Archive for March, 2013

Not the Whole Truth

The thing is, it’s a complete load of bollocks. The government economic strategy that is. Far be it from me to pretend that I have a clue about economics but I thought that the Tories and their bitches were supposed to be reducing the National Debt. I am losing money each and every month (about £250 per month so far with another £40 ish per month next financial year), and so probably are you, but at least the debt will reduce, so I thought.

The thing is, a couple of days ago I looked up something called the deficit. Should it be uppercase T and D, I don’t know, but what I have learned is that the deficit and The National Debt are not the same, not by a long shot.

What the Tories and their bitches are trying to reduce is the structural deficit. I’m not going to pretend I understand that fully but here is what I think I understand:

The National Debt is the total amount the country owes. All of it, everything. This is what everyone thinks the Tories and their bitches are trying to reduce, but they aren’t.

The deficit is the amount in any year that the government has to borrow. Basically it is the difference between the amount that is spent and the amount that is received in taxes. The deficit is ADDED to the National Debt each year.

The structural deficit is the amount the government has to borrow even if the economy is performing at its maximum. That is to say, the government is receiving maximum taxes whilst spending as little as they can and everyone is buying loads of stuff as well. Many people use the terms deficit and structural deficit to mean the same thing.

Common sense would tell you that if you reduce public spending (as the Tories and their bitches are) then the government doesn’t need to borrow as much, so the deficit reduces. All well and good except that the National Debt still increases by the amount of the deficit.

And here’s the rub. You would think that was a good thing. Reduce spending and the amount the country borrows this year is less than last year, so you add fewer pounds to the National Debt this year than last. WRONG!

Remember that the deficit is the difference between what the government spends and what it receives in taxes. Cutting public spending basically means sacking public employees and reducing government expenditure on public projects. What that does is reduce the amount of tax received because people can’t afford to pay it. So the difference remains the same.

Thinking about it… Let’s say we have a national debt of £1000. A nice round number. This year we spend £800 and take taxes of £600. The difference between spending and taxes (i.e. the deficit) is £200. So the £200 gets added to the National Debt. The National Debt is now £1200

Now, we cut all our spending, so this year we only spend £500, but because of that we sacked a load of people etc. and so only receive £300 in taxes. The difference is still £200. We cut spending and ruin peoples’ lives by taking away their jobs and the net effect is exactly the same. We add £200 to the National Debt, so it is now £1200. Exactly the same as when we spent more and kept people in jobs.

What the Tories and their bitches need to happen is for public spending to decrease but tax income to remain the same or increase, but it simply is not happening. Both spending and tax income are reducing, so the country is no better off.

Despite that the Tories and their bitches use  terms like “deficit” and “reducing debt” interchangeably, specifically to leave that ambiguity there, so that the layman thinks they are reducing debt when they aren’t.

They are trying to reduce the deficit, not debt, and are failing miserably. Debt is rising as fast as it ever was. What they are telling us is not the whole truth.

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