warrigal wrote on Nov 1
st, 2012 at 6:27pm:
Dsmithy70 wrote on Nov 1
st, 2012 at 3:48pm:
warrigal wrote on Nov 1
st, 2012 at 3:37pm:
How do we pay for what our country needs with a deficit?
More money is needed for this and that and things that need to be fixed.
Unemployment for one
Are you trying to be obtuse?
Ok define what you mean by a sensable deficit.How do we provide services, and asistance to thows in Australia in need
Your wish, is my command?
perceptions_now wrote on Oct 31
st, 2012 at 11:44am:
As I have said previously, Debt is a 2 part issue, Expenditure is 1 & Revenue is another!
In order to run an annual Deficit & accrue Debt, Expenditure needs to exceed Revenue.
However, Debt in itself is NOT inherently bad and most countries, like individuals & Businesses, will acquire Debt at various points in the Economic cycle. The "trick", to use a "global warming phrase", is to use Debt wisely and run at a Debt which is affordable, at that period in the Economic cycle.
In other words, when the Economic cycle is positive and is likely to remain so for some time, then Debt can be a useful way to expand the local economy, by putting the Debt to good use, in ways that will promote Economic activity & Productivity, particularly from the longer term perspective.
Equally, Debt incurred during the above phase, should be reduced to manageable levels, before the Economic cycle starts to head South.
Personally, I would suggest a net Debt to GDP ratio of something between 5-25%, depending on the point of the Economic cycle was at the time.
Ok, back to Expenditure & Revenue. It is not merely a matter of Spending less, in order to convert a Deficit into a Surplus and thereby getting rid of Debt!
Why, Well, for all Actions & Inactions, there are Consequences. IF Spending is reduced, it may also reduce Productivity & also Revenue, thus possibly increasing the Deficit/Debt, instead of lowering the Debt.
A great deal of care and attention needs to go into what Spending is to be cut, when it will be cut (at what point in the Economic cycle) & how it will be done, in order to keep Productivity & Revenue, as high as possible.
Serious consideration also needs to be given to the Revenue side, particularly as the Tax system is inherently too high on basic rates and too low on real Revenue, as the Deduction & avoidance industry allows far too much leeway, for both Business & individuals.
In fact, the whole tax system needs to be revamped, to lower tax rates & eradicate the avoidance industry and all sectors need to bear their fair share!
To close, the Europeans & the USA have real problems with Debt upwards of 80% of GDP and I do not foresee any way they will recover from their current position, without one hell of an Economic downturn.
To give an analogy, most people say, Credit Cards are terrible.
However, I use Credit Cards for nearly everything, but then I pay it off (in full) each month.
I haven't paid a cent in interest for a long, long time & the Credit Card company even pays me, via their "rewards programs", for using their money.
On top of that, I earn extra interest by keeping my money, in my bank accounts, for a longer period.
My point? Well, Debt isn't just Debt, there is good Debt & bad Debt!
PS - I have heard several commentators remark that the physical Damage & lost Business profits, caused by hurricane Sandy (in the USA) may not be too bad, as those loses may be offset by the spending on Recovery efforts.
What these commentators failed to do, was go to the next step, by including in their calculations the effects of the additional Debt that will inevitably be acquired during the recovery phase.
Should the US want some ideas on that situation, perhaps they can have a chat to Queensland & OZ Federal Politicians, who have already had some experience in those issues, following cyclone Yasi.
As I said earlier, for all Actions & Inactions, there are Consequences.
How would we provide services?
The sad truth is, we probably won't!
If we were going to do that properly, then REAL bipartisan co-operation would need to have stated in the mid 1980's or earlier.
But, it never did, not even anything close to it!
Forum
Pages: 
