Balanced (or positive) budget is great, less debt is great, but I'd be very careful about wishing for *no* government debt.

There was a fear in the Clinton era that the US debt could be completely paid off by 2012. No US debt means no US treasury bonds. No bonds means the world loses their safest investment, and the US government loses an important financial tool.

NPR has a facinating podcast about this: http://www.npr.org/blogs/money/2011/10/21/141592124/the-friday-podcast-what-if-we-paid-off-the-debt
 

Raising the personnel taxes in Belgium is impossible as we already have the highest taxes in the world. So that only leaves one thing: spending less.

But yes, this morning I read in the newspapers that our politicians will try and limit their budget so they "only" have a 2.8% deficit... Still, they did manage to lower our debts from about 120% of our GDP to about 90% from 1993 > 2008 so they did pay off the debts when there was money.
 

Yes, countries CAN live on borrowed money forever. Debt on an international level does not function like debt on a personal level, and in most cases the principal being repaid is never the issue, T-bills and T-bonds are bought up primarily for the interest generated and those being cashed in could very well be balanced out by further ones being issued.

Theoretically, there is not only nothing wrong with a manageable level of national debt, it's preferable. Your country can leverage that debt into societal improvements that pay dividends into the future, in many, many ways.

Again, a lot of the angst against international debt should probably be redirected at "irresponsible increases in the level of debt", not debt itself.
 

In the US the only candidate that has been "evangelizing" the debt message has been Ron Paul.

Our last budget "surplus", and I put that in quotes for good reason, was under Bill Clinton. He had to get the "surplus" by borrowing against Social Security.

Before him, the last real surplus was under Richard Nixon.

So the two presidents that knew how to handle the economy fairly well, were impeached.
 

I need to think about the maths but i'm pretty sure a sovereign state can inflate away small debts (small meaning lower than growth).

However I agree with your general point!
 

I find your post a bit short sighted. You reiterate words like "entitlement" "pork", words that have been invented for the sole purpose of underminding meaningful arguments - once you designate a sum of money as 'pork' it is darn impossible to come to the conclusion that is needed.

Same with 'entitlement' - I have come to believe that what people really mean by these words is that anything that benefits someone else is 'pork' and 'entitlement'

Same with the situation with Greece - neither you nor I do understand how it actually came to be the way it is. All those 'entitelment' stories that europeans tell are bullshit, simply used to bias you toward the outcome that is beneficial to you. Note who is scared about a Greek default - it is Europe not Greece - that is very telling.

For you to come and try to argue that outcome desgined by Germany and France etc is better than voting by the greek people - this just shows me you are not serious at all.

Come to think of it in your story about debt you fail to mention that bankrupcy and not being able to pay back your debts are also normal components of loaning money!
That is why you pay interest.

It is exactly not allowing someone to go bankrupt the messes up the normal mode of operation and messes up all of our lives. In fact not allowing Greece to go bankrupt benefits all the people that collected interest with no risk ...
 

During the good times, Australia, under the conservative Howard government (along with the brilliant treasurer Peter Costello), paid off all public sector debts (much of which created by the prev govt as well). The govt maintained a nominal amount of debt because govt bonds in a stable country are a form of risk minisation strategy.

When they had even more surplus left over, rather than spending it all to create political goodwill (and thus generate even more inflation in an already heated economy), the conservative govt created the Futures Fund. This money will be locked away in the long term and will help future govts meet their superannuation liabilities.
 

"Most people mistakenly believe they live in a democracy. In reality nearly all "democratic" countries are in fact republics...well, except California." [fixed for you]



"At "best" you can postpone the day of reckoning, which basically means leaving the repayment of the debts to our children and grandchildren."

By voting no and forcing a default, their children and grandchildren wouldn't have to repay the debts. The country would become insolvent and the debts would just largely be written off (Argentina? Venezuela?). However, their children and grandchildren would definitely be met with a very wary eye by any banks.
 

Move to Lichtenstein perhaps? I think they have pretty much no state debt :-)

https://secure.wikimedia.org/wikipedia/en/wiki/Liechtenstein
 

Amen! I say we all take over Hawaii and make a new country! :)
 

As far as I know the only place you can live with a positive balance sheet is Australia. (That you would even consider)
 

The really tragic thing is that there are so few countries where you can even vote for someone promising to pay down the debt (and the US isn't one of them either.)

