Canada+budget+deficit+increases/3711799/story.html

Having said that, none of the politicians here are saying anything other than that it needs to come down to 0 in a very short time frame. All the arguments are about what to cut (or which taxes to raise) not about the need to do it at all. As LuckyOne says further up the thread, memories of the Canadian debt crisis in the 90s are still fresh here.

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i think what people in this recession dont quite understand about the UK budget deficit is that the debt is accumulating under a deficit.

when labour say that they would cut things slower so that the deficit would be halved in 3 years, the key word here is deficit, not debt.

if we halved out deficit in 3 years, our debt will be around 15-20% higher in 3 years than it is today. things arent exactly rosy today, so with another 15% debt how will will that make us any better!

Edited by mfp123

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  • 295 Brexit, House prices and Summer 2020

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