Saturday, 7 November 2009

The nation's credit card

Contrary to what Labour might say, a "stimulus plan" does not solve any problems but delay them. The "car scrappage" scheme or the 15pc VAT cannot last forever because even the nation's credit card (called National Debt) has a limit. The stimulus creates a false sentiment of prosperity by printing money out of thin air - the Bank of England takes care of that- and putting devalued pounds in people's pockets to encourage them to spend. That buys time to the Government to create a new asset bubble that will create some bubble-jobs and, they hope, buy enough votes to win another election.

But sooner or later we will have to face the fact that the Government is broke and we all have to pay the credit card bill. What we need is sound economics based on low taxes, small government and a bit of common sense. Spending money we do not have in "stimulus" plans only stimulates our future ruin.

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