I'm really disappointed in the world in that universal suffrage just isn't working, not even in strongly limited constitutional republics like the US. Limiting the franchise on ethnicity or gender hasn't worked either, but it as become far to easy for people with no skin in the game to be in charge of the treasury.
 

This is the only blogspot hosted blog I still read. I wrote a post but blogpsot swallowed it with a memcache error. Bye bye blogspot.
 

Same with 'entitlement'

Wikipedia disagrees with you: "As a legal term, entitlement carries no value judgment: it simply denotes a privilege granted."

All pensions and government health benefits are by definition "entitlements", because you are legally entitled to receive them. That isn't the same as making a judgmental statement about today's "culture of entitlement", where people *feel* entitled to things they aren't in fact having a legal right to.
 

@Valor: Yeah, but that's part of the reason why Greece is in the trouble it is in today; as a part of Euro, it doesn't have the power to inflate anything away because it doesn't own the currency.

Anyways, odds on Greece actually voting in the referendum? 100:1? 1000:1? Bets anyone?
 

There was a fear in the Clinton era that the US debt could be completely paid off by 2012. No US debt means no US treasury bonds. No bonds means the world loses their safest investment, and the US government loses an important financial tool.

There's no reason to stop issuing them just because you no longer have net debt. It would be perfectly acceptable to issue them and just sit on the money. It would end up making the interest a entitlement, but I would be willing to live with it.
 

An important note about many European countries including Greece:

Many countries used to handle much of their huge deficit by simply printing more money. This causes inflation, but at least it solves big budget problems in the short term.

However, with the Euro, this is no longer possible. Greece is not really any more irresponsible than it has always been, they simply can't print money anymore to fix it.

This is also why the Greek people are so dead set against austerity measures. They see nothing especially irresponsible about recent spending levels, they only see their economy as a problem (which cuts will undoubtedly make worse).
 

"Europe offered Greece a deal in which Greece is forgiven half of its debts in exchange for enough austerity measures to not just pile up new debts endlessly afterwards."

It isn't exactly so. 50% of the debt that is hold by Greek institutions. German banks who recklessly lent money to Greece would be paid in full. This "relief" would have left Greece completely bankrupted.

So, since Germany is only interested in saving their banking system without having to bail them out (CDU would be out of power for the next 20 years if that happens) then they are squeezing every penny out of Greece with the support of France that is also exposed to the Greek debt.

Greece is doing what is probably sensible given their position. They are threatening to cause the implosion of the EU and at this point the consequences of such action are unpredictable. We may enter a continent wide recession that will contaminate the rest of the world. It all boils down to which banks hold Greek debt and also which banks also hold mortgage backed toxic assets that they are still passing as solid.

I don't understand much about economy but it seems to me that it was a grave error to have a common currency without having a common debt and without having the last resort of starting the printers.

Greece is precipitating the end-game and it's up to Germany to save the EU or let it crash and burn.

Maybe Germany will control Europe at last. I mean, even more. Through Economy they did what two wars couldn't and no, I'm not thinking of a conspiracy here. To be honest a European Federation controlled by Germany doesn't sound that bad.
 

I think you meant "representative democracy" not "republic". Clearly the various European countries like the U.K. Spain or Sweden aren't republics. They're constitutional monarchies with a representative system of democracy, where the voting rights of each citizen are conferred at an election to an elected representative, who then uses that delegated democratic authority during his or her term in office.

Personally I would prefer this system to any system that used a direct democratic mandate (sometimes referred to as demarchy). I would fear for any minority under such a system.
 

The situation in the US is more dire than I think most people realize. Our "Occupy Wall Street" movement wants to soak the rich, but it simply won't be enough by itself.

To put things in perspective, if we taxed everyone making over $350k a year at 100% (i.e. took every penny they earn) we'd still be less than 1/2 way toward a positive yearly budget at current spending levels.

