"This is akin to the NEP"

[Ricki Bobbi]

Is Ayn Rand inherently wrong or is there more to why my ideas are wrong? August is on a similar line of thought with debt repayment and he's far less individualist than I. Maybe it just makes sense and happens to be individualist?

There is such an extrmem level of individualistic behaviour in Ayn Rand's work.

Paying down the debt is good policy long-term. I understand it doesn't help you here and now.

You haven't proven how cutting taxes so the government runs balanced budgets today and cuts your taxes today makes any sort of sense other than making you better off here and now.

[geoffrey]

Paying down the debt is good policy long-term. I understand it doesn't help you here and now.

Why? What is the benefit long term? It's not about me, it's about the millions of Canadians with huge debt loads. I don't have that much debt, I'm doing ok. How is paying down Federal debt at low interest better long term than paying down high interest private debt? How is having the government debt free preferable to having it's citizens debt free?

You haven't proven how cutting taxes so the government runs balanced budgets today and cuts your taxes today makes any sort of sense other than making you better off here and now.

Yes, and that's what it's about. Don't you want everyone better off?

Sure we can just pay off the debt, but then Canadians debt is higher. 100 years from now you may be able to say Canada is debt free, but at what cost?

[gc1765]

Why? What is the benefit long term? It's not about me, it's about the millions of Canadians with huge debt loads. I don't have that much debt, I'm doing ok. How is paying down Federal debt at low interest better long term than paying down high interest private debt? How is having the government debt free preferable to having it's citizens debt free?

I thought you were a conservative

The conservative view (and my view) is that I have my finances in order, why I should I be paying interest because someone else has personal debt? If I was in debt, my number one priority would be getting out of debt. But I've been careful with my money and kept out of debt.

If you truly are concerned about people who are in debt, and want to take a more liberal view, why not give more money (or cut taxes for) low income people to help them get out of debt? Once the debt is starting to get paid off, and the interest payments start decreasing, taxes can be cut much more than if we continued to pay interest.

[geoffrey]

Debt isn't an inherently bad thing either. More debt, means more money is in circulation. Without debt, we'd be a very poor nation. You need to enlighten yourselves on economics a little more.

I'm not saying the government should be grossly overspending and running up more debt. I'm saying that paying it off lump sum does nothing for your well being... not until your at least about 150 years old. And by then, private debt will be so high no one is going to enjoy the tax break.

I don't like targeted tax cuts, that means is a wealth transfer and I'm fervently against wealth transfers. So nope, doesn't work for me either.

The whole other issue here is whether a government has a right to spend surplus funds. Last time I checked, they aren't in the business of posting profit. That means it's all been over-collected and needs to be return to those that paid it.

[Ricki Bobbi]

Debt isn't an inherently bad thing either. More debt, means more money is in circulation. Without debt, we'd be a very poor nation. You need to enlighten yourselves on economics a little more.

What is with the arrogance of "economists"?

Nobody said debt is inherently bad. But when we have the ability to pay down the National debt we should. Not all at once, not like we could, but big debt payments every year are good.

Past generations thought only of themselves *TRUDEAU* in running up the huge accumulated debt. Should we continue the same self-centered behaviour by not paying down the debt?

Personal debt is a matter of personal choice. How many people with huge personal debts drive new vehicles? Have tons of pricey personal electronics? Are in over their heads with their housing choice?

Paying down the national debt is much fairer.

[August1991]

The conservative view (and my view) is that I have my finances in order, why I should I be paying interest because someone else has personal debt? If I was in debt, my number one priority would be getting out of debt. But I've been careful with my money and kept out of debt.

That principle is admirable from the standpoint of an individual. It makes no sense from the standpoint of a collective.

Most young people borrow to buy a house and then slowly pay back the debt over time. At a certain age, they have no debts.

At any given moment in any society, there are going to be young people in debt. Hence the society will always have a debt. It would be catastrophic to try to eliminate or even reduce debt in a society. The same idea applies to a government.

