Posted on April 25, 2012 by derriere Bittleston
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If I lend you money to buy a meal and you do so the money is spent on wageing for the meal. The correct news is that you are paying towards sustaining the restaurant, its employees and suppliers, such as farmers, who go away the resources needed.
Once spent, the money I lent you has gone with no prospect of a return. You owe it to me it was a loan tho to repay it you must earn or borrow it from soul else. My loan is non-productive.
If I lend money to an oil play along they use that money to find and produce more oil which they sell. That enables them to pay back my loan and keep some addition themselves with which to pay their staff and suppliers but also to explore for more oil. My loan to them is productive.
Governments have been borrowing for many years to pay for education, social welfare like unemployment benefit and healthcare, defense and the cost of government and civil service. It is all expensive but unproductive. Indeed, aid people to live longer is economically counter-productive. However, we do not advocate shooting the retired and the sick as a swift remedy to the problem, effective as it would be.
To try to convince us that their spending is wise successive governments have referred to it as investiture. Gordon Brown, a former UK Chancellor, was good at making stock growth of the civil service sound like an investment. It was not, it was a cost. Understanding the difference is quite important if you are to be a Finance Minister. Building debt produces short-term benefit which shortly disappears leaving longer-term problems.
Mortgaging the future, which we all do one way or another at certain times in our lives, is unless viable when we know we can repay the debt. Once it reaches a level at which we cannot repay it we are in trouble. European debt has long since reached that level and...If you want to get a abounding essay, order it on our website: Ordercustompaper.com
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