Sunday, April 8, 2007

Debt - Fake Wealth

Most Europeans, Americans, Canadians and Australians did not realize that they have significant government debt, until after the financial crisis in 2008.  Their debts have gotten worse, but it was always significant even before 2008.

In fact, most people around the world, including voters in Western democratic countries, do not even know the difference between deficit and debt.

This debt means that, since the 1960's, people in many countries around the world have enjoyed government spending and borrowing, which will be paid for by future generations.   This is unjust and unethical.  We believe that this debt should be paid off as soon as possible especially by the generation that borrowed the money.

Since it was the previous generation that borrowed most of the money, one of the first cut-backs to help pay off the debt, should be cut-backs to Old Age Pension (Social Security).  If this is not done, there will be no Pension for future generations.

According to the Fraser Institute:
  • Canada has a total debt of $2.4 trillion, including federal, provincial and municipal liabilities.  Federal government debt is $457 Billion.
  • Approximately 50% of population are taxpayers and each taxpayer still owes $150,211.  This is impossible to pay off in one life-time.  Most couples who spend most of their disposable income on a $300,000 mortgage, would take over 25 years to pay it off.
Because it takes so long to pay off government debt, this means that this money was spent on the previous or current generation and will be paid off by your children or grandchildren.  What we have done is burden people in the future without their approval or knowledge.

If you believe that it is immoral, unethical or illegal to burden somebody without their approval or knowledge, then you would agree that government debts are immoral, unethical and should be illegal.

Ideally, it would be great if we could give/subsidize more to students, welfare recipients, public transportation users, etc., but it's not possible.  It's not even possible to continue spending the way we are.

The problem is that most people do not know or care about:
  • how much our debt is
  • the difference between debt and deficit
  • debt per taxpayer
  • math
In essence, by being politically-correct, socialist policies have done something very immoral, unethical and cruel (which should be illegal) and that is to burden taxpayers and future generations without their approval or knowledge.

Canadians are in a false illusion.  We think that Canada is so wealthy and can help every 3rd world country.  But Canada is not wealthy.  In large part, we're a fake.  Canada, like most Western countries, have fake wealth.

The analogy is like this:   A man borrows $2 Million and buys a mansion and a Mercedes. Everybody thinks he is wealthy.  He even feels wealthy.  He feels like he can provide aid to all of his neighbours.  But he can't. In fact, he doesn't make enough money to ever pay back this $2 Million loan.  Therefore, it will passed on to his children to pay off, which is essentially stealing from children.

According to Statistics Canada, the average Canadian family unit's net worth was $249,300 in 1999.  However, this is skewed by the rich Canadians.  The median net worth was $109,200.  If a family unit has two taxpayers, then that family's share of the Canadian government debt is $300,000.  This means the family is worthless or bankrupt.   From a mathematical and financial viewpoint, Canada is broke.  A country that is broke cannot be a first world country.  The more we go into debt, the more we'll become a third world country.

One of the ways to stop global warming is to raise awareness of the bad things people are doing.  The Ontario government wants to raise awareness of environmentally friendly people by issuing green license plates to small cars.  We need to raise awareness of our debt problem, otherwise we will become a third world country.
(Updated October, 2008)

Wikipedia shows the IMF ranking of public debt by country.

According to this October 2011 report, Capital Economics in London calculated these aggregate debt to GDP ratios (total private and public debt of countries divided by GDP):
  • Euro zone and the United Kingdom:  450%
  • Japan:  470%
  • Canada:  410%
  • U.S.:  350%
Read more:

Fake Economy

Housing, the most manipulated market in the world

Stealing from Children

Bubbles - Extreme Maker and Breaker of Wealth

Housing, the most manipulated market in the world




0 comments:

Post a Comment

Our World Needs Your Help

Share the articles with your friends, family, co-workers, colleagues, associates and acquaintances.

Use the Share buttons (Mail, Blogger, Twitter, Facebook, Google Buzz, Google +1) at the bottom of the articles.

If the comment boxes are not showing, click on "_ Comments and _ Reactions" link below the article.

Write and submit articles. If we like them, we'll publish them.

Contact us about donating time or money.