The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
The Forum - On Line Opinion's article discussion area



Syndicate
RSS/XML


RSS 2.0

Main Articles General

Sign In      Register

The Forum > Article Comments > It doesn’t have to be a circus > Comments

It doesn’t have to be a circus : Comments

By Don Aitkin, published 8/7/2016

If Malcolm Turnbull cannot bring himself to negotiate he needs to find colleagues who can, and who can deliver afterwards.

  1. Pages:
  2. 1
  3. 2
  4. 3
  5. 4
  6. 5
  7. Page 6
  8. 7
  9. 8
  10. All
Don
I find I can't proof-read my own work well, because I am running over what I meant to write, in my head.

I was downcast when a friend found 12 typos in the first 2 pages of one of my books.
Hmmmmm. And I thought was nearly perfect......
Posted by Waverley, Tuesday, 12 July 2016 1:04:56 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Armchair,

Interesting scenario. If it's your own central bank, you don't actually need bonds as the central bank itself can effectively control the money supply by paying/charging the commercial banks interest. And when bonds are issued, selling them to the central bank is unusual, though it's not unknown (they call it QE). So assuming we're doing it your way:

If others are borrowing Aidens then you can pay back the debt.
If you're the only one borrowing Aidens then whether it is theoretically possible to pay back the debt depends on whether the interest you pay is permanently taken out of the economy or put back in afterwards. But even if it's possible, paying back the debt would be incredibly dumb, because it would mean there's no money left in the economy!

So rather than looking at how you could pay back all the debt, it's better to look at why you should. Individual bonds must of course be honoured, but you can always sell more of them. So rather than aiming for a future position of no debt, it's better to increase and reduce debt according to the needs of the economy.

Now lets look at our economy:
Manufacturing's in trouble because our dollar's still higher than our balance of trade justifies. Manufacturers need cheaper credit to invest in new equipment to make them more efficient. They'd also benefit a lot from cheaper electricity, which we could easily get if cheaper credit were given to solar and wind generators.

More welfare? Less would have to be paid if there were more good jobs around.

Higher food costs? The opposite's true in my part of the country, as a new Aldi has opened in my suburb!

Less discretionery income to buy things? That's because neither the government nor the private sector is putting enough money into the economy. The government have been fooled into thinking taking more money out of the economy than they put in (aka running a surplus) is synonymous with economic responsibility.

Why the hell would we want to pay back a trillion dollars?

(tbc)
Posted by Aidan, Tuesday, 12 July 2016 1:15:24 PM
Find out more about this user Visit this user's webpage Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Armchair (continued)

We're not broke. We have unlimited credit. Stop worrying about the debt and instead look at whether in the current economic circumstances the government should be putting more money into the economy or taking more out.

_________________________________________________________________________________

Geoff of Perth,

Public debt has no direct on trade, and little if any on interest rates.
Who has repayments exceeding 150% of their annual incomes?
The value of our dollar has declined against some things and risen gains others.

Keynes proved in the 1930s that a deflationary death spiral is very easy to get out of – it just requires the government to run a much bigger deficit. The case for doing so is even stronger now as, unlike in his day, it's impossible for the government to run out of money.

_________________________________________________________________________________

SAINTS,

Though our debt is real, the problem with it is imaginary.

We've almost gone back to the start of the economic cycle, as the attempts to rush to surplus weakened the private sector so much that we were unable to reach the situation where it was safe (or even possible) to run a surplus.

If instead of panicking, we'd let the economy run the way it normally does, employment would be much higher and more Aussies would be paying tax.

_________________________________________________________________________________

plerdsus,

I keep on mentioning government debt because many people still believe the myths about it, and because of that they advocate actions which damage our economy. Private debt is a different issue, though I'm happy to discuss it if you like.

Private firms have limited credit. But when the economy improves (or when interest rates fall) the private sector can afford to borrow more.

Commercial banks are overreliant on foreign capital. The government should IMO make it easier for them to source more of their funds from the RBA.

Rudd's stimulus was the main reason why we escaped the 2008 crash so lightly.

Practically nobody thinks our dollar will collapse.

We need to increase our means, and boost the living standard of ordinary people!
Posted by Aidan, Tuesday, 12 July 2016 1:31:04 PM
Find out more about this user Visit this user's webpage Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Aidan
So you believe - "Though our debt is real, the problem with it is imaginary. We've almost gone back to the start of the economic cycle, as the attempts to rush to surplus weakened the private sector so much that we were unable to reach the situation where it was safe (or even possible) to run a surplus. If instead of panicking, we'd let the economy run the way it normally does, employment would be much higher and more Aussies would be paying tax."

Is the above what you really believe? Maybe if you watch Senate Budget Estimate Committee Reports and discussions you might be enlightened on "actual" facts regarding our current fiscal status. Figures I have previously reported in various OLO discussions.

Glad to hear a new Aldi is coming to your part of the world, so you can buy cheaper food - that will fix some of our economic problems.
Posted by SAINTS, Wednesday, 13 July 2016 5:59:23 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
SAINTS,

I wouldn't've said it if it wasn't what I really believe. I believe it because it's what the evidence shows. A few senators making false assumptions does not disprove it. There is no plausible way we could run out of money.

The opening of Aldi has resulted in other shops lowering their prices to compete. That sort of efficiency improvement is good for the economy. Indeed any sort of efficiency improvement is good for the economy. It's improving efficiency we should be concentrating on, not chasing arbitrary fiscal outcomes.

____________________________________________________________________________________

Don Aitkin,

What would it take to convince you that we could never ever be like Greece?
Posted by Aidan, Thursday, 14 July 2016 5:56:19 PM
Find out more about this user Visit this user's webpage Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Aidan,

I have enough to do without trying to answer such vague and footling questions.
Posted by Don Aitkin, Saturday, 16 July 2016 7:20:14 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
  1. Pages:
  2. 1
  3. 2
  4. 3
  5. 4
  6. 5
  7. Page 6
  8. 7
  9. 8
  10. All

About Us :: Search :: Discuss :: Feedback :: Legals :: Privacy