The Government of BC is adding more debt over the next three years, than during COVID or the 2008/09 financial crisis combined. The NDP behaves as if the peoples’ credit cards have no limits.The Fraser Institute says the BC government is on track to add $5,315 in new debt, per person, over the next three fiscal years. That is more debt than was accumulated during the COVID pandemic ($1,680) and the 2008/09 financial crisis ($3,438) combined.It gets worse. The study finds that over the next three years, the BC government plans to add a total of $35.6 billion in new debt (adjusting for both inflation and financial assets.) This compares with additional further debt of $9.9 billion after the pandemic and $17.8 billion after the financial crisis of 2008/09.Crucially, the interest rates the government must pay to service the debt were historically low and/or falling during the 2008/09 financial crisis and COVID periods of debt accumulation. Today, they are significantly higher. British Columbians need to understand just how much debt the government is forecasted to accumulate over the next three years. For, as a result of rising debt, even after adjusting for the effects of inflation, BC's debt interest payments are expected to rise 36.7 percent between fiscal years 2022/23 and 2025/26. Government debt comes with a cost beyond simply the dollars. It's called crowding out. That is, the money the province spends on debt interest will be unavailable for other priorities, pro-growth tax relief for example, or core public services such as healthcare.In previous big-deficit times (the 2008/09 crisis and the COVID-19 pandemic,) interest rates were low and falling. As a result, debt service payments on those increases did not significantly rise. However, this time interest rates are higher and the interest payments on debt will increase by 36.7 percent.There is a relationship between annual deficits and debt, but the two are not interchangeable. A deficit refers to when the government’s spending outpaces revenues in a fiscal year. Debt refers to the accumulation of deficits over years that must be financed with more borrowed money. When the government brings in more revenue than it spends, it’s called a surplus. When the government has just enough revenue to cover its expenses, the books are considered balanced.If a government wants to balance its budget from going in the red, it can either raise taxes or reduce its spending. Raising taxes is usually unpopular and often avoided for political reasons. During economic extreme stagnation, deficit spending can spur growth temporarily to prime the pump. The mistake is that socialist governments can’t stop the drug of the no-limit credit card. In normal times, people are better off when the government runs a small surplus and gradually pays down debt while wisely managing social spending.Reduced spending means the government will cut program expenditures. That can include cutting civil service jobs, scaling back social programs and ending subsidy giveaways. When a government cannot reduce its spending or increase taxes, but still does not have enough money, it borrows money and takes on debt. That unwise choice, if made in the present economic context, is irresponsible and is evidence of gross incompetence.Large government debt impacts all Canadians once it becomes unsustainable, wherein money that is meant to fund the government’s expenditures — such as education, healthcare, child care, and public safety — is pre-spent on interest to service the huge debt. Repeated deficit spending adds to inflationary pressure from which rising interest rates become the predictable consequence.The unseen robbery behind it all is the devaluation of the currency. When a dollar buys much less, the holder of the dollar has taken a cut or reduction in income. People on retirement fixed incomes are especially hurt. But even union members who can strike and extort wage increases above the workers' increased productivity, (which causes its own problem) also take a huge pay cut for which wage increases don’t compensate. The Canadian dollar generally is treated as what's termed a high-beta currency. It's been a resource-based economy and the Canadian dollar and its linkages to resource prices and commodity prices are sensitive to the outlook for global growth. The Canadian dollar is also traded like a commodity and short-term value is related to government management and the value of our natural resources in the market. However, in the longer term, our resources have become more valuable but the basic value of what a dollar can buy has gone down. Devaluation occurs when a country creates a downward adjustment of its currency value to balance trade. Devaluing a currency reduces the cost of a country's exports and makes imports more expensive and less attractive.As exports increase and imports decrease, there is typically a better balance of payments as the trade deficit shrinks. However, these short-term fixes moderate but never quite bring enhancement and over time basic spending power of the dollar declines.The inflation rate in Canada between 1915 and 2022 was 2,365.9%. This means that 100 dollars in 1915 is equivalent to 2,465.9 dollars in 2022. In other words, it takes $2,465.9 to buy what $100 used to be able to buy. The value of the 1954 Canadian dollar today is such that what could be bought with $100 in 1954, needs $1,129.52 today — 70 years later.And the main reason is simply irresponsible government financial management and spending beyond means. The answer is to never vote for politicians who promise benefits but fail to balance the budget over time and also fail to manage so that payments can also be made to reduce the total debt burden. The NDP style of deficit spending leadership robs people blind. Higher interest rates that successive government deficits create hurt everyone. Furthermore, the devaluation of the currency is a hidden theft where everyone is worse off.If an economy is to perform well, citizens must have confidence that the value of their money is broadly stable and not subject to chronic inflation or deflation. Both inflation and deflation create uncertainty about the future and have a significant negative impact on the economy. The hurtful effects also do not fall equally on the population. Big government deficit spenders hurt lower-income people the most.
