On Guard for Thee Posted September 1, 2015 Report Posted September 1, 2015 I'm confused about what interest rates have to do with a balanced budget. Martin cut because he had a big deficit, and he got back into balance through doing so. You seem to applaud this, even while applauding Trudeau's proposal to increase the deficit. There's a strange contradiction in that. Interest rates have a whole lot to do with costs of debt servicing. And Trudeau has not proposed increasing the deficit. Quote
Civis Romanus sum Posted September 2, 2015 Report Posted September 2, 2015 Interest rates have a whole lot to do with costs of debt servicing. And Trudeau has not proposed increasing the deficit. Interest rates are subject to change without notice, and there seems little doubt they are going up in the coming years. The tens of billions borrowed by Trudeau will be owed ten and twenty and likely thirty years from now. You have no idea what the interest rates will be then. And he most definitely is proposing increasing the deficit. Quote
On Guard for Thee Posted September 2, 2015 Report Posted September 2, 2015 Interest rates are subject to change without notice, and there seems little doubt they are going up in the coming years. The tens of billions borrowed by Trudeau will be owed ten and twenty and likely thirty years from now. You have no idea what the interest rates will be then. And he most definitely is proposing increasing the deficit. Increasing it from what? Quote
Civis Romanus sum Posted September 2, 2015 Report Posted September 2, 2015 Increasing it from what? Well that's a question. According to the Conservatives the budget is balanced. The PBO suggested we had a 1.5 billion deficit. So he would be significantly increasing the deficit several years running. That presumes he would actually then produce a balanced budget after three years. Quote
ToadBrother Posted September 2, 2015 Report Posted September 2, 2015 Interest rates are subject to change without notice, and there seems little doubt they are going up in the coming years. The tens of billions borrowed by Trudeau will be owed ten and twenty and likely thirty years from now. You have no idea what the interest rates will be then. And he most definitely is proposing increasing the deficit. Providing Canada's credit rating remains in good shape, I see no reason to expect any sharp rise in the cost of borrowing over the medium term. Not that I think borrowing boatloads of money is a good idea, nor do I think this recession is so deep that we need tons of stimulus spending to keep the ship afloat. Quote
Civis Romanus sum Posted September 2, 2015 Report Posted September 2, 2015 Providing Canada's credit rating remains in good shape, I see no reason to expect any sharp rise in the cost of borrowing over the medium term. Even at historically low interest levels the federal government spends the entire proceeds of the GST on servicing our debt. You have to be careful when interest rates are low. If interest rates are at 7% and they increase a point, the increase in debt servicing is fairly manageable. If interest rates are at 2% and interest rates go up a point your costs just went up by 50%. If interest rates go up 2%, which they almost certainly will, your service costs just doubled. And I have heard a number of economists express fears of inflation, given the enormous amount of debt various governments have built up, especially the Americans with their bond buying. What happens when the cost to service our existing debt goes from about $30 billion to $60 billion? That comes directly from money which could be spent on programs, or on cutting taxes, or it comes by borrowing more money, which becomes a vicious spiral. Quote
On Guard for Thee Posted September 2, 2015 Report Posted September 2, 2015 Even at historically low interest levels the federal government spends the entire proceeds of the GST on servicing our debt. You have to be careful when interest rates are low. If interest rates are at 7% and they increase a point, the increase in debt servicing is fairly manageable. If interest rates are at 2% and interest rates go up a point your costs just went up by 50%. If interest rates go up 2%, which they almost certainly will, your service costs just doubled. And I have heard a number of economists express fears of inflation, given the enormous amount of debt various governments have built up, especially the Americans with their bond buying. What happens when the cost to service our existing debt goes from about $30 billion to $60 billion? That comes directly from money which could be spent on programs, or on cutting taxes, or it comes by borrowing more money, which becomes a vicious spiral. All the more reason to get Harper out of office. Quote
Civis Romanus sum Posted September 2, 2015 Report Posted September 2, 2015 All the more reason to get Harper out of office. I fail to see how that response gibes with your evident support for Trudeau increasing the deficit. Quote
On Guard for Thee Posted September 2, 2015 Report Posted September 2, 2015 I fail to see how that response gibes with your evident support for Trudeau increasing the deficit. Trudeau has a PLAN to run a series of deficits, a lot of which is for infrastructure spending which tends to stimulate the economy, at which time one could change that plan. Harper added more to the debt than any predecessor and now that we are in recession he is dancing around attempting to spin his way out of his own definition of same. Who's to say he won't blunder his way to ever more deficits and debt increase since he doesn't seem to even have a plan. Quote
Civis Romanus sum Posted September 3, 2015 Report Posted September 3, 2015 Trudeau has a PLAN to run a series of deficits, a lot of which is for infrastructure spending which tends to stimulate the economy, at which time one could change that plan. This was exactly, precisely Harper's plan, wasn't it? For which you are now roundly criticizing him. Moreover, it was a plan which was not only agreed to by both the Liberals and New Democrats, but demanded by them. Quote
Evening Star Posted September 3, 2015 Report Posted September 3, 2015 but demanded by them. For this reason, I don't exactly call it "Harper's plan". Quote
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