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The Forum > Article Comments > The coalition government’s bankrupt economic policies > Comments

The coalition government’s bankrupt economic policies : Comments

By Harold Levien, published 7/4/2015

Joseph Stiglitz complimented the Government on its uniquely successful economic policy in saving Australia from the GFC which spread recession throughout Europe, North America and Asia including China.

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Nothing will change unless we stop private banks from creating inflationary money as debt.

We went off the gold standard in the 1970's and now our currencies accelerate in depreciation even with a little inflation. Inflation compounds like interest and soon the debt money that creates it, far outstrips growth.

The only solution is Govt banks that can create at least our inflationary money debt free.
Posted by Arjay, Tuesday, 7 April 2015 7:31:29 AM
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Arjay that's gross debt not net debt, so why do you think it's a problem?
Posted by Aidan, Tuesday, 7 April 2015 9:55:58 AM
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Dear Arjay,

Yes, but why blame private banks?

I believe it is the government which creates inflation: they have a policy to force, through the RBA, an inflation of 2-3% per annum - it's a form of tax in order to discourage savings, causing people to eat and drink now or their savings will be lost to inflation and/or capital-gains tax on the nominal value of their savings.
Posted by Yuyutsu, Tuesday, 7 April 2015 10:53:35 AM
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Our real problem is our guaranteed reliance on debt, and foreign debt at that as far as the eye can see!

And coupled to almost exclusive reliance on digging up and exporting rocks; and increasingly expensive service industries! Our balance of trade is far too reliance on the export of rocks, which we have forced down in price by over supplying a shrinking market!

Even as China, finds and brings on line new gas and coal projects! Which by the way, will like our coal and gas exports be hit by a future almost inevitable price on carbon!

As for future vision by the current government; or the alternative, it seems to be a case of the blind leading the blind; coupled to crippled cognitive ability!?

Albeit, someone has finally worked out that massive tax avoidance on a previously unprecedented scale, may be costing the bottom line billions, as is welfare for the rich/customary pork barreling!

Thus the mining boom was simply squandered!

Given in some tiny minds winning the election is/was vastly more important than saving the economy/the country/our future economic prospects, and or our rights as self reliant property and resource owners!

But rush with even greater levels of unseemly haste to sell off or privatize everything not nailed down; and only to make up the shortfall created, deliberately it would seem, by the consequences of quite massive tax avoidance, privatization and welfare for the rich/buying the votes of those who's ultra simplistic thought processes are limited to the hip pocket and a ME/ME/ME/ME bubble!

And the devil take tomorrow/the kids and their kids!

We can do so much better! And can make a start just by putting the current incumbents last on the ballot paper, and continue until we elect a few thinkers!

Which has to be a better outcome than electing stinkers bereft of any redeeming features/an operational cerebral cortex or even a new original idea!? I mean, we didn't get here overnight!
Rhrosty
Posted by Rhrosty, Tuesday, 7 April 2015 11:25:06 AM
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Graham, surely we get enough lefty idiot propaganda from the ABC SBS, & other media, without adding to it here.
Posted by Hasbeen, Tuesday, 7 April 2015 12:49:35 PM
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Did anyone bother reading the article? Why not point out what you believe not to be factual?

Must say, I agree with most of what has been written.
Posted by Flo, Tuesday, 7 April 2015 12:49:47 PM
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Flo, I agree.

____________________________________________________________________________________

Yuyutsu, it's nothing so elaborate. It's simply that the policies needed to completely eliminate inflation are many orders of magnitude more damaging than allowing a small amount of inflation to occur (because they would choke business investment). Having some inflation also has advantages for business (workers are more likely to accept a pay freeze than a pay cut) and in most circumstance people who are worried about the value of their savings can stick them in a bank account and earn a rate of interest exceeding that of inflation.
Posted by Aidan, Tuesday, 7 April 2015 1:52:24 PM
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@Rhrosty. You and I are largely in agreement. We have a government at present that is almost entirely driven by ideology, and like many of the commenters on OLO they never let the facts get in the way of a prejudice.

The current and latest tax report is a case in point. It contains many good suggestions, yet the debate is circumscribed from the outset by excluding major areas from consideration. GST is one example, but it is far from the only one.

Slashing the science budget is a quintessential example of short term thinking, the blatant stupidity of which was laid bare by rapidly dropping resources prices (which meant we can no longer just dig something out of the ground and flog it off) and Obama et al exposing the neanderthal thinking of Abbott on climate change.

It is long past the time when the emperor was told he has no clothes, and this article is a good start.
Posted by James O'Neill, Tuesday, 7 April 2015 4:15:41 PM
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I don't agree with the analysis Hasbeen, but that's not the point of On Line Opinion. The point is that you get an opportunity to argue against his points. So why don't you take it up? He's not the only one to argue along these lines, so your rebuttal will be valuable to many others in taking up your side of the argument. And you will also provide practice for his supporters.

Mind you, I think Arjay is hijacking the thread. The article is not about the gold standard or banking conspiracy theories.
Posted by GrahamY, Tuesday, 7 April 2015 7:09:11 PM
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Graham the debate is about economics. Is not banking, money creation and debt part of this debate ?

The fact is no one wants to upset the status quo because their bank shares are going great guns while the real economy shrinks, with housing being unaffordable and job prospects waning,demonstrates servere cognitive dissonance.

