ttbn,
"You think John Stone, an ex-head of Treasury before he went into politics, is an idiot."
Yes, based on what he said here I think it's pretty clear. He has failed to comprehend the consequences of floating the Australian dollar even though he was in charge of the Treasury when it was done.

"I can understand what John Stone says, but I cannot follow your idea that there is no problem with borrowing money in 'the currency the country prints'. What do you mean?"
Regardless of how big Australia's debt is, Australia can ALWAYS borrow as many Australian dollars as it needs because it owns the Reserve Bank which creates them. So even if nobody else was willing to buy bonds (which is itself an extremely unlikely situation) we can always borrow directly from the Reserve Bank.

Generally the government borrows on the bond markets instead of directly from the Reserve Bank, partly for historical reasons (from before the dollar was floated) and partly because it's good for bank liquidity. But it always can with no adverse consequences. Unfortunately because it's one of the last things governments resort to when their economies collapse, there's a widespread myth that it's the cause of the collapse, even though that doesn't stand up to even the most basic scrutiny.

"When your claim is never made by anyone else in the business, I'm left wondering why."
The claim has been made on Lateline and in the SMH, but not in great depth. I'm often left wondering why those who contradict it aren't questioned further on the matter.

We're a nation driven by handouts and powered by debt.
Its not an economy its a false economy.

It's only good to borrow when you getting something back in excess of what you borrow.
e.g. borrow at 3 percent to invest in something giving an 8 percent return.

You don't borrow money to flush down the toilet or invest in something that devalues.

The last official act of any government is to loot the treasury.

Printing more currency devalues that already in circulation, increasing national debt in AUD. Why is it so superior to borrowing foreign money?

It is seen as a desperate move and resultant currency devaluation has this view built in. Existing and prospective overseas investors take a very dim view of it.

There's no magic pudding.

Luciferase,

"Printing more currency devalues that already in circulation,"
True to some extent, but the amount it devalues is very small.

"increasing national debt in AUD."
Our national debt is in AUD. It stays the same whether the AUD rises or falls.

"Why is it so superior to borrowing foreign money?"
Firstly because there's zero risk of running out of AUD. Regardless of the economic circumstances we find ourselves in, we're totally immune from the problems that Greece has.

Secondly because values of floating currencies are largely self correcting. Borrowing foreign money and using it to buy AUD would raise the short term value of the AUD, but that would make our exports more competitive and our domestic industry less competitive against imports, which would force the AUD's value back down. And paying off the loan would force the AUD's value further down.

And having a negative balance of trade also has the effect of making us more reliant on debt. Google "sectoral balances" for more details.

Thirdly because if everything goes wrong and government investment fails to deliver the expected productivity increases, the market would devalue the AUD. This would mean that if the borrowing is in foreign currency, our debt would be significantly bigger.

"It is seen as a desperate move and resultant currency devaluation has this view built in."
The resultant currency devaluation would be very small. Borrowing money directly from the RBA is functionally equivalent to borrowing it on the bond market; government debt rises by the same amount either way.

It's borrowing in foreign currencies that results in the really big devaluations. Some countries have ended up with hyperinflation after being unable to borrow enough foreign currency to pay off a foreign currency debt when the bonds mature.

"Existing and prospective overseas investors take a very dim view of it."
Not the ones who understand how the monetary system works.

"There's no magic pudding."
We have unlimited credit, and it can be used to grow the economy. Whether you regard it as a magic pudding is up to you.