National debt or budget deficit?

It seems that both newsreaders and politicians can’t get this one right. The national debt is accumulated when governments borrow money on domestic and foreign markets; it does this by issuing bonds. The budget deficit is when governments spend more money than they earn. The debt is mainly brought about by fighting foreign wars and deficits occur when the national economy doesn’t make enough money from the products that are sold by producers. Recently the word ‘product’ has been stretched to cover non-tangibles like loans, mortgages (which are a form of loan) and other financial services like insurance. These ‘products’ are included in the national GDP (Gross Domestic Product) figures for a given period (usually monthly or annually) along with other commodities (oil, gas, grains and so on). The black economy and the unemployed are not considered when GDP figures are tabulated. Ever the mischief-maker, Jean Baudrillard suggested that waste (which is a product) be included in a nation’s GDP figures (1998).

It’s time for politicians of all the main parties and some of the smaller ones, like UKIP, to come clean about what these terms mean rather than mumble about how we need to reduce our “debt” when what they’re actually referring to is the budget deficit. The national debt is the hidden discourse that the politicians don’t want to have with the electorate because that would mean confessing to the true nature of how our national economies are structured.

You can’t fool me.

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Filed under economic illiteracy, Economics, Government & politics, Media

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