The Life and Death of an Economy
umair haque
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For the sake of presenting both sides of the argument, it would not be unreasonable to mention here that all that bond issuance doesn’t lead to free money. The UK paid out £43 billion in interest payments on its debt in 2015. That’s more than twice the £350 million a week that the Boris bus promises after Brexit. Wouldn’t it have been great if the governments of the past hadn’t borrowed so much, hadn’t created bloated bureaucracies, balanced its budgets, and there would be this extra £43 billion the current government could give to the NHS etc? Is the answer then really that the governments should borrow more, not try to reduce its debt, let it double in 20 years so that in 2035 it is spending £85 billion annually (assuming a similar interest rate environment) to service its debt. How exactly does that help?

Whether governments have been wise in choosing where to cut resources is a different topic entirely. But keeping the deficit under control is generally the right idea. The less interest I have to pay on my credit card, the more money I have to buy food.

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