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The article below was originally published at Morganist Economics and is copyright © 2020 Peter James Rhys Morgan.
http://morganisteconomics.blogspot.com/2020/10/using-pension-fund-easing-to-close.html
Using Pension Fund Easing To Close The Government Spending Deficit And To Reduce The Overall Government Debt.
By Peter Morgan. 19:28 09/10/20.
When government spending exceeds government revenue over a specific period of time the surplus government expenditure is referred to as the government deficit. The government deficit is only the amount of overspending a government generates over a set period of time, which is different to the government debt. The government debt is the total amount of debt the government generated throughout the entire period of time that it began to borrow money.
To be capable of paying off the outstanding government debt the government deficit has to be closed by increasing government revenue until it surpasses governmental expenditure, when government income exceeds government spending it is referred to as the government surplus. Once the government is in surplus the excess income can be used to pay off the outstanding government debt, this is the traditional method of reducing the total government debt to GDP.
There is another method of reducing the total government debt to GDP that can be achieved without having to pay off any of the outstanding government debts. Increasing economic growth will reduce the amount of total government debt as a percentage of GDP, reducing the relative amount of money the government has to pay back from future revenue. The increase in GDP also boosts future governmental revenue streams making it easier to pay the debt off.
By generating further economic growth it is possible to reduce the relative amount of total government debt to the overall level of economic output, which is effectively outgrowing the government debt. Even if the government deficit is not closed if the rate of economic growth exceeds the rate of government borrowing the amount of total government debt will decrease in relation to GDP, no debt has to be repaid but a higher rate of economic growth is required.
The government can in effect continue to borrow money, maintaining a deficit, but reduce the total amount of government debt in relation to GDP, as long as the rate of economic growth is greater than the deficit. As long as economic growth is higher than the deficit during the same period of time overall government debt will fall as a percentage of GDP. Attaining economic growth over prolonged periods of time can dramatically reduce the government debt to GDP.
Pension Fund Easing has the ability to stimulate additional economic growth by increasing the velocity of transactions during a specific period of time, through the superior placement of the money invested in pension funds. By increasing economic growth for sustained periods of time even by small percentages it is possible to reduce government debt to GDP massively. Even if the government has a deficit if it is exceeded by growth it will reduce debt to GDP.
Although it is possible to reduce the percentage of government debt to GDP while there is still a government deficit, as long as economic growth is greater than the shortfall, it is best to get rid of the deficit first to slash the amount of government debt through sustained economic growth. It might be possible to generate a further 4% of economic growth per year from the use of 'Pension Fund Easing', that will help to close the deficit and pay off government debt.
http://morganisteconomics.blogspot.com/2020/10/using-pension-fund-easing-to-close.html
Using Pension Fund Easing To Close The Government Spending Deficit And To Reduce The Overall Government Debt.
By Peter Morgan. 19:28 09/10/20.
When government spending exceeds government revenue over a specific period of time the surplus government expenditure is referred to as the government deficit. The government deficit is only the amount of overspending a government generates over a set period of time, which is different to the government debt. The government debt is the total amount of debt the government generated throughout the entire period of time that it began to borrow money.
To be capable of paying off the outstanding government debt the government deficit has to be closed by increasing government revenue until it surpasses governmental expenditure, when government income exceeds government spending it is referred to as the government surplus. Once the government is in surplus the excess income can be used to pay off the outstanding government debt, this is the traditional method of reducing the total government debt to GDP.
There is another method of reducing the total government debt to GDP that can be achieved without having to pay off any of the outstanding government debts. Increasing economic growth will reduce the amount of total government debt as a percentage of GDP, reducing the relative amount of money the government has to pay back from future revenue. The increase in GDP also boosts future governmental revenue streams making it easier to pay the debt off.
By generating further economic growth it is possible to reduce the relative amount of total government debt to the overall level of economic output, which is effectively outgrowing the government debt. Even if the government deficit is not closed if the rate of economic growth exceeds the rate of government borrowing the amount of total government debt will decrease in relation to GDP, no debt has to be repaid but a higher rate of economic growth is required.
The government can in effect continue to borrow money, maintaining a deficit, but reduce the total amount of government debt in relation to GDP, as long as the rate of economic growth is greater than the deficit. As long as economic growth is higher than the deficit during the same period of time overall government debt will fall as a percentage of GDP. Attaining economic growth over prolonged periods of time can dramatically reduce the government debt to GDP.
Pension Fund Easing has the ability to stimulate additional economic growth by increasing the velocity of transactions during a specific period of time, through the superior placement of the money invested in pension funds. By increasing economic growth for sustained periods of time even by small percentages it is possible to reduce government debt to GDP massively. Even if the government has a deficit if it is exceeded by growth it will reduce debt to GDP.
Although it is possible to reduce the percentage of government debt to GDP while there is still a government deficit, as long as economic growth is greater than the shortfall, it is best to get rid of the deficit first to slash the amount of government debt through sustained economic growth. It might be possible to generate a further 4% of economic growth per year from the use of 'Pension Fund Easing', that will help to close the deficit and pay off government debt.
