Comment 66941

By A Smith (anonymous) | Posted July 26, 2011 at 20:16:59 in reply to Comment 66912

Let's say Canada decided it wanted to build an LRT (costs $1 Billion per 525M people) system for cities right across Canada. This gives us a max investment of $65.6 Billion.

If we fund these LRT systems with 10 year Canada bonds, that amounts to ($6.56 Billion in principal + $1.92 Billion in interest) $8.48 Billion for ten years.

Canada's current GDP is $1.69 Trillion, which means these LRT costs would equal less than 0.5% of GDP in year 1 and assuming that GDP grows at the same rate it did last decade, would be down to 0.29% of GDP.

From 1997 - 2000, when our economy was strong, total debt charges in Canada averaged about 7.75% of GDP. Currently they are about 3.5% - 3.75% of GDP.

So even if we built LRT systems across Canada, it would still only take debt charges from 3.75% of GDP to 4.25% of GDP in year 1 and to 4.04% of GDP by year 10.

Even if LRT is a 100% waste of money, our economy is so large, it almost doesn't matter.

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