to be frustrated that SO many people don't understand the difference between the national debt and the deficit?

[Prinnie]

Title says it all really - really wish people would get their heads around it before forming thier opinions on the economy/politics.

ROTFL!@clam

I do understand the difference, fwiw. What is your point, OP?

I have no idea about any of it and therefore rarely express an opinion. Can you explain the difference to me as I would be interested to know?

(That would have been so much better had I only spelt "knowledgeably" correctly)

Prinnie:YANBU

Nikki: the deficit is the amount spent over income - essentially the Government'snnual overspending, and that is the amount added to the debt each year.

The debt is the total amount owed.

Eliminating the deficit means only living within our means: the debt will stillness to be serviced and eventually repaid. If we defaulted on debt payments, we would not be able to borrow, and would face savage, savage cuts as we would HAVE to go without a deficit immediately, rather than planning to reach a balanced budget.

First para of Wiki explains it perfectly. HERE

nikki1978

The debt is the total amount we owe.

The deficit is the amount we borrow per year - the amount that is added to the national debt.

The deficit is composed of two "bits" - the "structural deficit" and the rest - I don't know the formal name, but will call it "extraordinary deficit".

The structural deficit is the amount that is there regardless of where we are in the economic cycle. It is the "permanent" gap between what the government get in tax, and is spent. This is the bit of the deficit that is there in good times and bad, unless it is tackled.

The extraordinary deficit is due to "one-off" factors - things like the financial crisis, or any other one-off spending splurge.

The coalition's plan is to eliminate the structural deficit during the lifetime of this Parliament by balancing what is obtained in tax with what is spent.

I think the main reason I wish people would take in to account is that when we had 10 years of growth and good economic times, Gordon Brown was more than happy to allow a 4% structural deficit to continue. Common sense (and our experiences of household budgeting) tells us that when times are good you shouldn't overspend - we'd have much more wriggle room to have much less ferocious cuts now if the nation's finances had been more sensible in the good times.

People don't seem to take this in to account very much and seem to think that all the problems are all the banks' fault. Many are, but many aren't.

But, surely if we just tax all the nasty wicked bankers then we will clear the national debt and the defecit and there will be free money and candy for all for ever more?

Well I understand it, but then I'm a financial journalist.

But I agree that a basic understanding of economics is very poor in this country. Live in a developing country, or one that has recently developed (such as India, China) and the average joe on the street is so much more informed.

YANBU - levels of ignorance in relation to politics generally worries me hugely.

No wonder we are in such a great big bloody mess.

As the current National Debt is over £800 billion, there isn't a hope in hell that even 100% tax on one sector could clear it!

YANBU.

What is annoying is that I'm sure that many of the people who say there is no need for spending cuts to bring the deficit down, wouldn't dream of adding the equivalent of 5% or10% of their salary to their overdraft each month.

Agree with nancy

I am astounded by the ignorance re: politics, even among people who are otherwise quite switched on and intelligent.

A basic understanding of the issues is surely necessary to be able to engage in any sort of debate or discussion?

YANBU but you'll find that ignorance never has been and never will be a bar to people pontificating on a subject. Armchair economists, like armchair sports-fans, are a hardy perennial. :)

onimolap - I refuse to believe it. It's all down to those evil bankers (booo hissss). No one else bears any responsibiliy WHATSOEVER.

who do you mean by bankers?

Central bankers?

CEOs of retail banks?

Investment bankers?

Hedge funds?

Long-only asset managers?

Mortgage brokers?

I am as frustrated with lack of knowledge as anyone else on specific issues, and think educational standards for the last few decades in general have been woeful, due to the evil levelling-down and bad ethics of the teaching unions.

However, I don't think ignorance is actually as big a problem as people make out.

Experts should not be automatically trusted, though they should usually be respected. Their ignorance is just at a higher level - and the mistakes they make are much more serious. Common sense and a bit of distance rarely hurt in the grand scheme of things.

Just look at the Bank of England. All experts, and yet they are split three ways. Some of then want to print money, some want interest rates to stay the same, some want to increase interest rates. How are we ordinary folk meant to decide who is right? "Evidence-based" policy is rarely that. The prejudices of the experts may be far more subtle than that of the average white-van man, but they will still be there, lurking beneath the surface and colouring everything they do and say.

Not surprised, do you really think people can understand the mechanics of global finance when a lot of the country struggle to balance their own money?

otchayaniye - ALL bankers. Bankers are evil! Everything is the fault of bankers including original sin!

I wish I were so clever and smug as some on here

I am a bit thick about it admittedly. Where are we borrowing this money from????

I have long thought that qualification for voting by exam (re-taken every five years) would be a superior system to the current one, in which Rupert Murdoch ends up with a massive voting bloc of idiots.

Coolma - it isnt actual money. A Lot of 'banking' is just numbers on a screen. Quite often it is not a man with a suitcase stuffed full of fivers, it is just a number sent through a computer. Thats why the bankers can become so blase about such large amounts of money, because it is just a umber. If it was cold hard tangible ash in front of them, they would think twice!!

number cash