Drowning in it!

[Nemo]

Worst debt burden since 1950s makes huge tax raid inevitable, warns IFS

High interest costs and low economic growth will hamper efforts to tackle UK’s debt pile

https://www.telegraph.co.uk/business/20 ... warns-ifs/

...and it's not just us, most of the Western World is underwater.

There is quite a lot of talk about war at the moment and I'm always reminded of the words of Gerald Celente:

when all else fails they take you to war

[Urbandreamer]

So, it's finally made a newspaper!

This has been going on for years / decades / generations. Gradually getting worse.
But of course anyone who points these things out must be a raving loon.

QE, covid support, cost of fuel support, the spending goes on and on.

OK, I'm sure that some are going to point out the importance of this and other spending (paying Doctors anyone). The trouble is that spending has exceeded tax receipts for decades.
The last budget surplus was in 2000/2001, but the average deficit since the 70's has been 3.7%
https://commonslibrary.parliament.uk/re ... s/sn06167/

So let us be clear, after 20+ years a newspaper has noticed a situation that has been going on for fifty years. I would suspect that it's not the first time that the IFS, the Adam Smith Institute et-al have pointed out issues.

There is a reason why tax is at the highest level since OECD records began. But it's not what we spend, in general. No it's that our government has repeatedly chosen to spend more than the country can afford. Leading to very large interest payments.

That link shows that debt, relative to GDP was brought down for a long time after WWII, but 20 years ago it started to increase. Note, debt is different to deficit, but if you run a deficit you can only reduce debt by inflating it away. Oh, that's right, inflation was very low over the last 20 or so years, so the deficit caused the debt to increase.

It's not bloody rocket science.

Ps, it is I believe suggested that the current government will attempt to reduce taxes, borrowing yet more, in an effort for the party to be re-elected. Possibly something to think about if you believe, against historic evidence, that your vote can change things.

[funduffer]

So, it's finally made a newspaper!

This has been going on for years / decades / generations. Gradually getting worse.
But of course anyone who points these things out must be a raving loon.

QE, covid support, cost of fuel support, the spending goes on and on.

OK, I'm sure that some are going to point out the importance of this and other spending (paying Doctors anyone). The trouble is that spending has exceeded tax receipts for decades.
The last budget surplus was in 2000/2001, but the average deficit since the 70's has been 3.7%
https://commonslibrary.parliament.uk/re ... s/sn06167/

So let us be clear, after 20+ years a newspaper has noticed a situation that has been going on for fifty years. I would suspect that it's not the first time that the IFS, the Adam Smith Institute et-al have pointed out issues.

There is a reason why tax is at the highest level since OECD records began. But it's not what we spend, in general. No it's that our government has repeatedly chosen to spend more than the country can afford. Leading to very large interest payments.

That link shows that debt, relative to GDP was brought down for a long time after WWII, but 20 years ago it started to increase. Note, debt is different to deficit, but if you run a deficit you can only reduce debt by inflating it away. Oh, that's right, inflation was very low over the last 20 or so years, so the deficit caused the debt to increase.

It's not bloody rocket science.

Ps, it is I believe suggested that the current government will attempt to reduce taxes, borrowing yet more, in an effort for the party to be re-elected. Possibly something to think about if you believe, against historic evidence, that your vote can change things.

If you were an advocate of Modern Monetary Theory, you would say why is this a problem? If you have a fiat currency, you can just increase the money supply and carry on spending, provided you do not create shortages in the economy that will drive inflation. In the last 50 years or so, most western countries have massively increased their debt/GDP ratio, with Japan and USA at >100%, and have continued to grow and generally not suffered inflation, allowing the standard of living of their citizens to improve hugely. Spending money to increase productivity is the key.

Whether we can continue to do this through the 21st century remains to be seen. We are approaching the limits of sustainability in the world, so I suspect it won't work this century. AI may enable productivity to keep improving so I hear, but I am sure there will be downsides to AI.

What the best course of action is for this century, I don't know.

FD

[Tedx]

So, it's finally made a newspaper!

This has been going on for years / decades / generations. Gradually getting worse.
But of course anyone who points these things out must be a raving loon.

QE, covid support, cost of fuel support, the spending goes on and on.

OK, I'm sure that some are going to point out the importance of this and other spending (paying Doctors anyone). The trouble is that spending has exceeded tax receipts for decades.
The last budget surplus was in 2000/2001, but the average deficit since the 70's has been 3.7%
https://commonslibrary.parliament.uk/re ... s/sn06167/

So let us be clear, after 20+ years a newspaper has noticed a situation that has been going on for fifty years. I would suspect that it's not the first time that the IFS, the Adam Smith Institute et-al have pointed out issues.

There is a reason why tax is at the highest level since OECD records began. But it's not what we spend, in general. No it's that our government has repeatedly chosen to spend more than the country can afford. Leading to very large interest payments.

That link shows that debt, relative to GDP was brought down for a long time after WWII, but 20 years ago it started to increase. Note, debt is different to deficit, but if you run a deficit you can only reduce debt by inflating it away. Oh, that's right, inflation was very low over the last 20 or so years, so the deficit caused the debt to increase.