Mathematically this fiat money system based on the flawed Keynesian theory of economics is doomed to fail. Not only are our economists and media massaging the stats on real unemployment and inflation, they are out right liars. Why cannot the banks increase interest rates if the economy is so great ? The reality is that the financial economy is a parasite the real economy and a few elites who control the system do not want to lose this power. This is not theory but financial reality.

We used to have the Commonwealth Govt Bank + 4 Govt state banks and had little Govt Debt. We created debt free infrastructure like the Snowy Mountains and roads but still half this money came from private central bankers as debt to us.

Nothing will change unless all political parties stop being serfs to the masters of money creation.
Posted by Arjay, Tuesday, 7 April 2015 10:29:39 PM
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Arjay if you want to debate money creation at least do it honestly! Private central bankers played no part in anything; apart from the US Federal Reserve, all central banks are in public hands. And when commercial banks create money, they're only borrowing it so it doesn't actually make them any better off financially.

Your statement that we used to have little government debt is blatantly false – look at http://lowpollutionfuture.treasury.gov.au/documents/1496/pdf/01_debt.pdf if you want to know how high it used to be.

And what do you think the flaw in the Keynesian theory of economics is?
Posted by Aidan, Tuesday, 7 April 2015 10:57:48 PM
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If you want to hop on the Labor / Liberal paradigm then all you are doing is buying into a feces sandwich where we get to choose which half of the sandwich were going to be forced to eat.
Its nothing more than pass the baton with these car salesmen politicians, taking turns screwing us while they laugh all the way to the bank.
Just as big of a problem in my opinion is transparency and accountability.
Does anyone truly believe we live in a democracy when politicians get voted in on lies, and promises they don't keep and then answer to no-one whilst retiring with lifetime benefits after they have mismanaged the country, then spend more money explaining how they need to tighten strings to manage debt they created.
Did any of us borrow the money? No
They've got to stop this debt based system and spending based on pathetic predictions of what money they will have.
If its not in your wallet you cant afford it, and we aren't going to stop the bleeding till we make them honest.
Posted by Armchair Critic, Wednesday, 8 April 2015 1:53:30 AM
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Armchair Critic,you are right but they will not listen because those who control this system are doing just dandy.

I would liken our system to a building that has seriously compromised foundations but no one is allowed to go down in the basement and have a look. Instead they are arguing about how to renovate the upper levels of this building that is on the verge of collapse. Lipstick on a pig comes to mind.

A good site is this one http://usawatchdog.com/middle-east-revolution-inflationary-depression-coming-paul-craig-roberts/ Dr Roberts is the ex -assistant secretary to the US Treasury.

Even people like Robert Kiyosaki the author of Rich dad Poor Dad say this system is coming down.

We along with many countries including Great Britain, Switzerland, BRICS Nations and even Israel have joined a China initiated Asian Infrastructure Investment Bank. My fear is that China will just take up where our Central Bankers have enslaved us and own their own monopolised debt money creation system. The AIIB is China's answer to the IMF and World Bank.

Have a close read of Greg Hunter's USA Watchdog and read widely on the alternate media on how to protect yourself because this will be the mother of all collapses.
Posted by Arjay, Wednesday, 8 April 2015 6:21:29 AM
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If you are going to contribute to the discussion, Armchair Critic, rather than simply whinge, you need to pay attention to some facts.

>>Did any of us borrow the money? No <<

Yes, we did.

The level of private debt in this country is around 100% of GDP.

http://www.abc.net.au/news/2014-05-07/household-debt-the-big-threat-to-australian-economy/5435844

Which underlines one of the main points in the article: that the average citizen hasn't the faintest clue how economics work, and is therefore liable to be led by the nose by a) government propaganda and/or b) crackpot notions from hysterical web sites.

QED
Posted by Pericles, Wednesday, 8 April 2015 10:35:03 AM
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Periclueless is at it again with more deception. Armchair critic was referring to the debt money borrowed on our behalf by our Govts and not the personal debt we willingly take on that you infer.

There is no democracy without monetary sovereignty. This means being able to own the new money without debt,which represents your toil and creativity. Who creates most of the new money as debt ?

As George Carlin says " You have owners, they own you." http://www.youtube.com/watch?v=6o5jpcTmcqk They replaced the iron shackles of slavery with the invisible shackles of debt and we delight in our oppression.
Posted by Arjay, Wednesday, 8 April 2015 7:58:13 PM
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That's a bit of a stretch, Arjay.

>>Armchair critic was referring to the debt money borrowed on our behalf by our Govts and not the personal debt we willingly take on that you infer<<

What he said was:

>>Did any of us borrow the money? No<<

Given that our government's debt is very low, compared to other developed countries, what else could he have meant?
Posted by Pericles, Friday, 10 April 2015 9:15:32 AM
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Array, the claim that "There is no democracy without monetary sovereignty" is false. Some democracies choose to reject monetary sovereignty. And Australia's monetary sovereignty is at Federal level, yet we have democracy at state and local level too.

And make no mistake, we do have monetary sovereignty at Federal level. But to control inflation we do need a means of controlling money creation, and to do that we use interest rates, which require some form of debt.
Posted by Aidan, Friday, 10 April 2015 10:55:59 AM
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