Why household overspending is worse than the federal deficit GlobeMoney
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The case for playing down the risks of government deficits has been made by Olivier Blanchard, a former chief economist of the International Monetary Fund. The IMF is a group of 189 countries that promotes financial stability, trade and economic growth. You might recall the IMF’s warnings in the mid-1990s that harsh measures were needed to attack the federal deficit of the time.Canada’s back in deficit again, and so are many provinces.
There are no excuses to be made about household deficits because the math doesn’t work. Individuals pay much higher interest rates to borrow than governments, If you’re buying a house or renewing a mortgage, a fair deal on the popular five-year fixed rate would be 3.5 per cent. That’s double the rate on the federal government’s 10-year bond. Home equity lines of credit typically run from 4.45 to 4.95 per cent these days.
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