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Why Government Debt should increase

May 7, 2012

If you really want to understand Government Debt and why debt should increase – this blog entry by Stephen Koukoulas is well worth reading:

“The recommendation … that gross debt be maintained around its current size as a percentage of GDP is a reason why gross debt will and should continue to rise. If nominal GDP grows at say, 5.5% per year, the amount of CGS on issue will need to double every 15 years or so.”

“Barnaby Joyce has indicated that the Coalition’s target for gross debt is “to stop it increasing then reduce it”. Financial markets and foreign investors in our economy should be unsettled by this promise. Either that or it is another one of the Coalition’s blustering commitments that in government would be unworkable.”

Stephen Koukoulas is well worth following on Twitter: @TheKouk

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