tag:blogger.com,1999:blog-2654455663519806899.post1847962113647567672..comments2023-11-09T02:43:59.293-08:00Comments on Christian Medical Comment: 94% of Britons don’t understand what’s happening to the country’s national debtPeter Saundershttp://www.blogger.com/profile/17222354018504253042noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2654455663519806899.post-91418139528285088072013-01-02T08:00:45.726-08:002013-01-02T08:00:45.726-08:00Thanks for this James. Some good points but I thin...Thanks for this James. Some good points but I think Britain is in a very bad way indeed. Maybe not as bad as the PIGS countries but pretty woeful. Specifically:<br /><br />1. I don't think we should be reassured by low interest rates. These are being kept down artificially at present but will go up as Britain's credit rating worsens as it surely will.<br /><br />2. We must not forget the effects of devaluation on the consumer. When I came to the UK in 1989 the NZ dollar was worth 26p. It is now 52p! The UK is deep-water diving wrt Oz/NZ etc. <br /><br />3. Britain's debt/GDP ratio is actually one of the world's highest - see illustration at http://bit.ly/aNbNWu - way higher that NZ, Oz etc.<br /><br />4. I'm sure we will agree that the Christian response should be simple living, generous giving and getting out of debt. I though Cranmer's recent piece on this was very good - if you didn't see it it's at http://bit.ly/10qNgnM Peter Saundershttps://www.blogger.com/profile/17222354018504253042noreply@blogger.comtag:blogger.com,1999:blog-2654455663519806899.post-75466810050045217162012-12-16T04:13:47.940-08:002012-12-16T04:13:47.940-08:00As a Christian economist, I'll try and respond...As a Christian economist, I'll try and respond and not be trite.<br /><br />Debt is a problem if we can't pay it back any more - and deficits are a problem if banks won't fund them. As banks will fund them, and at pretty low rates, then that says that things aren't as bad as the debt bombshell website (a scaremongering one if ever I came across it) would like us to think.<br /><br />Governments have one large advantage over the rest of us when it comes to taking on debt, namely they can print money to finance it, one way or another. In our day and age where parliaments legislate against that happening directly, instead a bit of higher inflation here and there will reduce the size of that debt.<br /><br />It's worth also pointing out that the graphic contained forecasts, and the good Lord created economic forecasters to make the weather forecasters look good, as the old adage goes. And the OBR is continually revising its forecasts. While our deficit isn't small, it isn't at panic stations just yet. <br /><br />Furthermore, I'd argue that graphic's a little misleading, put out by those who want the UK to balance the books at all times. Better would be to have a picture of the debt-to-GDP ratio, where you'd find the UK actually looking pretty damn rosy - way behind the US, Japan and all the usual suspects.<br /><br />The bottom line is, economic jargon aside (we are culpable I'm sure), government will not run balanced budgets throughout the economic cycle if they collect taxes that are dependent on economic activity (VAT, income tax, corporation tax etc), and if they pay benefits similarly (unemployment benefits). In a recession, these two factors will lead to a deficit - and the larger the recession, the larger the deficit.<br /><br />I crunched some numbers a while back (happy to provide details but I wrote it in a rather infrequently used blog of mine: http://christianityeconometrics.blogspot.co.uk/2011/04/little-bit-of-looking-at-data.html), and given the sheer size of the downturn (largest since the 1930s), we should have expected a huge deterioration in public finances. That data work makes use of patterns established since 1980, hence over a lot of Conservative and Labour governments, and says that actually, given the size of the downturn it should have been much larger than even Labour ran.<br /><br />The flip side is, of course, once the economy recovers, public finances start to look much better since tax receipts rise and unemployment falls. The strange thing about this "recovery" is that austerity has almost single handedly choked off the recovery, meaning that public finances can't improve, and in fact have got worse - as Osborne has finally begun admitting recently.<br /><br />Of course, the biggest problem we all have is knowing who to believe and who to trust when we hear them talking about the economy, but it's pretty similar to working out who to believe when they are talking about the Bible and Christianity - you have to use judgement. Both are expounding something very much misunderstood to the general population, full of odd sounding complicated terms - and they have at their core things that at first glance make precisely no sense - like the idea that austerity has made govt finances worse because it stopped the economy from growing.Anonymoushttps://www.blogger.com/profile/10258069769427687340noreply@blogger.com