Hi Alan
you say "The third widespread falsehood is that Australia avoided recession after the GFC hit in 2008 because it had no debt". Have you got a source for this?

I really am surprised anyone actually reads this bloke.

The posts are at least interesting, in showing just how thick some people can be.

Good morning all,

Thanks for these contributions.

@Spindoc: Yes, Most European nations fared badly through the GFC. They wish they had effected similar stimulus spending in 2009-10 to Australia's.

@Atman, re “Energy and water infrastructure under the Labor Party?”

Information on Australia’s infrastructure development is all here:

http://www.infrastructureaustralia.gov.au/

Re: “School halls for schools which didn't even need them …”

No. Assessments from auditors and independent inquiries show the buildings were appropriate and are overwhelmingly appreciated.

The insulation scheme was not the failure the Opposition and media would have you believe. See here:

http://www.independentaustralia.net/2013/politics/we-really-must-talk-about-the-pink-batts/

Both the BER and HIP were effective. Of course, the campaign in the media to denigrate these two excellent programs was effective also.

Re: "'we're doing better than some other countries' goes nowhere."

Atman, Australia is doing better than everywhere. Not just in the world today, but anywhere, any time, ever.

@Ludwig, re: “Wouldn’t a big reduction in immigration actually allow us much more freedom to build other sorts of infrastructure?”

Not sure. The argument regarding immigration and population is for another forum. But a steadily growing population is certainly not inconsistent with increasing prosperity and standard of living. It is a vital part of being a good global citizen.

Re: “as we come off the end of the mining boom, discontent in the general community is likely to increase …”

The mining boom has not ended, Ludwig. It is transitioning from the investment to the production phase.

The media in Australia didn’t print this – they suppress most important info, as we have discussed before – but China’s iron ore imports for July was an all-time record. Looks set to expand further.

Provided Australia gets the tax and royalties settings right, wealth and income will continue to flow.

@Foyle, re Mr Abbott. Unfortunately, as has been shown abundantly, nothing he says can be believed, can it?

Re the current account deficit and its impacts, not sure. Many comparable economies seem to have similar deficits – New Zealand, Canada, the USA, France, Brazil.

Agree with all your other observations.

More soon …

Cheers,

AA

Alan,
The New Economic Perspectives blog provides, on the top of the home page, access to the whole of Professor Randall Wray's book, "Modern Money Theory" subtitled "A Primer on Macroeconomic for Sovereign Monetary Systems". Professor Wray and Australian professor, Bill Mitchell are producing a text book on the subject.

The third blog in the MMT list links to a page showing how the sectoral balances combined in the sovereign currency area, expressed as percentages of the GDP, always net to zero.

The way I manage to remember how the balances system works is that, if the current account is balanced (exports value equals imports value) a domestic budget deficit outcome increases private financial wealth. If a current account deficit is added then, if the budget outcome doesn't increase to the same proportion private financial wealth decreases. That is the point I was making about Abbott and other neo-liberal politicians. People may feel wealthier because their home value has increased but the total financial saving held by citizens will have decreased.

From many of the comments posted about your article it is obvious that many of the commentators understand very little about monetary theory.

All money necessary to facilitate the operation of a sovereign area has to be created by the sovereign government using key strokes with the Reserve Bank. For example the Social Security Department instructs the Reserve Bank to credit the account of each private bank (or building society etc) with the total amount to be distributed on pension day and lists the account of the individuals who are to receive the increase in their account with the each bank.

The sovereign government spends first then collects taxes but only needs to collect enough to keep inflation at bay during a boom. Even Malcolm Turnbull seems to understand this as he advocated tax cuts rather than cash handouts at Christmas 2008. But, that favoured those who were least likely to spend the handouts and therefore was too slow.

The posts by JD Alt at NEP are an easy introduction to MMT. The other authors are all competent.

Check this link for debt vs GDP, it goes back to 1989.

You may notice that our debts grow during the Labor governments and get paid back by Coalition governments. The most notable aspect is the speed with which Labor governments mismanage our taxes. It climbs from their first year in power regardless of what surplus they were left.

http://www.tradingeconomics.com/australia/government-debt-to-gdp

The rate of growth of the Australian debt is not only greater now than at any time in Australia's history but also greater than the rate that occurred in the bench-mark nations like Greece and Ireland.

The fact is no lasting benefit or infrastructure has occurred through this debt accumulation. Nothing. The debt has brought nothing.

As for the GFC response of this government being worthwhile, that canard is answered here:

http://www.onlineopinion.com.au/view.asp?article=15130