What is debt? It’s money that our government owes. And to whom does the government owe this money to? Well to be honest, about 3/4’s of it is owed to Canadian Citizens. This is owed via Canada Savings Bonds, T-Bills or other financial vehicles. This means that about a quarter of the debt is owed to foreign entities and investors.
So when the debt is paid down, the government is giving us double the bonus.
1) They are paying back debt owed directly to citizen’s
and
2) They are reducing the amount of interest we pay to service the debt.
This 13.2 Billion paydown at a modest 4% interest rate means that our interest will drop by about a half billion a year. That means 500 Million more dollars to put towards social programs, tax cuts, new equipment for the military or paying down the debt even further next year, etc. Whatever the government decides to do, the bottom line is that this payment of the surplus directly to the debt will make each yar better and better for Canadians.
I just have to say “Bravo!!”
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Maybe, someday soon, we’ll finally be rid of Trudeau’s financial legacy of debt. Hopefully, we can also get rid of his legacy of socialism as well? How about official bilingualism? Multiculturalism? Any other -isms I’ve forgotten??
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Not much harm will be done by small drops like this, though the big change has been a long boom, lots of jobs, and a river of money flowing to Federal coffers due to Employment Insurance. That is where that money in the suplus largely comes from. This leads directly to a lowering of the ratio between our GDP and the National Debt, so that instead of it being over 50% it heads back down toward less than 40%. But if government ever tries to really cut back on the debt the first to scream will be the “finance industry” that lives off the the buying and selling of Government bonds. What other employment can we possibly find for all those people as we head off toward something to replace manufacturing, resource industry, and so on. I would sooner see tax reductions for the marginal earners, who will promptly spend whatever they have, than pointless tinkering at the edge of the National debt. If we maintain spending by individuals we shall have the best chance to move along nicely.
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Be more specific, Mulder, when you cheer who gets paid back. Only a small percentage of Canada’s citizens get that money (the same ones who leant it in the first place).
And interest rates are determined by more factors that simply paying back the money.
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Actually Todd, the benefactors are anyone who pays taxes. The benefactors are the generations ahead of us who won’t be burdened with the extra half billion or more in interest payments every year.