Author Topic: Government Day-to-Day  (Read 13163 times)

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Offline wilber

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Re: Government Day-to-Day
« Reply #195 on: February 10, 2020, 02:02:22 pm »
Why should I have to pay 100% of the costs of a bridge that will be around 50 years after I die ?

I'm ok with that stuff being paid off over time.

Well if you are a certain age, you won't be around to see a lot of things get paid off but that doesn't mean they shouldn't be paid off.
If the Port Mann is amortized over 30 years I won't be around to see it paid off but that is no excuse to stick 100% of the cost on future generations.

 I'm OK with stuff being paid off over time as well but this debt to GDP nonsense is just to justify paying for stuff forever.

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Offline MH

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Re: Government Day-to-Day
« Reply #196 on: February 10, 2020, 02:09:15 pm »
1. Well if you are a certain age, you won't be around to see a lot of things get paid off but that doesn't mean they shouldn't be paid off.
If the Port Mann is amortized over 30 years I won't be around to see it paid off but that is no excuse to stick 100% of the cost on future generations.

2. I'm OK with stuff being paid off over time as well but this debt to GDP nonsense is just to justify paying for stuff forever.
1. Infrastructure is used over time, though.  Maybe you buy cars for cash but not everyone does.  It's maybe a fair idea to pay a bit every year so that those who pay tax in that year pay for something being used in that year.

2. Sort of, but it's also a useful stat in that it tells us what % of our wealth we are paying on.

Offline wilber

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Re: Government Day-to-Day
« Reply #197 on: February 10, 2020, 02:15:00 pm »
1. Infrastructure is used over time, though.  Maybe you buy cars for cash but not everyone does.  It's maybe a fair idea to pay a bit every year so that those who pay tax in that year pay for something being used in that year.

2. Sort of, but it's also a useful stat in that it tells us what % of our wealth we are paying on.

It's not about paying cash for cars. If you buy a car on a loan, pay it off before you get rid of that car. Don't just add that debt to the debt you incur for its replacement.

It may be a useful stat but it isn't an excuse to go farther in debt.
"Never trust a man without a single redeeming vice" WSC

Offline ?Impact

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Re: Government Day-to-Day
« Reply #198 on: February 10, 2020, 02:23:24 pm »
1. Infrastructure is used over time, though.

Infrastructure comes with 4 major cost components

1. Initial construction/installation cost
2. interest on monies borrowed to cover initial construction/installation
3. Annual recurring maintenance costs
4. Interest on monies borrowed to cover annual recurring maintenance costs

Hopefully we can all agree that #4 should be zero, or at maximum paid off within 12 months

I expect #2 & #3 are the largest cost items. While #3 may start off being a percentage of #1, over time I expect it will become larger than #1. Not all initial construction/installation costs will occur up front. If a major upgrade is made, say adding a lane to an existing highway, then that is really a new installation. If however a bridge span needs to be replaced because the initial span failed before expected lifetime then that is a maintenance cost. #3 should always be paid off withing 12 months.

That really leaves us with what lifetime should be used for infrastructure.
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Offline MH

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Re: Government Day-to-Day
« Reply #199 on: February 10, 2020, 02:48:32 pm »
1. It's not about paying cash for cars. If you buy a car on a loan, pay it off before you get rid of that car. 

2. It may be a useful stat but it isn't an excuse to go farther in debt.

1. The bridge is paid off at the end of its life just like the car.

2. A small amount of debt can be used as a tool... not a concern.

Offline wilber

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Re: Government Day-to-Day
« Reply #200 on: February 10, 2020, 02:57:47 pm »
1. The bridge is paid off at the end of its life just like the car.

2. A small amount of debt can be used as a tool... not a concern.

The bridge was just an example, in fact I don't know if there is a schedule to pay it off, I hope there is.

My point is, using debt to GDP as a parameter to justify borrowing means there is no intention to pay it off.
"Never trust a man without a single redeeming vice" WSC
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Offline Gorgeous Graham

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Re: Government Day-to-Day
« Reply #201 on: February 10, 2020, 04:21:50 pm »
Why should I have to pay 100% of the costs of a bridge that will be around 50 years after I die ?

I'm ok with that stuff being paid off over time.

Well ok let's say you're deferring part costs to future generations who will be future users.  But the problem with this logic (not least being the other costs Impact pointed out) is that there's always going to be things needed to be built, new bridges and roads etc. that future generations will need to build.  So why not just pay current costs off ASAP to avoid needless interest payments and save money?
I can tell how good of a person you are by how you treat the people you disagree with.
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Offline Gorgeous Graham

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Re: Government Day-to-Day
« Reply #202 on: February 10, 2020, 05:06:44 pm »
However, as has been mentioned to you numerous times before, even in household finances, what's more important than your absolute debt is your ability to service your debt. If someone has millions of dollars tied up in assets, a $100,000 loan is nothing. When someone makes $25,000 per year, a $100,000 loan is massive.

