Comment 102318

By notlloyd (registered) - website | Posted June 11, 2014 at 08:16:13 in reply to Comment 102316

I would agree with you in the context of a government that controls the money supply, but not the context of other governments. Municipalities (essentially corporations) and Provinces can go broke. Because taxation has an upper limit (the point where people flee or businesses shut down) a Province can effectively go bankrupt when people refuse to lend it money.

If Standard and Poors and such downgrades our debt, we can expect an interest rate hike of 1% or more - that's a billion a year on every 100 billion borrowed.

A provincial government can only significantly influence the economy through the G part of the equation which is Government expenditure and taxation. There can be no expenditure if there is no revenue.

Ontario is approaching its limit. We are not broke, but we are close.

Comment edited by notlloyd on 2014-06-11 08:16:40

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