A number of you have asked where government has spent the last Eurobond, and by extension where it plans to spend the new $1bn. I am disappointed by these questions because it means people have not been reading what I have been writing for the past year. All money spent by government comes from a single national finance pot. When the money (revenue) in the pot is lower than government spending plans, government has a fiscal deficit. Which means it has to borrow from abroad or domestically to meet this revenue gap. So when government issues a Eurobond the money from that bond goes into that single national pot to meet the revenue gap. The revenue gap comes from new spending plans and old spending plans. Politicians usually tell you that they are borrowing to fund new infrastructure. That is a lie. It is more correct to say they are borrowing to meet the revenue gap made up of many things! The true picture is that our government wants to do too many things at once. It wants to to have a a very large bloated government, award large salary increases, maintain many embassies abroad, countless bye-elections, new districts and build new social infrastructure. All of these things means that we have a short fall in funding which means we have to issue Eurobonds. We have decided it is better to keep borrowing than cut government waste. So in the final analysis, I believe it is just as true to say the Eurobond money is going on a large foreign service and the 2013 wage rises - as it is true to say it is going on social infrastructure. Basically we dont need to borrow if we can cut waste and have a smaller government. This is why I opposed the wage rises in 2013. And I still oppose this latest attempt to borrow just to keep paying civil servants large salaries. And I refuse to be hoodwinked by some who say the Eurobond is for funding X. Those will fool the ignorant but not on this page!
Posted on: Mon, 07 Apr 2014 22:59:32 +0000
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