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The Forum > Article Comments > Here are some alternative facts - not fake news, but quite bad > Comments

Here are some alternative facts - not fake news, but quite bad : Comments

By Tony Makin, published 15/6/2017

Few economists ever draw the link between Japan’s decades-long economic torpor and its public debt mountain.

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Debt is more of a problem than we are usually told! The USA seems ready to crack through a reset debt ceiling and just to fund recurrent expenditure?

China is already in uncharted territory, with trillions in debt and at least twice the GNP!?

Our government debt is not that bad, although we might be hard pressed to stimulate an economy heading south due to another GFC?

Of real concern for us is, record and exponentially expanding foreign debt and all but matched by record domestic debt! All while the domestic economy is being effectively strangled by massive unaffordable energy and even more unaffordable housing!

So what can we do? Well we could and have upped defence expenditure/ship building, which is a useful start in the right direction. If but the tip of the proverbial iceberg, of things we could and should do to inoculate ourselves from the unrepayable debt created crisis building around the world?

If we have any other choice but to reengineer the economy with cheaper than coal power, it escapes me.

Cheaper than coal thorium in walk away safe molten salt reactors would allow competing co-ops to bring the price of power down to less than 3 cents PKH!

Which would make already economically viable as irrigation water, new age, deionization dialysis desalination even more massively affordable! Thereby among a suite of new myriad possibilities, turn vast deserts into our most productive food and fibre producers.

Couple the massive economic growth that'd accrue/create, to genuine and massively simplified tax reform and we'd have the energy dependant high tech manufacturers/well heeled self funded retirees of the world beating our doors down to relocate here!

What we need and seem unable to find is a Lee Kwun Yu type visionary (Tony Abbott perhaps [LOL ROTF]) at the helm and ensuring our potential, becomes our literal (cooperative capitalism) reality.

Can we afford to pay for this economic miracle?

Well we do have a two trillion dollar super fund, invested anywhere else but here! And all but sums up traditional capitalism's view of our straitjacket restrained, economic potential?
Alan B.
Posted by Alan B., Thursday, 15 June 2017 11:38:34 AM
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Here we see proof of Tony Makin's incompetence:
"All advanced economies, ­except Germany, Iceland and South Korea, are still running sizeable budget deficits after the global financial crisis. Collectively these deficits have exhausted a huge pool of private saving that could have been used to fund private ­investment."

Any competent economist would know that when the government runs a deficit, it puts more money into the economy than it takes out!

Therefore, far from exhausting the pool of private saving, government deficits CONTRIBUTE TO the pool of private saving.

There are times when government deficits do adversely affect private investment, as they can lead to higher interest rates which discourage debt financing of private investment. But with interest rates as low as they are, it's fanciful to presume that's what's currently limiting private investment.
Posted by Aidan, Thursday, 15 June 2017 12:11:55 PM
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The author ignores the fact that for every debtor their is an equal creditor.

If the Current Account is balanced then the deficit of the currency issuing government is exactly equal to the increase in private sector financial wealth. Because the federal government is the issuer of the currency, through the Reserve Bank which it owns, that government can put any unemployed resources to work. The limit is the risk of inflation if real resources are scarce.

The State Governments are the same as private citizens in our federation.

Because our Current Account is fraught Australia is selling assets to fund consumption.

Norway has had a more sensible approach. Norway has exchanged its oil assets for foreign shares and other assets to the extent that they will probably be able to exist on the share dividends once the oil is exhausted.
Posted by Foyle, Thursday, 15 June 2017 1:15:49 PM
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Government deficits are not an inexhaustible supply of picked from thin air money! If that were so, basket case economies, like Zimbabwe, would be rolling in wealth!

But rather need to be backed by something like a unfettered and growing GNP?

Debt is fine, even massive monumental debt, if it is used to create massive monumental income earning infrastructure/Snowy Mountains vision!

Meaning the completed asset value can cancel out the (book keeping) debit created, to create the asset, which can then be shown in the credit column.

Then repeated as often as you like as the funding template, using the reserve bank as the funding mechanism/instrument.

We have everything else we need, right here! Except a trace of appetite for publically funded/facilitated projects and cooperative capitalism to make sure they not only work but continually prosper!

It's just not hard!

Just prevented by useful mantra muttering idiots, welded to the coattails of debt laden, tax avoiding, profit repatriating, asset stripping, foreign investors/speculators/narrow vested interest?
Alan B.
Posted by Alan B., Thursday, 15 June 2017 1:16:25 PM
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Professor Makin is not an incompetent economist. He is an effective propagandist when he excludes the report of May 13, 2017, “Corporate Japan is on track to log a second year in a row of record net profit”.
Posted by Leslie, Thursday, 15 June 2017 1:30:10 PM
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Like fiddled climate data I am sure economist use fiddled data to arrive at their narrative. They seem very good at commenting on events after they have taken place. Simple fact is that we spend far more than we earn. It is not sustainable and our grandchildren are going to pay a huge price for the stupidity of people who think Government has to pay for everything. The Labour/Greens/Turnbull Governments are continuing to trash this country. True enough that the general public vote for these vandals.
Posted by runner, Thursday, 15 June 2017 1:34:38 PM
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