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Lowering National Debt???

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RBR
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Post: #1
Lowering National Debt???

Hello all,

I managed to balance my nation's budget but somehow I keep adding to the national debt. I don't know what is going on exactly. It might have something to do with my Payment of Interest but I don't know how to lower that exactly.

Here's the full details so that you can see my confusion:

Code:
Taxes on Capital    29.22
Acquisition Taxes    561.49
Excise Taxes        234.74
Tariff            3.75
Other State Income    28.84
Total State Income    858.04

PE Administration    84.77
PE Justice        37.73
PE Education        81.84
PE Family        88.91
PE Environment        17.6
PE Health        130.87
PE Defense        34.88
PE Subsidies        32.1
PE Others        48.13
PE Welfare        42.28
PE Pensions        254.75
Public Expenditure     853.86

Money Supply        2152.00
National Debt        -1799.42
Nominal Interest    8.11%
Payment of Interest    -135.56

New Indebtedness    -131.37

02.12.2015 01:42
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Kakatiya
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Post: #2
RE: Lowering National Debt???

Your national debt is actually still quite low (below 100% of GDP). It doesn't become an issue until it reaches 250-300% of GDP, from what I have heard. There are no negative economic consequences for having a debt of your size.

Anyway, you should probably do the following:

1) Lower the nominal interest rate by the maximum amount each winter. Your current interest rate (over 8%) is far too high, and high interest rates are bad because they mean you pay more in interest each year. They also discourage investment, because high interest rates make obtaining loans less attractive and more risky for investors.

2) Lower pensions. Your pensions currently make a huge portion of your budget, and they are well above the living costs.

3) Increase money supply each year, until the value of your money supply reaches about 120% of nominal GDP (not real GDP).

02.12.2015 03:00
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RBR
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Post: #3
RE: Lowering National Debt???

Great ideas! Thanks for the input! Smile

02.12.2015 03:26
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Helsworth
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Post: #4
RE: Lowering National Debt???

Investment is a function of sales not rates. Sales is a function of spending (both public & private). The reason you want the lowest possible interest rate in Ars-Regendi is to handle (lower) your interest payments as % of your overall spending. Do what Kakatiya said and you should be fine. If you want people to spend more, I recommend the Negative Income tax for that. It's the best option as far as the game's concerned. On top of that, you can lower the income tax and increase spending.


https://www.patreon.com/SerbanVCEnache
02.12.2015 10:41
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RinNatsume
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Post: #5
RE: Lowering National Debt???

Is it even necessary to lower national debt as a measure?

17.12.2015 21:45
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Kakatiya
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Post: #6
RE: Lowering National Debt???

RinNatsume Wrote:
Is it even necessary to lower national debt as a measure?


I think it's only necessary if it's really high (over 250% of GDP), because at that point it causes widespread unhappiness and may result in deselection.

17.12.2015 23:41
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