It's not really a matter of more taxes OR spending cuts. We can raise taxes all we want, but if we don't make significant spending cuts, it won't matter. Sadly the discussion around our fiscal crisis rarely focuses on this point. I think people honestly believe that if the rich would just "pay their fair share" we'd be fine, and that just isn't true.
 

Since nobody else did, allow a greek living in the inside of the country to give you guys a bit of their perspective.

First off, it's not 50% off. I wish it was, but it's not. In the long term the gain from this deal would be about 100 billion euros (which amounts to 20 - 25% of our debt, clearly not 50%). Only problem is we'd have to borrow another extra 130 billion euros. For most ppl that thing just doesn't make sense. At all. Add to that the fact that the offer includes harsh austerity measures for a decade and a percieved (or real) loss of greek sovereignty. Keep that in mind.

Second point. A decade back, our then prime minister announced to the people that we had done it. Our first ever surplus. Yes sir, we did it alright. We were making more money that we were spending. Finally. Only problem was... we weren't. That c@nt lied to us. All of us. The debt was going up and he was telling the ppl that we had a bloody surplus all the while he was selling our debt to goldman sacks or whatever the name of that us bank was to make a bad economy look good. As a result, greeks didn't have the necessary information to make what would amount to an informed decision. Hell, even the current dick we have as a prime minister, came into power by "explaining" to the ppl that "we got money" all the while he was making deals secretly behind our backs with the imf. So the general sentiment amongst most greeks is that we're idiots that got conned by the 2 dominant political parties. And thus we bear as individuals the least amount of blame for the shitstorm we're in. Seeing how the EU and the IMF were closing deals behind our backs reguarding our debt, you can see how it's not helping their credibility much when they say that they only have "what's best for greece" in their minds. We got conned once already and look were it's goten us. Everyone is very sceptical about every deal that's being proposed. I can bet anything you like that if tommorow morning the EU said, screw this, we're paying all of greece's debt cause we love you guys, no strings attached, most greek would revolt against the new plot against them by the EU.

So, to conclude things. Most greeks see right now that we're aproaching a critical point. The point of "i got nothing to lose anymore, cause the government took it all away a year ago". So if we got nothing left to lose, and we're doomed anyway. What's the most sensible solution? We can't change our fate, but maybe, just maybe, we can suffer for the benefit not of our children or grandchildren but for their children. So let's default,go bankrupt, we got nothing to lose anyways save our lives. We'll probably die out of hunger but those that make it out of it alive, can start anew without the debt our mistakes left us. And since we can't really trust the polititians to do their work, isn't it great that after this default nobody will lend us? Not only we're taking care of our debt but we're making sure we can't pile up new one. Profit (in a way). We'll have to learn to live with what we got. It's bad, but our grandfathers did, our fathers did it too... we thought we might escape it but it seems we can't. So many think we should take our chances. Go bankrupt, let europe throw us out, get our national currency back, destroy everything and start fresh.

Hope that helps, apologies for the english it's not my native tongue. Take care
 

which amounts to 20 - 25% of our debt, clearly not 50%

As far as I understood it, it is 50% of the *bank* debt that is forgiven. The other half of the Greek debt is a shortfall in the pension funds, which you can't cut in half without cutting everybody's pensions in half. I don't think anybody wants that. And yes, that means that even if all creditors forgave Greece all debt, Greece would still be in debt to the tune of 80% of their GDP due to that pension fund shortfall.

Many countries used to handle much of their huge deficit by simply printing more money. This causes inflation, but at least it solves big budget problems in the short term.

You could half Greek debt by having 100% inflation (cumulative). That *would* work also on the pension fund half of the debt. People would still get the nominal amount of the pension they were promised, but its value would only be half of what it is today, so many pensioners would live in poverty. Inflation would also reward everybody who took out personal debt, and it would punish everybody who saved up some money. Not a good solution.
 

I came to say what Sine Nomine said earlier, so I'll skip it, except to reiterate their point. Government debt is not personal debt, and when e.g. Germany can borrow at 2.25%, they really ought to.
 

Try Singapore? Clean, green and runs a budget surplus most years I think. Though most citizens think we pay too much and it can get a little rough if you lose your job because we have relatively little state welfare.