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Sunday, 21 July 2013

National Debt in the UK (and USA)

Sometimes I feel like we are living in the 1930s: we can see a crisis looming but carry on hoping it isn't going to happen, yet in my gut I feel that it is imminent.

What is bothering me? Well it is the indebtedness of the UK (and the USA) and the almost inevitable deep crisis that will result if it continues to mount. The true level of the UK's debt (around £900 billion) is VERY close to that in Wiemar Germany in the early 1920s when inflation went mad (money became worthless) and social unrest and national socialism took hold.  If interest rates rise by just a few percent, the UK will be unable to repay its debts, banks will fail and there will be no government money to bail them out. In summary we would be in totally uncharted territory where no savings, salaries or pensions would be safe. It is quite possible that social order would break down and a revolution and far left or right politics would be the order of the day. This is just in the UK. The same story is likely in the USA and across the Eurozone. The stability we have enjoyed since WW2 would be well and truly over.

I hope and pray that I am wrong.

The ONLY answer to this is for the nation to live within its means both nationally and on an individual level. We CANNOT continue to borrow money to support services and lifestyles we cannot afford.  

Read to get the background on this. I also recommend the book "How did we get into this mess?" by the BBC financial commentator Robert Peston.

1 comment:

  1. Roger, I couldn't agree more with you
    I fear matters will get worse after the next election, taxing peoples savings, taxing pension lumps sums for starters
    I do feel the worst is yet to come