In the 1920s, "conservatives" like yourself believed in "sound money". The result of this simplistic belief was the Great Depression. A similar idea like "no debt" could be just as catastrophic.

Past generations thought only of themselves *TRUDEAU* in running up the huge accumulated debt. Should we continue the same self-centered behaviour by not paying down the debt?

Personal debt is a matter of personal choice. How many people with huge personal debts drive new vehicles? Have tons of pricey personal electronics? Are in over their heads with their housing choice?

Calvin was a theologian, not an economist.

[gc1765]

That principle is admirable from the standpoint of an individual. It makes no sense from the standpoint of a collective.

Why not? Care to elaborate?

Most young people borrow to buy a house and then slowly pay back the debt over time. At a certain age, they have no debts.

At any given moment in any society, there are going to be young people in debt. Hence the society will always have a debt. It would be catastrophic to try to eliminate or even reduce debt in a society. The same idea applies to a government.

In the 1920s, "conservatives" like yourself believed in "sound money". The result of this simplistic belief was the Great Depression. A similar idea like "no debt" could be just as catastrophic.

I thought conservatives believed in "fairness" of taxation. In other words, from a conservative point of view, how is it fair that someone should have to pay interest because someone else has debt? I could understand the argument against paying down the debt from a liberal, but not from a conservative.

[geoffrey]

I thought conservatives believed in "fairness" of taxation. In other words, from a conservative point of view, how is it fair that someone should have to pay interest because someone else has debt? I could understand the argument against paying down the debt from a liberal, but not from a conservative.

It's not fairness of taxation, but equity of taxation. Hence the conservatives view towards more flat-tax based measures.

Your not paying interest on my debt, your paying interest on the debt that funded all that infrastructure you have. If you didn't have that Federal debt, they'd had to have raised taxes considerably and you'd currently not have the wealth you have.

[gc1765]

Your not paying interest on my debt, your paying interest on the debt that funded all that infrastructure you have. If you didn't have that Federal debt, they'd had to have raised taxes considerably and you'd currently not have the wealth you have.

But if it was my personal debt, I would do everything I can to pay it off and avoid the interest. So, in effect, as a taxpayer I am forced to pay interest charges that I would rather not pay. Too bad I can't pay off my 'portion' of the debt and have my taxes lowered. Oh well.

P.S. How are equity of taxation and fairness of taxation not equivalent in this case. I mean, what arguments are there for equity of taxation other to say that it is more "fair".

[jbg]

At any given moment in any society, there are going to be young people in debt. Hence the society will always have a debt. It would be catastrophic to try to eliminate or even reduce debt in a society. The same idea applies to a government.

Past generations thought only of themselves *TRUDEAU* in running up the huge accumulated debt. Should we continue the same self-centered behaviour by not paying down the debt?

It all depends on what the debt is being used for. If it's building highways, airports or other items with long life spans, debt should properly be amortized over long periods of time, i.e. the "debt" should be considered to be a fraction of the face amount of the debt. Defense is sometimes properly considered long-term spending. No one would doubt that there has been a huge "peace dividend" from defeating the Soviet Empire. Where teh debt is used to fuel populist government policies that merely help re-elect the party in power (as Trudeau did) debt is bad.

In the 1920s, "conservatives" like yourself believed in "sound money". The result of this simplistic belief was the Great Depression. A similar idea like "no debt" could be just as catastrophic.

The Great Depression was caused more by a collapse of trade occasioned by protectionism, and a badly timed bank failure of the Creditanstaldt (sp) in Austria, than by "sound money". If anything, the unwinding of WW I debt helped grease the Depression.

[Argus]

The NDP and the Liberals are more fiscally responsible? Isn't paying off the accumulated debt and saving interest payments down the road a good idea?

I've addressed this in a few other threads... and no, I don't believe paying down the debt is a fiscally responsible decision right now.