The Government of BC is adding more debt over the next three years, than during COVID or the 2008/09 financial crisis combined. The NDP behaves as if the peoples’ credit cards have no limits.The Fraser Institute says the BC government is on track to add $5,315 in new debt, per person, over the next three fiscal years. That is more debt than was accumulated during the COVID pandemic ($1,680) and the 2008/09 financial crisis ($3,438) combined.It gets worse. The study finds that over the next three years, the BC government plans to add a total of $35.6 billion in new debt (adjusting for both inflation and financial assets.) This compares with additional further debt of $9.9 billion after the pandemic and $17.8 billion after the financial crisis of 2008/09.Crucially, the interest rates the government must pay to service the debt were historically low and/or falling during the 2008/09 financial crisis and COVID periods of debt accumulation. Today, they are significantly higher. British Columbians need to understand just how much debt the government is forecasted to accumulate over the next three years. For, as a result of rising debt, even after adjusting for the effects of inflation, BC's debt interest payments are expected to rise 36.7 percent between fiscal years 2022/23 and 2025/26. Government debt comes with a cost beyond simply the dollars. It's called crowding out. That is, the money the province spends on debt interest will be unavailable for other priorities, pro-growth tax relief for example, or core public services such as healthcare.In previous big-deficit times (the 2008/09 crisis and the COVID-19 pandemic,) interest rates were low and falling. As a result, debt service payments on those increases did not significantly rise. However, this time interest rates are higher and the interest payments on debt will increase by 36.7 percent.There is a relationship between annual deficits and debt, but the two are not interchangeable. A deficit refers to when the government’s spending outpaces revenues in a fiscal year. Debt refers to the accumulation of deficits over years that must be financed with more borrowed money. When the government brings in more revenue than it spends, it’s called a surplus. When the government has just enough revenue to cover its expenses, the books are considered balanced.If a government wants to balance its budget from going in the red, it can either raise taxes or reduce its spending. Raising taxes is usually unpopular and often avoided for political reasons. During economic extreme stagnation, deficit spending can spur growth temporarily to prime the pump. The mistake is that socialist governments can’t stop the drug of the no-limit credit card. In normal times, people are better off when the government runs a small surplus and gradually pays down debt while wisely managing social spending.Reduced spending means the government will cut program expenditures. That can include cutting civil service jobs, scaling back social programs and ending subsidy giveaways. When a government cannot reduce its spending or increase taxes, but still does not have enough money, it borrows money and takes on debt. That unwise choice, if made in the present economic context, is irresponsible and is evidence of gross incompetence.Large government debt impacts all Canadians once it becomes unsustainable, wherein money that is meant to fund the government’s expenditures — such as education, healthcare, child care, and public safety — is pre-spent on interest to service the huge debt. Repeated deficit spending adds to inflationary pressure from which rising interest rates become the predictable consequence.The unseen robbery behind it all is the devaluation of the currency. When a dollar buys much less, the holder of the dollar has taken a cut or reduction in income. People on retirement fixed incomes are especially hurt. But even union members who can strike and extort wage increases above the workers' increased productivity, (which causes its own problem) also take a huge pay cut for which wage increases don’t compensate. The Canadian dollar generally is treated as what's termed a high-beta currency. It's been a resource-based economy and the Canadian dollar and its linkages to resource prices and commodity prices are sensitive to the outlook for global growth. The Canadian dollar is also traded like a commodity and short-term value is related to government management and the value of our natural resources in the market. However, in the longer term, our resources have become more valuable but the basic value of what a dollar can buy has gone down. Devaluation occurs when a country creates a downward adjustment of its currency value to balance trade. Devaluing a currency reduces the cost of a country's exports and makes imports more expensive and less attractive.As exports increase and imports decrease, there is typically a better balance of payments as the trade deficit shrinks. However, these short-term fixes moderate but never quite bring enhancement and over time basic spending power of the dollar declines.The inflation rate in Canada between 1915 and 2022 was 2,365.9%. This means that 100 dollars in 1915 is equivalent to 2,465.9 dollars in 2022. In other words, it takes $2,465.9 to buy what $100 used to be able to buy. The value of the 1954 Canadian dollar today is such that what could be bought with $100 in 1954, needs $1,129.52 today — 70 years later.And the main reason is simply irresponsible government financial management and spending beyond means. The answer is to never vote for politicians who promise benefits but fail to balance the budget over time and also fail to manage so that payments can also be made to reduce the total debt burden. The NDP style of deficit spending leadership robs people blind. Higher interest rates that successive government deficits create hurt everyone. Furthermore, the devaluation of the currency is a hidden theft where everyone is worse off.If an economy is to perform well, citizens must have confidence that the value of their money is broadly stable and not subject to chronic inflation or deflation. Both inflation and deflation create uncertainty about the future and have a significant negative impact on the economy. The hurtful effects also do not fall equally on the population. Big government deficit spenders hurt lower-income people the most.
