Quote:
Originally Posted by Slava
Perfect, so if we're using that as a model it must also be fine for governments to borrow money?
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I feel that while debt is a great tool for a young family it makes less sense for an older mature family. For most people the idea is to take out a mortgage when you are first starting out, maybe expand the mortgage as you move into a bigger house and then slowly pay it off. Once you are established I don't think it makes as much sense to be taking on debt as an ongoing budgeting tool.
Taking something like schools, Alberta is growing so new schools are needed but it seems like they should be able to build a steady supply of new schools with cash flow. Assuming you borrow money to build each school and make payments over 25 years it will work great for the first few years, but as you get closer to year 25 you are paying the full cost every year in payments alone and are stuck in a cycle. (And yes, I know that is a bit of an over simplification)