Paying down debt is almost always a fiscally responsible decision. Why is it not fiscally responsible now?

[August1991]

That principle is admirable from the standpoint of an individual. It makes no sense from the standpoint of a collective.

Why not? Care to elaborate?

I gave one simple example of how an individual will try to pay off a (mortgage) debt but society will always have (mortgage) debt. You are arguing that society doesn't need children's books because you don't read such books anymore.

I thought conservatives believed in "fairness" of taxation. In other words, from a conservative point of view, how is it fair that someone should have to pay interest because someone else has debt? I could understand the argument against paying down the debt from a liberal, but not from a conservative.

The essence of government is to spend other people's money for services used by other people. How fair is it that I should have to pay for teachers because someone else has children?

Geoffrey constantly points out that government borrows at an interest rate lower than what any borrower could obtain. It's even lower than most rates a lender can obtain.

gc, I am conservative because I think Canadian governments buy too much stuff we don't want and their spending is growing. We have to stop this somehow.

It all depends on what the debt is being used for. If it's building highways, airports or other items with long life spans, debt should properly be amortized over long periods of time, i.e. the "debt" should be considered to be a fraction of the face amount of the debt. Defense is sometimes properly considered long-term spending. No one would doubt that there has been a huge "peace dividend" from defeating the Soviet Empire. Where teh debt is used to fuel populist government policies that merely help re-elect the party in power (as Trudeau did) debt is bad.

Bad government spending is bad regardless of whether the money was obtained through taxes or borrowing.

The Great Depression was caused more by a collapse of trade occasioned by protectionism, and a badly timed bank failure of the Creditanstaldt (sp) in Austria, than by "sound money". If anything, the unwinding of WW I debt helped grease the Depression.

Without going too far afield, I think there is general consensus now that the US and other countries applied a strict "sound money" policy in the late 1920s and early 1930s. In doing so, they made a bad situation catastrophic. [in October 1987, when the NYSE lost about 25% of its value in a few days, the US Fed's Greenspan did the opposite.]

[Argus]

The conservative view (and my view) is that I have my finances in order, why I should I be paying interest because someone else has personal debt? If I was in debt, my number one priority would be getting out of debt. But I've been careful with my money and kept out of debt.

That principle is admirable from the standpoint of an individual. It makes no sense from the standpoint of a collective.

But paying off debt makes sense from the standpoint of a collective, if you think long term. If tomorrow all our debt was paid off that would free up tens of billions from being spent on debt servicing. Imagine that tax cuts that could allow! Or, imagine how many great social services we could provide with that money.

At any given moment in any society, there are going to be young people in debt. Hence the society will always have a debt. It would be catastrophic to try to eliminate or even reduce debt in a society. The same idea applies to a government.

But his whole reason for not paying off the debt "now" was because it was better to lower taxes so society can pay off individual debts. This, even though he, you, and everyone else knows that won't happen. No matter how much you cut taxes - even if you elimiante them entirely, people are still going to go into hock for whatever they want. They'll just buy even bigger houses, bigger cars, better vacations. The problem with people taking on too much debt will always be with us, and has nothing to do with tax rates.

Why, btw, would it be catastrophic for the government to pay off all its debt, as Alberta did?

In the 1920s, "conservatives" like yourself believed in "sound money". The result of this simplistic belief was the Great Depression. A similar idea like "no debt" could be just as catastrophic.

Blaming the great depression on debt repayment is stretching it awfully far, don't you think?

[Argus]

Your not paying interest on my debt, your paying interest on the debt that funded all that infrastructure you have. If you didn't have that Federal debt, they'd had to have raised taxes considerably and you'd currently not have the wealth you have.

Ooooorr, if they hadn't borrowed to pay things - during good times, mind - but instead raised the money themselves, they wouldn't have left their legacy of debt to their children to pay off. It is always better, where possible, pay for things when you consume them.

