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evansb
14th Sep 2016, 23:25
The International Monetary Fund (IMF) praised Canada's current debt situation, and has decided, after several meetings and a hundred gallons of ice water, to approve the federal government of Canada's current policy of running a deficit.

Try explaining a deficit to your children, (or your personal banker/accountant) that when your debt far exceeds your income, and you have no intention of changing your spending patterns in the foreseeable (3 years) future, you still have the approval of an international financial organisation..

FYI: The Canadian dollar is currently worth .75 of an American (U.S.) dollar.

MG23
14th Sep 2016, 23:33
They knew they was Liberals when they elected them.

And, while I'm hardly one to defend the IMF, if it didn't exist, the Liberals would be borrow-and-spending at least as much as they will now. It's what Liberals do.

Mostly Harmless
15th Sep 2016, 01:23
Nothing new, just a continuation of his father's policies.

ExXB
15th Sep 2016, 10:49
Try explaining a deficit to your children, (or your personal banker/accountant) that when your debt far exceeds your income, and you have no intention of changing your spending patterns in the foreseeable (3 years) future, you still have the approval of an international financial organisation.

Er, here in Switzerland is not uncommon that, when buying a home, no capital is paid, only the (low) interest. A large down payment (20% or more) is necessary but the dept far exceeds income and one buys into these contracts for 1, 2, 5 or 10 years. That would be easy to explain to my kids. (I would also explain that credit card debt, on the other hand, is usurious and sit down with them to calculate how much a $100 purchase financed over two years at 18% interest actually costs - particularly if they miss a payment or two.)

With interest rates so low, why wouldn't you use dept?

ExXB
15th Sep 2016, 11:16
Say a government borrows a large sum at a low interest rate and invests that money in projects tailored to generate jobs - reducing unemployment.

Through various forms of taxation; VAT; income tax; at least 10% of the borrowed amount (and likely much more) would be returned to the government. The costs of supporting unemployed people would also be reduced. Sounds win-win-win to me.

As long as interest rates remain low.

onetrack
15th Sep 2016, 13:24
Borrowing money is an inherently necessary part of advancing your own position, the position of your business, or advancing the position of a country - all to some major improvement in lifestyle, business operations, or for a country to gain economic advantage, or cost reduction in many important areas.

For example, a country may borrow money to improve infrastructure, to build better roads, to improve water and energy security. All these contribute to lower costs for its citizens and improve the countrys economic advantage.

However, the problems start when borrowed money is frittered away on useless projects (failed defence projects come to mind) - or spent in a manner which returns no benefit to the nation.

Many countries have run deficits for extended periods while they work to improve their position. As long as the borrowings are repaid from the improvements gained, there's no problem with running a deficit.

However, running continuous deficits with no hope of ever repaying the borrowings, is exactly how Greece has ended up where it is.

G-CPTN
15th Sep 2016, 14:16
During the period that I spent in Denmark (1981 - 1985) interest rates there were very high, however all interest paid was tax-deductible (regardless of purpose of the loan) so people who normally paid high income tax had cheap loans.
Typically, houses were financed through several loans raised at the various stages of construction (land purchase, single storey, second storey etc) and often at varying (though fixed) rates of interest - with some loans being 'interest only'.

The loans remained with the property, so a new 'buyer' would be required to take on those loans (though clever punters could sell those loans - this is where it could get complicated for someone raised in the UK).

There could be a degree of equity that would need to be paid for either in cash or by raising a new loan.

The result was that similar properties in the same street might cost significantly different due to the interest rates when the loans were floated.