Hope you read what I've written above.

Some of the replies to you have been twaddle. Debt (public and private) is not some recent thing despite the lefty-casino-capitalism spiel.

As I state, we've been running a National Debt via the Bank of England since 1694. And we'd have no modern economy without Investment and fractional reserve banking. If people didn't lend money we'd still be living in caves (pretty much). For every investor, someone is borrowing the money.

GDP = C+I+G ... Consumption+Investment+Govt expenditure.

Imagine where we'd be if people didn't borrow to invest, consume or pay for the state. That's how borrowing can create, and has for centuries created, growth. Why did we all get richer when banking took off at the end of the middle ages and the Christian anti-usury laws were ignored?

But my reply to your original post puts it more clearly and explains the point this article is making about utilising the advantageously low interest rates available at the moment.

If you are coming tomorrow, I'll bookmark this page and await your response. I'm a sort-of lefty but this is the first time I've come here. You asked an eminently sensible question. I have no idea why no-one else bothered to answer it.

If you do have any follow up questions I'll try to answer them, and if you want referenced sources I'll try to provide them.

My economics degree was 20 years ago, and although I spent most of my time off my head, this is all first-year A-level stuff. And this is the main criticism of current policies. The EU's different - no fiscal union, and it's easy for a German tabloid press to whip up a frenzy about giving their hard earned cash to feckless Greeks. (Who have been, and still are, unfortunately, being feckless.)

It's actually a lot more complex than that, but my point is that in the UK it's not.

Osborne's motivated by ideology, just like Reagan believed Friedman's trickle down economics. The difference is that Thatcher's switch to Monetarism (Friedman) was covered by N. Sea oil and the City's big-bang. (Which she instigated so she can take some credit for that, though it pains me to say it. But the true-lefties will counter that that was the start of the City's casino capitalism which caused the current mess in the first place. The centrist-Tories would respond that Labour lite-touch regulation exacerbated the problems during the Blair years.)

Osborne hoped to be proved right. He hoped that he could cut the public sector and that somehow the private sector would pick up the slack. (now maybe if the US and EU were booming, not in the same shit we're in, then it might have worked through the £ devaluing against the dollar and euro. But with the whole Western world in recession and our main export market's currency going through the floor, I'm afraid it's failed. That's why the Tories are still blaming the Eurozone. Because in their dreams, if the EZ was sorted, a cheaper £ would lead to us flogging loads of exports to the EU. But that hasn't happened, as you know.)

Had Osborne's plan worked, then we'd be starting to see a recovery by now, we'd be in full swing by 2014 (hence the desire for a full 5yr parliament) and then he could have a give-away election budget in 2014/5. He'd win that and then say "Look, smaller govt's better. My ideology has been proved right. We will shrink the state and all become richer. Neo-Thatcherism rocks."

But it ain't working like that.

Yet he won't admit he's wrong because we all know that political u-turns (especially over your main belief) are suicide. So it's better for him to keep buggering the economy, blame it on Europe, the weather, the jubilee, the Olympics etc, and hope something turns up. Which it won't.

But as I say, not only should he admit Plan A's wrong, the really sick thing is that given the interest rates at the moment, Plan B's even more attractive than ever. But GO won't admit that cos he'd have to resign, in effect. Admission of failure would hole him below the water-line. Had DC made domestic or foreign issues a priority, he MIGHT be able to sack GO and get away with it. But he's put everything on the economy. And he can't admit his govt's totally cocked up the economy since they came to power.

PS Even worse if that they're continuing the PFI timebomb which means we pay an effective interest rate of 100's of % on our capital projects, just to keep them off the balance sheet so he can say he's not borrowing more.

Labour started this. Probably the worst (non-war) thing they did.

The Tories vowed to stop it, but they're continuing it just to cook the books a bit.

Govt: We need to build a hospital for £100m, but we haven't got the cash and promised not to borrow any more money.
PFI man: I'll build it but you can pay me £500m but spread over the next 20yrs
G: That's more expensive, isn't it?
PFI man: Yes, it makes me very rich. But you can just pay me out of the department's annual budget each year, you don't have to officially borrow the money from the bond markets.
G: So even though it costs the tax payer 6-14x as much in the long run, we can claim with hand on heart not to have increased the national debt?
PFI: Yes. Exactlty.
G: Brilliant idea. I mean, it's not like there's a recession on and we need to be prudent or anything.

And, finally to return to the article, this makes EVEN LESS SENSE WHEN THE INTEREST RATES ARE THE LOWEST IN AGES.