The siren voices of those who would borrow more
I have just returned home from a day working in London and in the last stages of the voyage home I was listening to the budget debate on "Today in Parliament"
Although I had already noted in this morning's post that Labour has the disastrous policy of wanting to borrow more, I was deeply depressed at the number of siren voices, mostly from the Labour benches, who were urging this policy on the chancellor.
To say that these people are the economic equivalent of lemmings would be to risk a class action from lemmings.
Have they learned nothing from the mess that Cyprus is in? Obviously not.
One MP referred to the fact that it's a good time to borrow because interest rates are low: another said that there is good borrowing and bad borrowing.
The trouble with borrowing when interest rates are cheap is that if they go up again, as eventually they must, and you are not in a position to pay the money back, the cost of paying the interest on the extra debt becomes crippling.
It's all very well to argue that there is good borrowing and bad borrowing when your total debt is well within what you can manage. But when a country the size of Britain has a national debt of £1.2 trillion and is already, even at present low lates of interest, spending more money paying the interest on the money borrowed before Gordon Brown left office than on schools, there is no longer such a thing as good and bad borrowing: it is all unaffordable.
Although I had already noted in this morning's post that Labour has the disastrous policy of wanting to borrow more, I was deeply depressed at the number of siren voices, mostly from the Labour benches, who were urging this policy on the chancellor.
To say that these people are the economic equivalent of lemmings would be to risk a class action from lemmings.
Have they learned nothing from the mess that Cyprus is in? Obviously not.
One MP referred to the fact that it's a good time to borrow because interest rates are low: another said that there is good borrowing and bad borrowing.
The trouble with borrowing when interest rates are cheap is that if they go up again, as eventually they must, and you are not in a position to pay the money back, the cost of paying the interest on the extra debt becomes crippling.
It's all very well to argue that there is good borrowing and bad borrowing when your total debt is well within what you can manage. But when a country the size of Britain has a national debt of £1.2 trillion and is already, even at present low lates of interest, spending more money paying the interest on the money borrowed before Gordon Brown left office than on schools, there is no longer such a thing as good and bad borrowing: it is all unaffordable.
Comments
At the moment though and after yesterdays budget we can see borrowing and spending are still far too high (and when we factor back in the netted off £28bn in post office assets meaning the government now pays pensions to retired post workers, and the £6.4bn the government has taken from the BofE in interest earning guilts, we can see borrowing has hardly fallen at all. Sure these items reduce borrowing for now, but the liability is still added, if you like its "stealth borrowing" makes the headline figures fall but the true cost is still there.
Was also a mistake to shield the NHS and education (both of these monsters need urgent reforming)
However back to the calls to borrow more, makes you want to bang your head on the wall doesn't it.
See its not our task to go cap in hand to him and ask, Please can I keep more of my own money. That's rather backward. No, its down to him to produce a budget then come cap in hand to us and ask please can I have the funding for this.
Also one of the best ways to get the economy back on its feet and to prevent over borrowing in the future must be the return to sound money, for simplicity lets assume gold. No one needs to manage it, it does that itself, no policies are required, market demand sets interest rates, and no one can print the stuff. its great. Gold looks after itself, and it behaves itself too. Its always quite literally "as good as gold".