Tag Archives: debt

Should Government Run Surpluses

Prof.Steve Keen writes & talks:

At a talk entitled “The Age of Entitlement is Over?” at the [Sydney] Northside Forum, after recommending George Monbiot’s excellent article on grouse I used the Open Source program Minsky to model what can happen when a government runs a permanent surplus. The result is not what advocates of government surpluses expect. (you can download the model Prof.Keen used in Minsky).

In a nutshell, country economics don’t work on exactly the same basis as companies or households. Pretending that they are all the same is a really bad idea.

Borrowing on Your Grandchildren’s Projected Future

US Debt $14T. Latest plan to avoid ruin is to cut $1T over the next 10 years. Compound interest on $13T over 10 years = $8T. Fail.

Borrowing on projected growth is always dangerous and risky, but particularly so if you already have huge debts (as the US has) – the interest alone is crippling.

Right now they might not seem to have a choice, but that merely proves the original point, doesn’t it?