This one’s is certainly much funnier.I've often wondered about this issue.Most household debt is tied up in property and other investments. They pertain to the non-current side of one’s personal balance sheet.In other words, even though they have a large non-current liability, it is often offset by the non-current asset it represents.In fact, most people are actually better off for owning their own home.So, how is this different to government debt? Well, a lot of this stimulus debt has more in common with credit card debt, which is sad; because we are left with some rather dubious assets. Think of the pink batts and the overpriced tuck shops.Now an NBN on the other hand has the potential to become an income earning asset and a boon to productivity. In theory! It's the execution I'm worried about.As for high nominal house prices, I urge people to look at the bottom line. It is there, that you will discover that the real issue is one of monetary policy.Another thing I object to is the assessment of government debt in relation to GDP. I resent this! Here is why: I and my life’s work are not just some line item in the government’s balance sheet. Government works for us, they exist to serve us and this is where some people have it bass ackwards.
Anonymous: I don't think anyone is trying to suggest that your hard work is on the balance sheet. The reason for looking at government debt in relation to GDP is much simpler than that: it allows reasonable comparisons of figures across different countries. A small country would naturally be expected to have a smaller nominal debt than a far larger country. Looking at per capita figures is one approach, but that misses out the difference between very poor and very rich countries, which is significant when assessing debt. Finally, tax revenue can quite naturally be expected to grow in line with GDP as would, to some degree, Government spending. Again, this supports the idea of looking at debt in relation to GDP.
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