[geoffrey]

Your not paying interest on my debt, your paying interest on the debt that funded all that infrastructure you have. If you didn't have that Federal debt, they'd had to have raised taxes considerably and you'd currently not have the wealth you have.

Ooooorr, if they hadn't borrowed to pay things - during good times, mind - but instead raised the money themselves, they wouldn't have left their legacy of debt to their children to pay off. It is always better, where possible, pay for things when you consume them.

They did raise the money themselves... by issuing bonds. Debt financing is a completely acceptable way of doing business in many situations. Canada debt to equity mix is quite acceptable, especially by corporate standards.

[August1991]

Why, btw, would it be catastrophic for the government to pay off all its debt, as Alberta did?

In short, yes.

Government debt is an important part of Canada's capital markets. Government debt is an intrinsic part of how the Bank of Canada conducts monetary policy. We would always want to have liquid markets in Canadian government bonds with a full variety of terms. Hence, we'd always want debt.

I believe that the Albertan government now regrets that it paid off its debt. Albertan government bonds were a useful tool.

I am not saying that government debt is good. But I won't say that it's bad. I am arguing that government spending is the problem.

Blaming the great depression on debt repayment is stretching it awfully far, don't you think?

I'm blaming the Great Depression on a simple obsession with sound money. Many seem to have a similar, and potentially dangerous, obsession with government debt.

[gc1765]

I gave one simple example of how an individual will try to pay off a (mortgage) debt but society will always have (mortgage) debt. You are arguing that society doesn't need children's books because you don't read such books anymore.

That's fine, people will always have debt. That doesn't mean that I personally have to have debt. I don't need debt. I'm not saying that people shouldn't have debt. Or to use your children's books analogy, people can have all of the children's books they want, but that doesn't mean I have to read them. Having a national debt means that, as a taxpayer, I am forced to read children's books against my will.

I thought conservatives believed in "fairness" of taxation. In other words, from a conservative point of view, how is it fair that someone should have to pay interest because someone else has debt? I could understand the argument against paying down the debt from a liberal, but not from a conservative.

The essence of government is to spend other people's money for services used by other people. How fair is it that I should have to pay for teachers because someone else has children?

That's fine. If you believe the government should not pay teacher's salary, that would be a very conservative point of view to take. Of course, you'd have to consider the fact that you were once a child and presumably your schooling was also paid for by the government. If you believe that education should only be private, that's fine, but that is a very conservative point of view.

Geoffrey constantly points out that government borrows at an interest rate lower than what any borrower could obtain. It's even lower than most rates a lender can obtain.

Is that true? If it is, my mind might be changed on the subject. However, given these tables: Link

It seems that we paid 34 billion dollars interest in 2004-2005 on a debt of 500 billion. That's almost 7%. I'd like to know where I can get a (safe) return of 7%. Of course, I'll have to double check those numbers when I get more time, for some reason it doesn't seem to make sense that it would be that high. I'll double check later.

[August1991]

That's fine, people will always have debt. That doesn't mean that I personally have to have debt. I don't need debt. I'm not saying that people shouldn't have debt. Or to use your children's books analogy, people can have all of the children's books they want, but that doesn't mean I have to read them. Having a national debt means that, as a taxpayer, I am forced to read children's books against my will.

At any given moment, our libraries will have children's books and our government will have debt.

But gc, if you don't want to have debt, just buy government bonds (about $20,000 worth) and then you can rest easy that you've paid back your portion of the debt. The coupons you clip will be payments to yourself. Whenever Harper announces that he's paid down the debt, you too can cash in the bonds. You could even use the proceeds of the sale to pay some of your tax bill. Of course, if Harper cut taxes and ran a deficit, you'd have to buy more bonds. But then you'd have lower taxes.

In a sense, if you did this, you'd mirror exactly Harper but in the opposite direction. You'd be no better or worse off.

