The UK's budget deficit As a country, we've grown accustomed to living beyond our means. The Government's tax revenues are rarely enough to fulfill its generous spending promises, so every year Britain runs a large budget deficit. The money we can't raise from taxation needs to be borrowed, and as taxpayers, we're the guarantee on the loan. Every year, this budget deficit is added to our national debt. In 1997 Labour inherited a budget that was actually in balance. After a painful and turbulent decade under the Tories, the public finances had finally been brought under control. But after four years in office Gordon Brown took out the country's credit card and let rip. By the end of 2009-10 our annual deficit had ballooned to £170.8 billion. This graph shows how the UK's budget deficit has fluctuated as a percentage of the country's economic output (GDP): As the graph shows, the budget was barely in surplus for more than a few years. We've been maxing out a new credit card almost every year, even in the good times. If a company were run like this, it would have long been declared bankrupt. So how much longer can we defy financial gravity? Well, we're about to find out. Public finances out of control At the very time tax revenues are declining and a debt crisis is ravaging the global economy, our politicians have chosen to go on an unprecedented spending splurge. To fund it, the Government borrowed a monumental £170.8 billion last year. If all goes well, we're set to borrow another £167.9 billion this year. This kind of deficit is far greater than during the recessions of the 80s and early 90s and even higher than when Britain went cap in hand to the IMF in 1976. This isn't money saved for a rainy day. Because we continued to rack up debt in the good years, this latest spending spree is fueled by one big borrowing binge. http://www.debtbombshell.com/britains-budget-deficit.htm
People who post this kind of crap, usually cranks or marxist media, don't understand modern economic theory. A goverment is always in deficit unless it intends to drive the private sector broke. Governments spend to stimulate the economy and there is always a deficit. The problem is not the deficit but how it is financed, at what rates and whether the rate of money creation matches productivity gorwth. If a government tries to create a surplus, usually by means of taxation, when there is equilibriium between pricate savings and investment, necessarily you get a trade deficit because there is no incentive to produce any longer. This is all math, first year economics. No country with a sovereign fiat currency and a growth policy has ever had a surplus. US never had one since inception except when Clinton tried and caused a recession.
"If a government tries to create a surplus, usually by means of taxation, when there is equilibriium between pricate savings and investment, necessarily you get a trade deficit because there is no incentive to produce any longer. This is all math, first year economics. " are u making a point? a sovereign fiat currency is the cause of economic problems as power hungry and greedy politicians create a roman circus for the (m)asses which the state of current economic affairs shows. to simplify the piper always gets paid.
If a deficit is good for a country's economy, then by that logic, all the countries with the largest deficits should have the strongest economies. China, which is always running a surplus should be failing miserably. The Chinese must not understand modern economic theory, the Canadians too: http://www.reuters.com/article/2011/11/21/us-crisis-idUSTRE7AK0EP20111121
so... if above is true who lends then ? or this picture is only one sided - excluding lending ? or there is some entity not accounted for ?
They do, you don't. They run a current account surplus. You don't always have that choice. If they have a trade surplus, some other countries must have a trade deficit, or you don't understand that either? On the other hand, the Chinese are currency manipulators so they do not abide with modern economic theory. Or you don't understand that either?
i suppose another principle of modern economic theory is that you can devalue/ debauch your currency to prosperity. this action would result in zimbabwe and argentina being the riches countries on the planet. the swiss have great difficulty in understanding this principle.
Perpetually growing deficits(% of GDP) are a crock of you know what! Nothing more than a theory propped up by academics and politicians to keep the ball rolling on the many unsustainable policies that have been put in place in the last 50 years. Deficits should be used as nothing more than a kick in the pants when the private sector is showing slack. Deficits should be balanced on a relative basis so when the private sector kicks back in gear and revenues come back in. A sensible spending policy would grow in proportion to growth in the real economy and not continually grow on a relative basis for the hell of it! You can't have debt grow to 50, then 100, then 150% of GDP and expect for all to be well. Sheer size of debt will dwarf demand and then that's when the real fun starts...when interest payments become the main expenditure! Get ready for that. Not like any of these western powers will sensibly cut to bring these back in line. Why not just print and go to war and plunder someone elses resources!
OK, let's assume your modern economic theory is correct. The Americans are running the largest deficit ever, that should result in a large increase in their economy. When do you expect that to occur?