According to a CBC report, “the federal government’s market debt — the debt on which Ottawa pays interest — has topped $1 trillion for the first time.”
This is hugely significant as this type of debt can rapidly drain the government of its capacity to expand maintain services during recessions or harsh times.
The debt ceiling
The growth of the market debt is also consequential because of the mostly unheralded federal Borrowing Authority Act, which came into force last November. It sets a limit on how far the federal government can go into debt.
That limit is now $1.168 trillion, and our total debt is currently projected to reach $1.029 trillion in 2017-2018, to $1.066 trillion in 2018-2019.
Given that the government finance department projects its first return to a balanced budget to be in 2045 it is extremely likely that between now and then the debt limit is hit, or Canada faces a deep recession.
In that case, our rapidly growing debt will drain the few resources we have and leave our nation potentially ripe for vulture funds.
And all of this weakness for what?
Low-rate short-term growth and nowhere to go.
For example, an internal government memo found that a “very rapid pace of growth is not sustainable going forward as … transitory factors start to wane, and interest rates will likely continue rising.”
The Canadian government is in effect spending vast sums of money expanding the national debt with only debt and risk to show for it.
I guess budgets don’t just balance themselves, and pointless spending does not provide real growth.