When it comes to debt $1 is not the same as another $1.

You're right about that yes of course.

Our government's position is that what really matters is debt-to-GDP, therefore since Canada's nominal GDP is going up right now and we have a moderate deficit and debt-to-GDP is actually going down it means our debt is in good shape, which allows us to run deficits in a decently good economy.  Ok I agree it's good that we're not going to default on our loans and debt-to-GDP is going down.

The problem with their logic is that nominal GDP over the longterm is always rising, and since nominal GDP is especially always rising during good economic times that means they will always have an excuse to run deficits as long as debt growth doesn't outstrip GDP growth.  If the Liberals run into a recession they will run even higher deficits to stimulate the economy as virtually every modern western country does, as they should.  Therefore they will be running deficits during both good and bad economic times.  So when exactly do we EVER pay off/pay down our debt?  Under this Liberal plan, the answer is never.  This is an unsustainable economic plan, and it's also very wasteful since we will be paying more and more money towards interest payments, which will also compound over time & incur more & more waste.

What the Liberals should be doing is using these times of decent growth to run surpluses as Chretien/Martin did to pay down our debt, and during bad economic times run deficits to stimulate the economy, then rinse and repeat.  This is sustainable.  The real reason the Trudeau gov doesn't want to do this is political.  They want to give away money and fund all sorts of projects in order to buy votes.  They don't need to be sustainable in the longterm and can pass the debt to future generations because they can, all that matters is keeping their jobs, which is unethical.  And they trot out all this debt-to-GDP stuff to convince people they're actually being fiscally responsible.  They certainly don't want to raise taxes to actually pay for their projects since that would be political suicide.  The voters who support all this BS are equally or more to blame.
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Offline MH

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Re: Government Day-to-Day
« Reply #203 on: February 10, 2020, 05:11:15 pm »
Well ok let's say you're deferring part costs to future generations who will be future users.  But the problem with this logic (not least being the other costs Impact pointed out) is that there's always going to be things needed to be built, new bridges and roads etc. that future generations will need to build.  So why not just pay current costs off ASAP to avoid needless interest payments and save money?

Infrastructure costs may be incurred all at once, if they were all built around the same time... it might not make sense to take a big hit at one time.

But I am thinking we are already using more sense than politics allows.

Offline wilber

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Re: Government Day-to-Day
« Reply #204 on: February 12, 2020, 11:19:08 am »
One of the things that pisses me off about politicians in general is that instead of being more upfront about the realities of continually increasing the debt so people might lower their expectations a bit, they are continually looking for excuses to borrow even more without paying any of it back.
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Offline JMT

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Re: Government Day-to-Day
« Reply #205 on: February 12, 2020, 02:20:09 pm »
One of the things that pisses me off about politicians in general is that instead of being more upfront about the realities of continually increasing the debt

The thing is, reality doesn't necessarily match up with your prognostications.
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Offline wilber

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Re: Government Day-to-Day
« Reply #206 on: February 12, 2020, 02:25:05 pm »
The thing is, reality doesn't necessarily match up with your prognostications.

Sure does, why else do we have 768 billion in debt which will just continue to grow and we won't pay any of it back because we just keep borrowing when times are good because it is all about debt to GDP and not reality. 26 billion a year in interest. Our entire 26 billion deficit next year will just be paying interest on what we already owe.
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Offline Omni

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Re: Government Day-to-Day
« Reply #207 on: February 12, 2020, 02:26:03 pm »
The thing is, reality doesn't necessarily match up with your prognostications.

Math can be difficult, especially when it's politically biased.

Offline JMT

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Re: Government Day-to-Day
« Reply #208 on: February 12, 2020, 04:19:48 pm »
Sure does, why else do we have 768 billion in debt which will just continue to grow and we won't pay any of it back because we just keep borrowing when times are good because it is all about debt to GDP and not reality.

If you want to be outraged, it's important to realize that our debt is far more than $1T.  $768 is simply the net debt, which subtracts some liquid and semi liquid assets.

No one measures deficits or debts nominally anymore, because it's meaningless.

[/quote]26 billion a year in interest. Our entire 26 billion deficit next year will just be paying interest on what we already owe.
[/quote]

We used to pay much more....at a time like this when inflation is higher than interest in the debt, it makes little sense to pay down debt, or indeed even refrain from borrowing (within reason).

Offline Gorgeous Graham

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Re: Government Day-to-Day
« Reply #209 on: February 12, 2020, 05:32:59 pm »
The thing is, reality doesn't necessarily match up with your prognostications.

Never underestimate a Liberal government's (federal or provincial) willingness to buy off votes with other people's money.  Gerald Butts worked as Dalton McGuinty's principal advisor.  Straight outta the playbook.  Enough said.
I can tell how good of a person you are by how you treat the people you disagree with.