NeilW wrote:Ask those who believe in "reducing the debt" how many personal cheques they have sent to the Donations and Bequests account at the Commissioners for the Reduction of the National Debt and to what value. Then you'll find out whether they really believe it is necessary, or have other motives.
Just been reading yet more 'PANIC' type articles throwing out figures of the UK debt now being £2T+ and near 100% of GDP, the highest since .... etc. BUT that debt is secured largely at a fixed rate over many years/decades, and at pretty low levels of interest rate. 2T at 2% is no better/worse to service than 1T at 4%, and whilst more to eventually pay back much will be eroded by inflation.
The risks are primarily that of too little inflation (not enough debt erosion) along with higher interest rates at the time each Gilt matures when that might have to be rolled into another replacement Gilt, or be repaid/wiped-out. But where that risk is spread out over many many years (timepoints). Japan is doing fine with Debt/GDP north of 200%. If the UK doubled up its 2T debt to 4T at perhaps a fixed rate cost of 2%, and invested that additional 2T at a 4% rate of return (sort of Sovereign Wealth Fund), then the entire debt would be costing nothing.
Debts at very low fixed (long) term interest rates can actually be a asset. Where paying debt down instead of debt expansion is akin to giving a asset away.