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Jay Currie

One Damn Thing After Another

6/13/2004

More on Debt

Ian Welsh, who does not sleep, has put up a brilliant post at the BlogsCanada Election e-group.
Once upon a time, about 30 years ago, we had a relatively small debt, that sat at about 12% of GDP and had servicing charges on gross debt of a little over 5.3%. That was 1973. Oddly the year before servicing charges had been 5%, with a slightly higher debt - and the year after servicing charges were to rise to 5.6%. Those servicing charges would keep rising, reaching a height of 10.7% in 1981. That rise more than doubled actual debt costs - and since debt itself began to rise, there was a classic vicious cycle. Although there would be dips, a long term decline would not begin until 1991.
ian welch
Frankly, this should be required reading for anyone who presumes to discuss fiscal policy during this election campaign.