So what happens when the deficit is paid off?

The problem is that even if you KNOW there is going to be a bust, unless you know when you will always make more money betting on the boom continuing. Until it bursts.

I did think that there wasn't enough analysis (former history student here - that's why I read it; needed geeky economic history fix). More "here's the tables. Tah dah! that's why we think x" and I'm going "but why?! WHY are you thinking x?"

Yes yes - the UK hasn't, whereas countries like:

• Portugal
• Ireland
• Greece and
• Spain

I did also think that you could come to substantially different conclusions than the authors on suitable current policy from the figures presented (hence why I like having them to pore over).

One other important point that they made is that the UK has not defaulted on its external debt for a very long time, and thus has a greater reserve of credibility than other countries who have superficially similar current positions.

Basically, economic crises happen all the time, even though governments think they're WAY cleverer than their forefathers. For the most recent crisis, all the indicators were there, just everyone ignored them (apart from a select few - who were told they were being muppets). As happened every other time there's been a major economic crisis.

Hmmmm and other stuff about some countries defaulting a lot of the time (Greece has been in default 50% of the time since 1800).

and there were lots of graphs. And tables.

I think I might need to re-read it, as not everything went in the first time.

Now, I am really warming to the idea of a MN tax - just think how much productivity levels would be improved amongst the women of Britain . . .

Now interestingly, I didn't think This Time is Different was actually that well written (and I thought that they really needed to get someone different to do their charts) - but I am a total numbers geek, so love having all those tables to pore over .

So Abs, given that I'm reading a whodunnit at the moment (ahem) can you summarise it at all? And explain its relevance to current situation?
(I would like an 'end of' tax please)

No takver. I don't want to be bankrupted - what a silly idea. Pscha.

Now, a txtspk tax - £1 for every letter you miss off
[single-handedly brings down twitter and the "youth of today"]

I agree - it's such an amazing book, so well written (despite all the statistics that made me look a bit like this while looking at it), EVERYONE should read it. I was glad to see that one of the authors is advising the US government.

eeeek at MN tax!

With our taxes we could make Britain a better place! Def a tax on all dogs with bandy legs and studded collars.

What about a microtax on MN posts? Say 0.5p per post?

Agree 'This Time is Different' well worth reading - should be compulsory reading for all (or is that too authoritarian?).

Fair point, AlpinePony - but perhaps poor wording rather than misunderstanding. Suspect few people actually wish to pay off the National debt in its entirety, but may still wish to understand what happens when the deficit back under control (at which point, if we are looking at historical trends and the 70s/80s we can probably solve our transport problems by hitching a lift on flying pigs as they travel past).

I propose a Boden tax.

Middle class owners of dull souless clothes need to share the pain. In the interest of fairness, you understand.

ColdComfort - I like your thinking

I propose

• g string hanging out tax
• spitting in street tax/fine of £1mn (I hate spitting in the street) and
• stupid commuters who refuse to move inside the carriage tax (though I don't know how'll that work).

I think a beard tax is a fantastic idea! Could we also have an exposed beer gut tax, a celtic band tattoo tax, an Ugg boot tax (though they are damn cosy) and a tax on slogan t-shirts that say 'I'm a little madam'? Please?

Oh lordy - am frightened by how many do not understand the difference between debt & deficit (opposition front bench included!).

Thank FREAKING goodness they're not reducing the deficit/debt like in the olden days. e.g. France (numerous times), England (1290) and Spain (1492) - expelling the Jewish population and taking all their property and money to spaff away on wars or funding exploration (it's no coincidence that Columbus sailed in 1492). Or, just inventing random taxes (windows, beards - actually, that was a religious discrimination-y type tax under the Russian tsars).

There is a very interesting (if you're boring and geeky, comme moi) book about economic crises called "this time is different" which looks at 8 centuries of economic crises. Interesting reading. Especially since the same things happen, over and over again (each time, with the government's going "this time is different! We're much cleverer/have a better understanding of economics/have ended the boom-bust cycle).

'what happens when the deficit is paid off'

big party round mine.
Who's with me?

Have been reading a history of the 70s lately, fascinating stuff, and much of it seemed very, very familiar right now. ('Worst economic crisis since the war' / 'We have to share the pain' / etc)

Interesting point which I had forgotten from the late 70s crisis when the IMF was called in, massive cuts had to be agreed on etc. Crisis was based on Treasury estimates for the PSBR. When the true figures came through, the actual PSBR was less than half the estimate, and indeed very little of the IMF loan was actually called in.

The author interviewed various treasury civil service bods from the time - and got a very telling quote, saying, essentially, that there is only an opportunity once every 10-20 years for the Treasury to really slam down on spending, so whenever they see the chance, they make the most of it.

IMO the whole scenario fits very closely with the current situation - and again, the opportunity for a one-off reining in of public spending is clearly being taken.

Regarding the OP - 'what happens when the deficit is paid off' - do you know the John Donne poem, can't remember his dates exactly, but maybe 1650s?

'As Princes do in times of action get
New taxes and remit them not in peace . . .'

I guess not much changes

@ColdComfortFarm... you've got it right. The deficit is our ongoing overdraft, if you like. At the moment it's increasing the National Debt by some £180bn a year... we're spending £180bn more than we're getting in. It's too big a proportion of GDP to expect a natural upturn in the economy to deal with it. Hence spending cuts, tax rises and whatever else.

If we get the budget balanced then we still have a whopping great National Debt but at least it's not going up so fast.

No. But isn't it right that the deficit is the difference between what's coming in, in hte form of taxes etc, and what's going out, eg defence, education, benefits, debt repayments etc and right now that gap is huge. it' not about 'repaying' anything. We also have a pretty huge debt, but it's hard to repay that until the deficit is reduced. I think that's how it goes.

No. Once we have a surplus we will still have massive debt; we should pay off as much of the debt as we can.

Any money that can be spent should be spent on capital projects like transport and on tax cuts to improve our competitiveness.

It depends who is in power then and what their priorities are.