Armchair Critic,

Australia is sovereign. The fact that a few foreigners have decided to buy our bonds doesn't change that.

Australia has unlimited credit. Literally! Even if our debt were a thousand per cent of GDP, there would be zero risk of being unable to repay it. (This only applies to debt in Australian dollars, but the Australian government does not borrow in other currencies).

Australia could print all the money it wants, without issuing debt. But that would ultimately have the same effect: interest would still be paid on the money that's entered the economy, but instead of bonds it would be paid on reserves that commercial banks hold with the RBA. Unless we had a zero interest rate policy, but to sustain a ZIRP across the economic cycle we'd need very high taxation or else we'd end up with very high inflation.

Debt is created not from plastic but from the ability of banks to lend profitably. And the value of money is based partly on the need to use it to pay debts, and partly on the need to use it to pay taxes.

The RBA is profitable most of the time, and doesn't owe what it can't print. But to control inflation, we need to do something to limit the amount of money that banks can lend profitably.

Aidan
That's just more of the standard statist fantasy that real wealth - houses, trucks, roads - comes from printing pieces of paper with special state-monopoly squiggles on it.

It doesn't.

And it doesn't matter how many frauds or fools think or claim it does, nor how big their hat is.

It still doesn't.

Real wealth always only ever comes from productive activity.

The fact that you can't understand the difference between gross and net, is what explains your mistaken doctrine.

On the contrary, Jardine. I'm well aware that real wealth comes from productive activity, and have never claimed otherwise. But Armchair was concerned about money, debt and sovereignty, so I explained why those concerns weren't valid.

What gave you the delusion that I can't understand the difference between gross and net?

The fact you've failed to notice the relationship between money and productive activity, is what explains your mistaken doctrine.

Don't be silly Richard, it has nothing to do with democracy or any6 other high ideals.

The Greeks have been having a right royal; party on the credit card. They have maxed out a number of times, extending the limit to keep on partying.

Now the lenders can see there is no chance of the partying Greeks being able to pay their debts, & won't extend the limit again, unless the Greeks stop partying.

I have no idea how money wise you may be, but it doesn't require an Einstein to see that lending money to partying Greeks, or Ozzies for that matter, is a bad idea. Only a fool would lend them more money if they won't start doing a bit of hard graft, & start trimming their cloth to suit their income.

You should be shouting the facts to all Ozzies, for if we continue as we are, it won't be long before we are in the same boat. The stupidity of the welfare state will get us all in the not too far distant future, if we don't wake up top ourselves. Democracy has nothing to do with it, except that political parties buying votes with handouts is ultimately disastrous.

Well I'm confused and I'm not to proud or lacking of humility that I wont admit it.
I'm not an expert on financial matters and its more of my questions and lack of knowledge that lead me to make the statements I do.

I don't understand why we pay interest on plastic that can come out of a recycle bin.

And I don't understand how interest on bonds for currency could be cancelled out.
I'm not aware that we lend the banks anything.

If the private central banks sent us a shipment of gold (something of real worth) as a real value backing for their worthless plastic, then you would have something physical to justify the bond payments and interest on.

Why are we paying interest on plastic money that has no more real value than that of my recycle bin?

I need to learn more about this stuff I really don't think I get it.

Regarding democracy..
I'm always quick to say that our democracy isn't real democracy, for various reasons.
I wondered this morning whether or not it would it be any less democratic if for example we gave adult voters 1 vote for every year they were an Australian adult, plus an extra vote if you were born in the country?

A person of 68yrs would get 50 votes, 51 if he was born here, whilst someone of 18yrs would only get 1 vote, 2 if they were born here.

Now I'm not saying I advocate this idea, just that I thought about it.

Would it be any less democratic to say that older Australians with the wisdom of seeing the country change over the years have better insight than an 18yo ?
Or that people who have lived here their whole lives shouldn't have more of a say than people who have only been here 5 minutes?
Or that people born here should have more of a say than those who were not?

The outcomes of elections would no doubt be completely different but would it not still be democratic?

Just random thoughts...

Dear Critic,

The whole idea of democracy is ridiculous, as arbitrary as any other regime. Some justify democracy on the grounds that it is meant as a protection against harassment by the state - but can democracy actually protect individuals and minorities? What right has a group of people calling themselves "state" to harass others to begin with?

When a group of people combines voluntarily, they may adopt whatever methods of decision among them as they like, including democracy and all its variations, but since states are not voluntary, democracy is nonsense.

Still, if you want one obvious improvement over the current system and in the direction of the ideas you presented above, then that would be to count only those who have something to say and want to say it, as opposed to donkeys who only cast a vote to avoid a fine. While still noxious, this would provide slightly better protections for those who suffer most at the decrees of the state.