Author Topic: Government Day-to-Day  (Read 13160 times)

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Offline JMT

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Re: Government Day-to-Day
« Reply #255 on: March 11, 2020, 11:46:36 pm »
You guys really need to listen to economists and stop thinking you know everything:

https://twitter.com/lindsaytedds/status/1237877347916730368?s=21

https://twitter.com/kevinmilligan/status/1237380418808057856?s=21

They both echo what the PBO said last week.  Canadaís federal government is well placed fiscally.  There is no danger with this deficit or one more than twice the size.  It costs Ottawa so little to borrow money at the moment that itís actually irresponsible to not use the capacity.
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Offline wilber

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Re: Government Day-to-Day
« Reply #256 on: March 11, 2020, 11:53:21 pm »
You guys really need to listen to economists and stop thinking you know everything:

https://twitter.com/lindsaytedds/status/1237877347916730368?s=21

https://twitter.com/kevinmilligan/status/1237380418808057856?s=21

They both echo what the PBO said last week.  Canadaís federal government is well placed fiscally.  There is no danger with this deficit or one more than twice the size.  It costs Ottawa so little to borrow money at the moment that itís actually irresponsible to not use the capacity.

Gawd.

The government will have to borrow tons because of this epidemic and its effect on the economy, it's just too bad it can't control its spending when times are good. Man I'm glad you guys don't have control over my personal finances, I would be up to my neck in hock for no other reason than I can afford the payments.
« Last Edit: March 12, 2020, 12:02:10 am by wilber »
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Offline JMT

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Re: Government Day-to-Day
« Reply #257 on: March 12, 2020, 11:13:29 am »
Gawd.

The government will have to borrow tons because of this epidemic and its effect on the economy, it's just too bad it can't control its spending when times are good. Man I'm glad you guys don't have control over my personal finances, I would be up to my neck in hock for no other reason than I can afford the payments.

Gawd Iím glad I donít think Iím an expert on everything.
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Offline wilber

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Re: Government Day-to-Day
« Reply #258 on: March 12, 2020, 11:33:37 am »
Gawd Iím glad I donít think Iím an expert on everything.

You don't need to be an expert where just a little logic is required.
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Offline wilber

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Re: Government Day-to-Day
« Reply #259 on: March 12, 2020, 02:32:48 pm »
I guess some people don't understand that when you run up debt when you don't need to, you reduce your capacity to borrow when you do need to.
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Offline ?Impact

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Re: Government Day-to-Day
« Reply #260 on: March 12, 2020, 02:41:36 pm »
I guess some people don't understand that when you run up debt when you don't need to, you reduce your capacity to borrow when you do need to.

Nobody said that. The question is what is the need, or more specifically what is the investment and the return on that investment?

Offline wilber

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Re: Government Day-to-Day
« Reply #261 on: March 12, 2020, 02:43:14 pm »
Nobody said that. The question is what is the need, or more specifically what is the investment and the return on that investment?

There is zero return if you never pay it back, it just becomes a burden with no value.
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Offline kimmy

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Re: Government Day-to-Day
« Reply #262 on: March 12, 2020, 03:01:23 pm »
:D  LOL what??

No it isn't.  The only thing debt-to-GDP measures is the ability to potentially pay back debt, as well as ability to service current debt loan/interest payments.

Think about it this way:  if you're 12 and your only income comes from doing chores around the house, $200 is a big debt that will take forever to pay off.   If you're a grown-up with a decent job, $200 is easily manageable. Most of us accumulate and pay off $200 or more of credit card debt every month. The size of the debt relative to our income is what's most important.

Another thing to keep in mind is that government debt is actually being repaid (and renewed) all the time. Government debt is financed by issuing bonds that are repaid after a fixed duration.  Old bonds are continually being repaid, and new bonds are continually being reissued.

One danger is that people might decide that government bonds are not a good investment anymore.  This could happen if:

 -people are not sure your country will exist long enough to pay back their bonds. (Canada bonds should be fine, I think.)
 -people don't think your government will be able to pay back their bonds when they are due.
 -people decide that the interest rates you are offering are not attractive.  For example, if interest rates are low, or inflation is high, people might want to invest in something else.

But we do, you know, have to come up with the money to pay back the bonds that come due every year, and in a year when we are going to have big unplanned expenses and a big unexpected drop in revenue, that is going to be a headache.

 -k
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Offline wilber

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Re: Government Day-to-Day
« Reply #263 on: March 12, 2020, 06:13:46 pm »


But we do, you know, have to come up with the money to pay back the bonds that come due every year, and in a year when we are going to have big unplanned expenses and a big unexpected drop in revenue, that is going to be a headache.

