The question is  often asked “Do Ministers understand about the economy?”

Well, if proof were needed then today’s headline in The Daily Telegraph answers that question.

 

David Cameron says “Pay off your credit cards for sake of the economy!”  

From the point of view of individuals I would not disagree with that advice because the less debt, the less interest paid, which in turn increases an individuals spending power in the longer term.

However, at the present time all the talk is of the need for greater economic growth. This lack in economic growth is already being caused by  a drop in the new borrowing needed in order to stimulate consumer spending..

The more debt that is paid off, the less money there will be in the economy and the deeper the current recession will become.

With an economy that is currently 97% reliant upon debt, new debt is the very lifeblood of the economy.

With nearly two thirds of the economy being consumer spending, reducing that spending power is not the answer to the immediate lack of growth.

It would be good advice Mr Prime Minister, if only you had talked about the other half of the equation, replacing “debt” with “debt free money“ as a necessary  way to boost and maintain a stable economy.