Aidan, by avoiding a recession we have now seen house prices in the likes of Sydney and Melbourne become unaffordable for most and even many who were born and bred there can no longer live in their cities of choice. How is this fair?

The other problem we no face is that our interest rates have no buffer left, so when we do go into recession, unavoidable in my view, how will we get out?

While I confess I am no guru with regards to borrowing and debt, I was of the opinion that to create money, you have to issue bonds to the likes of China. Is this correct, if not, how does it work.

More importantly, if we can simply print more money as we choose, why cant we give everyone enough cash to pay down their mortgage, or have a slush fund that wannabe business people can simply borrow the start up capital they need. After all, there are plenty of smart, willing people with no cash and no idea how to obtain it.

While on the subject of unlimited borrowings, your view, why don't we borrow enough to buy all our foreign owned assets back?

Another idea would be to borrow money so our pensioners can get a decent reinterment income, as opposed to the piddly little amount that dribbles down the line to them.

Sorry Aidan but your theory on unlimited borrowings just doesn't make sense to me mate, unless of cause you can provide reasons why.

rehctub,
Of course I can provide reasons why:

"Aidan, by avoiding a recession we have now seen house prices in the likes of Sydney and Melbourne become unaffordable for most and even many who were born and bred there can no longer live in their cities of choice. How is this fair?"
It isn't fair, but having declining house prices and people unable to pay the mortgages they've already got is far worse. And having a recession doesn't prevent a subsequent housing bubble anyway.

The best way to keep house prices down is with a broad based land tax, and as I've said before, I'd like to see one replace the GST. Unfortunately such a tax would have to be phased in very slowly to avoid unfairly disadvantaging those who have already bought houses.

"The other problem we no face is that our interest rates have no buffer left, so when we do go into recession, unavoidable in my view, how will we get out?"
With a fiscal stimulus of course. Though as Rudd showed, this does enable the recession to be avoided.

"While I confess I am no guru with regards to borrowing and debt, I was of the opinion that to create money, you have to issue bonds to the likes of China. Is this correct, if not, how does it work."
Creating money requires two things: firstly getting it into circulation, and secondly a way of draining excess reserves (otherwise it could collapse like the Continental Dollar). Issuing bonds is the normal procedure for draining excess reserves, mainly for historical reasons, and China may choose to buy them. But merely paying interest on reserves (as the RBA also does) is sufficient to drain excess reserves.

(TBC)

rehctub (continued)
"More importantly... why cant we give everyone enough cash to pay down their mortgage, or have a slush fund that wannabe business people can simply borrow the start up capital they need. After all, there are plenty of smart, willing people with no cash and no idea how to obtain it."
Although the debt doesn't matter, the deficit does. Just because it's currently too low for the economic conditions we're facing doesn't mean that a higher deficit is always better. Giving everyone that much cash would be far too inflationary, and would result in a huge housing bubble and a permanent fall in our dollar. And it would be a very inefficient use of government money. Just because the government can always access more money doesn't mean they should waste it!

"While on the subject of unlimited borrowings, your view, why don't we borrow enough to buy all our foreign owned assets back?"
The above answer applies to that question too. And I don't see anything wrong with having assets in foreign ownership. But there are two related things I think we should address: firstly governments are far to eager to sell assets rather than taking on debt, and secondly there's an assets imbalance, with more Aussie assets in foreign ownership than vice versa. There have been times recently when our dollar's been so overvalued that it's wrecked our manufacturing industries, and that's threatening to occur again soon. I think under these circumstances the government should create some more money, reduce our dollar's short term value a bit by selling it to buy foreign money (particularly that of the countries we export a lot to) and use it to start (or expand) a sovereign wealth fund.

"Another idea would be to borrow money so our pensioners can get a decent reinterment income, as opposed to the piddly little amount that dribbles down the line to them."
Another inefficient use of government money, so my earlier objection still stands. And anyway, I thought we had a superannuation system to address that problem?

Without doing some research, my only frame of reference for how much it costs per head is how much it cost me when I put my 2 girls (from Indonesia) through the process of migration.

1. The first thing that is required of you before you wish to travel internationally is the correct legal documentation from within your own country. And prior to migration this requirement becomes considerably more. So, at least in the case of the Australian Indonesian relationship as it was in between 2006 - 2010, the first requirement is that the applicant must have good standing within their original country.

Now, in the case of the Asylum Seekers, who may not have any documentation I could not even begin to hazard a guess as to what the guvment may spend on attempting to establish the id and history of some of these people.

2. Once you are able to evidence good standing right across the board in your own country, then you can make the application to the Australian government. There are a lot of pre-requirements, such as medical vaccinations and screening scans. I did all the paperwork myself and (including one eclectic question which required a 1 month FOI plus int. postal time) it took me the best part of 2 months working solidly at it and when printed was the best part of 2 inches thick A4.

So, in the case of a lot of the Asylum Seekers, I guess that they are not paying the fees (some thousands per applicant at my time) nor the costs of the medicals and security checks, nor the translators and interpreters as well as other specialists who are being paid to have this done for them. Not to mention a portion of every other public servant who has had some degree of involvement in their processing.

So, we haven't even started to feed and house them or provide them with the specialist medical attention that they need etc etc and the costs are already not insignificant.

How are we doing so far?

Yes we do have a super system to address retirement, however it is clearly in the cross hairs of government simply because there is nothing left to turn to. The result being that people no longer trust their savings in super because chances are we wont get it because someone else will be deemed as 'more worthy' of it, most likely being someone who was not born here or didn't contribute in the first place.

The amount Rudd and Gillard wasted can never be recovered, plus we have to cater for those they allowed in, or left in detention.

The numbers 2 and 2000 should never be forgotten. 2 being how many Howard left behind, compared with 2000 left behind by Rudd and Gillard. But at least Abbott stopped the boats, which stopped the flow.

But I put it to you all that sometimes the rules of the game need to be changed.

For example, I recall the prime minister's words when he stated something to the effect that the banks operate under a "Social License" from the people, with the sub text of that being i.m.o. that the Parliament as the elected representatives of the people can also alter this at their behest.

Hypothetically speaking, what if the rules were that you could get lawfully paid in cash at the discretion of the worker being paid? What if your wages didn't have to be paid into your bank? What if banks were required to seek your consent, and perhaps offer a financial product, instead of being allowed to play about and earn their own extra money with YOUR money, as they please, and not share it, every time money is going in and out? What if they had to work also for the people whose money it is, in this regard?

What if, the rules were such that banks couldn't gouge and slug RehTub every time he makes a sale and the proceeds go in electronically to his account? Or just 0.05c a go to maintain the network and devices with a squeak of profit on top?

In choosing your guvment you are choosing also what the rules could be, are you not?

Same applies to the issue of the cost of the Asylum Seekers, but when you have politicians who want to layer privatised outsourcing upon outsourcing,

(in an attempt to divorce themselves from personal responsibility)

with everyone making up their own inflated price on top of their over inflated opinions of themselves then you get the absurd fiscal blow out and potential black hole that we have.

But I would also put it to you that some politicians do not care in the slightest about this. They do not care how tuff you are doing it. And the more you hurt and the more anxious and hateful you become, the easier it is to reel you in by your own prejudice.