It's not bloody rocket science.

Ps, it is I believe suggested that the current government will attempt to reduce taxes, borrowing yet more, in an effort for the party to be re-elected. Possibly something to think about if you believe, against historic evidence, that your vote can change things.

If you were an advocate of Modern Monetary Theory, you would say why is this a problem? If you have a fiat currency, you can just increase the money supply and carry on spending, provided you do not create shortages in the economy that will drive inflation. In the last 50 years or so, most western countries have massively increased their debt/GDP ratio, with Japan and USA at >100%, and have continued to grow and generally not suffered inflation, allowing the standard of living of their citizens to improve hugely. Spending money to increase productivity is the key.

Whether we can continue to do this through the 21st century remains to be seen. We are approaching the limits of sustainability in the world, so I suspect it won't work this century. AI may enable productivity to keep improving so I hear, but I am sure there will be downsides to AI.

What the best course of action is for this century, I don't know.

FD

The problem is never money, it's always resources.

[Urbandreamer]

If you were an advocate of Modern Monetary Theory, you would say why is this a problem?

FD

True. And this government and previous governments have claimed that they subscribe to this theory, rather than claimed otherwise?

[ursaminortaur]

So, it's finally made a newspaper!

This has been going on for years / decades / generations. Gradually getting worse.
But of course anyone who points these things out must be a raving loon.

QE, covid support, cost of fuel support, the spending goes on and on.

OK, I'm sure that some are going to point out the importance of this and other spending (paying Doctors anyone). The trouble is that spending has exceeded tax receipts for decades.
The last budget surplus was in 2000/2001, but the average deficit since the 70's has been 3.7%
https://commonslibrary.parliament.uk/re ... s/sn06167/

So let us be clear, after 20+ years a newspaper has noticed a situation that has been going on for fifty years. I would suspect that it's not the first time that the IFS, the Adam Smith Institute et-al have pointed out issues.

There is a reason why tax is at the highest level since OECD records began. But it's not what we spend, in general. No it's that our government has repeatedly chosen to spend more than the country can afford. Leading to very large interest payments.

That link shows that debt, relative to GDP was brought down for a long time after WWII, but 20 years ago it started to increase. Note, debt is different to deficit, but if you run a deficit you can only reduce debt by inflating it away. Oh, that's right, inflation was very low over the last 20 or so years, so the deficit caused the debt to increase.

You can also reduce the debt/GDP ratio by growing the economy ie increasing GDP.

Since the establishment of the first national debt in 1692 the national debt as a percentage of GDP has-been above 100% for about a third of the time. The two notable peaks being in 1822 at 209.35% and 1947 at 245.69%

https://www.ukpublicspending.co.uk/spending_chart_1692_2023UKp_17c1li111tcn_G0t_Three_Centuries_of_UK_National_Debt

The interest on the public debt as a percentage of GDP has also been much higher in the past peaking at 8.15% in 1715, 8.04% in 1822, and 9.68% in 1932 compared to 3.14% in 2022 and an estimated 4.30% in 2023.

https://www.ukpublicspending.co.uk/spending_chart_1692_2023UKp_17c1li011tcn_90t

And although the UK's tax burden is the highest it has been since WW2 it is still below the average tax burden for other advanced economies

https://obr.uk/box/the-uks-tax-burden-in-historical-and-international-context/

While the UK tax burden is currently high by historical standards, it has remained below the average across other advanced economies.

So perhaps the situation isn't quite as bad as some might make out.

[88V8]

The problem is never money, it's always resources.

We already use 1.6 earths.
The problem is the excessive population, and the false notion that life should always be 'better' than it was for our parents.

The US had the right idea when it legislated to limit the national debt, but each time the limit is reached, Congress backs away from enforcement, and Biden has altogether set the limit aside.

So long as the democratic system encourages high spending countries to elect govts who lie to their innumerate electorate, debt and stealth taxes to pay the debt interest, will just go on rising.

V8

[ursaminortaur]

The problem is never money, it's always resources.

We already use 1.6 earths.
The problem is the excessive population, and the false notion that life should always be 'better' than it was for our parents.

The US had the right idea when it legislated to limit the national debt, but each time the limit is reached, Congress backs away from enforcement, and Biden has altogether set the limit aside.

So long as the democratic system encourages high spending countries to elect govts who lie to their innumerate electorate, debt and stealth taxes to pay the debt interest, will just go on rising.

V8

Population is due to peak sometime this century and fall thereafter, the last I heard was an estimate that it would peak in 2064. The fertility rates in most countries is either already below replacement level or fast approaching that with the exceptions mostly being in Africa.

The threat to not increase the US debt ceiling is in reality a paper tiger since it would bring government to a halt and cause the US to default on interest payments on its debt which would threaten the ability of the government to borrow at such low rates in the future and might even lead to the dollar no longer being seen as the world's reserve currency.

[Nimrod103]

Spending money to increase productivity is the key.