 -k

Bingo. But you really aren't paying back anything, you are just rolling over debt at an interest rate you can't predict in the future. Like renewing a mortgage every five or so years, except you didn't pay off any of the principal, you just paid the interest.
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Offline Omni

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Re: Government Day-to-Day
« Reply #264 on: March 12, 2020, 07:45:13 pm »
Bingo. But you really aren't paying back anything, you are just rolling over debt at an interest rate you can't predict in the future. Like renewing a mortgage every five or so years, except you didn't pay off any of the principal, you just paid the interest.

Not exactly how mortgages work, but yes of course the lender will structure the payments so the initial payments are mostly interest and small principal which will swap over the term of the mortgage.

Offline wilber

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Re: Government Day-to-Day
« Reply #265 on: March 12, 2020, 07:53:27 pm »
Not exactly how mortgages work, but yes of course the lender will structure the payments so the initial payments are mostly interest and small principal which will swap over the term of the mortgage.

When you pay off a mortgage, the portion of the payment paying interest gradually declines and the portion going on principal increases as you pay off the principal. The debt to GDP con means you never pay off any of the principal and all of your payment goes into paying interest. Every five years you have to renew at the going interest rate. Government bonds also have to be turned over at specified periods. Back in the eighties, my mortgage went from 9% to 18% when I renewed. Fortunately I could handle it as could many at the time because their debt load was lower. If interest rates went to 5% today, our economy would collapse because most people couldn't absorb the increase and stay solvent.
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Offline Gorgeous Graham

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Re: Government Day-to-Day
« Reply #266 on: March 12, 2020, 08:48:22 pm »
Think about it this way:  if you're 12 and your only income comes from doing chores around the house, $200 is a big debt that will take forever to pay off.   If you're a grown-up with a decent job, $200 is easily manageable. Most of us accumulate and pay off $200 or more of credit card debt every month. The size of the debt relative to our income is what's most important.

Yes i'm well aware what debt-to-gdp means.  It has its use.  But just because a country's debt-to-gdp is shrinking while still running deficits that doesn't mean you're being fiscally responsible.  Your debt-to-gdp is supposed to shrink during good economic times because your gdp is going to be doing well and your need for debt is minimal.  My point is now is the time to pay down the debt a bit, we just borrowed a crapload for years to recover from the "great recession".  And when bad times hit again, like now, we can responsible pour in the deficit to stimulate the economy and be in a sounder financial position.  If we saved those 20 billion deficits up and instead added them to the billions we'll be putting out for the massive sh!t-kicking the TSX is taking right now we'd be much better off.

Our economy is in desperate shape.  Alberta is being gutted and I don't think its coming back, the TSX lost 12% of its total value today IN ONE DAY, that's 12% of the entire Canadian economy evaporated.  This is when you run deficits.  Chretien/Martin knew it.  Kevin Milligan can suck my d!ck.

I'm not going to argue with these Liberal a$$-lickers, if Trudeau were running surpluses they'd defend that too.  **** these partisan sh!t-f*ckers.  I hate partisans.
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Offline wilber

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Re: Government Day-to-Day
« Reply #267 on: March 12, 2020, 09:01:51 pm »
Quote
Think about it this way:  if you're 12 and your only income comes from doing chores around the house, $200 is a big debt that will take forever to pay off.   If you're a grown-up with a decent job, $200 is easily manageable. Most of us accumulate and pay off $200 or more of credit card debt every month. The size of the debt relative to our income is what's most important.

And if that kid takes a 20% cut in what he is making from doing the chores, he still owes $200.

In a recession, revenues (GDP) go down while deficits and debt go way up because not only does government not have the revenues but it has to spend much more to stimulate the economy. That's something these debt to GDP shills either don't understand or care about.

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Offline ?Impact

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Re: Government Day-to-Day
« Reply #268 on: March 13, 2020, 08:34:29 am »
I'm not going to argue with these Liberal a$$-lickers, if Trudeau were running surpluses they'd defend that too.  **** these partisan sh!t-f*ckers.  I hate partisans.

Interesting statement, I will have to think on that a bit.
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Offline wilber

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Re: Government Day-to-Day
« Reply #269 on: March 13, 2020, 10:16:30 am »
Interesting statement, I will have to think on that a bit.

Except for the last paragraph and the last line of the previous paragraph, I agree with Covid. 100%.
"Never trust a man without a single redeeming vice" WSC