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 15/6/2017Few economists ever draw the link between Japan’s decades-long economic torpor and its public debt mountain.
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"Government deficits are not an inexhaustible supply of picked from thin air money!"
For a sovereign currency issuer (such as Australia's Federal Government) that only borrows in its own currency, they literally are.
"If that were so, basket case economies, like Zimbabwe, would be rolling in wealth!"
WRONG!
Firstly, wealth and money are two different things.The Zimbabwean government seemed hell bent on destroying the former.
Secondly, the Zimbabwean dollar was officially fixed against the US dollar. Rather than letting the market determine what it was worth, the Zimbabwean government wasted resources preventing competitive devaluation. Then they ran out of the resources to do so, resulting in a catastrophic devaluation.
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Leslie,
Possible but unlikely. I'll go by Hanlon's razor.
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runner,
Spending more than we earn can be sustained, but there are consequences. Usually it means interest rates are higher than they otherwise would be. But in the current economic climate,
The claim that "our grandchildren are going to pay a huge price" is based entirely on the completely false assumption that they will ever be under any obligation to eliminate the government's debt.
But on the current trajectory, our grandchildren will pay a very high price for the stupidity of people who think the government must meet short term economic targets at the expense of education funding, infrastructure, the environment and indeed the standard of living of families.