That is the key isn't it? How much of the UK budget is spent increasing productivity? And how much on things which are just waste?

[88V8]

Spending money to increase productivity is the key.

That is the key isn't it? How much of the UK budget is spent increasing productivity? And how much on things which are just waste?

And how much law and taxation is seemingly directed at making things more difficult for businesses?

V8

[DrFfybes]

And how much law and taxation is seemingly directed at making things more difficult for businesses?

V8

That depends on if your business IS law or taxation

[Nemo]

Modern Monetary Theorist argue that their budgets aren’t like a regular household’s, their policies should not be shaped by fears of a rising national debt. Sounds like wishful thinking to me. The problem that I see with this is that national debt usually rises faster than GDP and the whole system becomes ‘top heavy’ and just becomes a giant Ponzi scheme. Take the US dollar:

The interest cost of the projected US national debt will be an estimated 30% of this year’s US tax income:

CBO projects that annual interest costs will rise to a staggering $1.4 trillion in 2033.

https://www.pgpf.org/blog/2023/02/inter ... ecord-high

America may soon be spending more on debt service than defence.

https://www.economist.com/graphic-detai ... an-defence

Since 1971 all that is holding the financial system together is faith in the system.

I suspect that if they ever get a CBDC working then there will be some kind of reset. The market in shares and securities is already set up for this as far as I can see.

[ursaminortaur]

Modern Monetary Theorist argue that their budgets aren’t like a regular household’s, their policies should not be shaped by fears of a rising national debt. Sounds like wishful thinking to me. The problem that I see with this is that national debt usually rises faster than GDP and the whole system becomes ‘top heavy’ and just becomes a giant Ponzi scheme.

Looking at the trend lines (trough to peak and peak to trough) for the UK debt/GDP over the past 300+ years it looks to me that the the rate of decline is steeper than the rate of increase i.e. debt generally falls as a percentage of GDP slightly faster than it rises.


https://ifs.org.uk/taxlab/taxlab-data-item/uk-public-sector-net-debt-1700

[Bubblesofearth]

Population is due to peak sometime this century and fall thereafter, the last I heard was an estimate that it would peak in 2064. The fertility rates in most countries is either already below replacement level or fast approaching that with the exceptions mostly being in Africa.

When is consumption due to peak?

BoE

[Adamski]

Biggest problem in the pipeline is the ageing population. That will inevitably push up spending on health and care costs, and be a bigger burden on the working population.

What think likely is we'll head in similar direction to Italy and Japan. High public debt, and stagnant growth. Think it'll be a miracle if Rishi or Sir Keir can turn it around.

[Tedx]

Modern Monetary Theorist argue that their budgets aren’t like a regular household’s, their policies should not be shaped by fears of a rising national debt. Sounds like wishful thinking to me.

How many households have their own currency issuing central bank?

You can do it if you want. Set up your own 'Bank of 26 Acacia Avenue' and your own currency zone and exchange rates with other external currencies.

I believe the US Comedy series 'The Goldbergs' did just that. The currency was called 'Mom Bucks'.

When you became the currency issuer, you'll see the comparison to normal households is wrong. No matter how much the media (and politicians) try to make us think otherwise.

[Nemo]

The Committee for a Responsible Federal Budget (CRFB) is a public policy think tank that comments on all things economic. It has provided an interesting analysis of figures from the Congressional Budget Office (CBO) 2023 long term projection for the US economy. Debt, deficits and spending are all projected to rise:

Today, the Congressional Budget Office (CBO) released its June 2023 Long-Term Budget Outlook, projecting that the national debt is on an unsustainable long-term path.

https://www.crfb.org/papers/analysis-cb ... et-outlook

[Urbandreamer]

Modern Monetary Theorist argue that their budgets aren’t like a regular household’s, their policies should not be shaped by fears of a rising national debt. Sounds like wishful thinking to me.

How many households have their own currency issuing central bank?

You can do it if you want. Set up your own 'Bank of 26 Acacia Avenue' and your own currency zone and exchange rates with other external currencies.

I believe the US Comedy series 'The Goldbergs' did just that. The currency was called 'Mom Bucks'.

When you became the currency issuer, you'll see the comparison to normal households is wrong. No matter how much the media (and politicians) try to make us think otherwise.

I tried Tedx, honestly I did try oh so very hard.
This board is about the economy, not personal finance.
I tried, tried, tried.

ARGH, buy bitcoin!
Buy it while your money is worth something!

The currency is issued by a mathematical formula that geometrically issues less and less of it. This year less will be issued than gold mined. In four years time it will be half that rate. In 8, a quarter.....

Now, back to what the government and BoE are choosing to do.

[Urbandreamer]

As I said,
"Now, back to what the government and BoE are choosing to do."

Well it seems that the IMF (who I confess to not being a fan of) is advising that Tax cuts would be a bad idea.

https://www.bbc.co.uk/news/business-68140634

Treasury sources said the government was slapping down the IMF for its advice on tax cuts, which derives from the organisation's research for its annual in-depth health check of the UK economy.

Just maybe, tax cuts are not affordable.