Monday, November 27, 2006

Conservative Fiscal Maddness

Federal Conservative Finance Minister Flaherty wants to redefine Canada’s national debt in terms of “Net Debt” (Liabilities - Total Assets). Of course, government assets - such as national parks, crown lands, territories, ports, and buildings etc. - are worth $trillions, when fully accounted for. So, does the New Conservative Government’s definition of debt mean that the federal government can run the national debt into the trillions and we will be economically OK? Nonsense!

The measure of a country’s capacity to carry debt is its debt-to-GDP (gross domestic product) ratio. Anyone can fudge the evaluation of assets to be whatever any government wants and create any “Net Debt” number that the partisan politics of the day requires – regards of the true economic state of the country. That is why industrialized countries use debt-to-GDP as an indicator of economic health.

The Prime Minister claims to be an economist but what we are seeing from his New Government is fiscal maddness. What gives? Is the New Government trying to hide something?

(c) 2006 Victoria BC


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