Geoffrey constantly points out that government borrows at an interest rate lower than what any borrower could obtain. It's even lower than most rates a lender can obtain.

Is that true? If it is, my mind might be changed on the subject. However, given these tables: Link

It seems that we paid 34 billion dollars interest in 2004-2005 on a debt of 500 billion. That's almost 7%. I'd like to know where I can get a (safe) return of 7%. Of course, I'll have to double check those numbers when I get more time, for some reason it doesn't seem to make sense that it would be that high. I'll double check later.

I think the 7% is based on outstanding debt including money borrowed up to 30 years ago when interest rates were high. If the government were to borrow now, it would borrow at rates around 4%.

[gc1765]

But gc, if you don't want to have debt, just buy government bonds (about $20,000 worth) and then you can rest easy that you've paid back your portion of the debt. The coupons you clip will be payments to yourself. Whenever Harper announces that he's paid down the debt, you too can cash in the bonds. You could even use the proceeds of the sale to pay some of your tax bill. Of course, if Harper cut taxes and ran a deficit, you'd have to buy more bonds. But then you'd have lower taxes.

In a sense, if you did this, you'd mirror exactly Harper but in the opposite direction. You'd be no better or worse off.

Yes, I agree. That's precisely why I said I would change my mind if it turned out that the government borrows at rates (say 3%, which is probably about what a bond would get) the same as (or lower than) what I can get in return. The 7% figure is what threw me off, your comments below were informative though:

I think the 7% is based on outstanding debt including money borrowed up to 30 years ago when interest rates were high. If the government were to borrow now, it would borrow at rates around 4%.

[geoffrey]

qc, the government borrows through bonds generally. That 3% is the interest the government is paying. As the old bonds mature, the government either pays them off or issues more bonds at the current rate.

If anything, this is a fantastic time for the government to be borrowing.

[Ricki Bobbi]

qc, the government borrows through bonds generally. That 3% is the interest the government is paying. As the old bonds mature, the government either pays them off or issues more bonds at the current rate.

If anything, this is a fantastic time for the government to be borrowing.

Just because rates are low?

What should they do with the money they borrow?

[geoffrey]

qc, the government borrows through bonds generally. That 3% is the interest the government is paying. As the old bonds mature, the government either pays them off or issues more bonds at the current rate.

If anything, this is a fantastic time for the government to be borrowing.

Just because rates are low?

What should they do with the money they borrow?

Implement things that give greater than 3% returns. Come on now. Do you not invest for yourself?

Do you pay off your 5.5% mortgage faster or put the extra money in a 9% growth fund?

It's all about opportunity costs. If it costs me 3% to make 10%, I'm going to borrow the money.

[rogue state]

i think Canadian people had enough of egotistic complaints of rich Alberta, and threats.

NEP, pillage, theft, taxes, that's their only wording.

Alberta should be partaged equitably among other provinces.

obviously, Canadians will need some help from other countries, maybe some nukes to keep Americans at bay.

Mahmoud Ghalehnoii

[Ricki Bobbi]

i think Canadian people had enough of egotistic complaints of rich Alberta, and threats.

NEP, pillage, theft, taxes, that's their only wording.

Alberta should be partaged equitably among other provinces.

obviously, Canadians will need some help from other countries, maybe some nukes to keep Americans at bay.

Mahmoud Ghalehnoii

What??????

[geoffrey]

i think Canadian people had enough of egotistic complaints of rich Alberta, and threats.

NEP, pillage, theft, taxes, that's their only wording.

Alberta should be partaged equitably among other provinces.

obviously, Canadians will need some help from other countries, maybe some nukes to keep Americans at bay.

Mahmoud Ghalehnoii

What??????

That had to be the most random post I've ever seen. NEP to nukes to keep the yanks away? Wha?!!?

Anyways, Alberta's concerns are not egotistical. At least, the RoC doesn't say anything Quebec complains in a similar manner despite contributing very little in real terms to the country.