The Canadian government has been running deficits since the Trudeau years, except for a few years under Paul Martin when it was finally, painfully, able to move back into a surplus. But even when running a surplus, the government is still paying down the debt accumulated over those decades – debt which is composed of principal, interest, and interest on interest. And interest on interest is by far the largest portion of that debt. A 1993 Auditor General report said that of the accumulated net debt of $423 billion, only $37 billion was principal – the rest was due to the ‘magic’ of compound interest.
“I, however, place economy among the first and most important republican virtues, and public debt as the greatest of the dangers to be feared.”
Thomas Jefferson to William Plumer, July 21, 1816
“The progress of the enormous debts which at present oppress, and will in the long-run probably ruin, all the great nations of Europe, has been pretty uniform. Nations, like private men, have generally begun to borrow upon what may be called personal credit, without assigning or mortgaging any particular fund for the payment of the debt; and when this resource has failed them, they have gone on to borrow upon assignments or mortgages of particular funds.” Excerpt From: “An Inquiry into the Nature and Causes of the Wealth of Nations.” Adam Smith, 1776