51 comments

1. JaquixNovember 4, 2016 at 1:28 pm

   Great work Kaye Lee bringing this to our attention. Every day aspects of the Howard and Costello “legacy” dogs Australia, and their management of a boom, and the sale of these assets, and the meddling with superannuation etc, are all clear to see with the passage of time. The Libs are clinging to most of them. The huge amounts in this Mysterious Future Fund are now as you say “mouldering away” – no doubt making the Libs feel safe, but not being utilised in the best possible way. Who said they were the best economic managers? Only themselves, but parroted by the media. Who would be the shadow minister in the Labor Party who would be onto this particular issue?

2. JasonNovember 4, 2016 at 1:35 pm

   The LNP says government can’t create jobs yet employs Costello to manage money. The government can create money out of a key pad to spend yet thinks its running out of money. This money should be used now otherwise it is real theft from future generations. Real infrastructure and human resources are what we need to invest in not imaginary future costs. If future generations could send us things they made in ati,e machine it would make sense but in the real world it doesn’t except in the mind of the economically illiterate politicians and voters. Why the hell did we sell Telstra wholesale infrastructure to just use it as an investment fund?

3. Kaye LeeNovember 4, 2016 at 2:17 pm

   In Alaska, they have the “Permanent Fund” and, from its initial principal of $734,000 in the 1980s, it has grown to $50 billion. The Alaskans love the fund because they receive an annual dividend cheque from its earnings.

   Each year, the state legislature takes out 8per cent from the earnings, puts 3 per cent back into the principal for inflation, and the remaining 5 per cent is distributed.

   It invests in American companies so the money stimulates their own economy rather than foreign economies.

4. townsvilleblogNovember 4, 2016 at 2:23 pm

   Kaye, Because I believe that our Future Fund is to be kept for our future, the main problem we have currently is that the giant multinational (mainly yank) foreign corporations pay no income tax, due to laws (loop holes) within the taxation laws that allow them to claim/write off so much that they avoid paying any income tax.

   We read last December of the 579 corporations (still Googleable) that had not paid a cent in tax since 2013 and still don’t due to their mates in the LNP, this is where our main problem lies, they don’t pay tax, our federal govt is down on revenue (but refuses to collect tax from these foreign multinationals) and so cuts back our benefits/services, it’s disgusting.

5. HarquebusNovember 4, 2016 at 2:35 pm

   “a sovereign currency issuing nation has no impediments to paying people what they are due”
   If this is so then, why do we need a future fund?

   “Indeed, the state has recently attracted much attention – and derision – for the way its policy making elite squandered the wealth generated by the resources boom.”
   https://theconversation.com/western-australia-provides-a-masterclass-in-what-not-to-do-with-a-resources-boom-67942

6. Kaye LeeNovember 4, 2016 at 2:41 pm

   We don’t need a future fund Harquebus – we should be spending the money creating jobs and lifting people out of poverty and investing in renewable energy, building infrastructure and educating people.

   A business has to be able to cover its future liabilities for staff entitlements like superannuation guarantee, long service and accrued annual and sick leave – a sovereign currency issuing nation doesn’t.

7. ZathrasNovember 4, 2016 at 3:11 pm

   The sole purpose of the Future Fund is to guarantee ongoing superannuation pension payments to those remaining Public Servants and politicians who were fortunate enough to avail themselves of the overly generous Defined Benefit Commonwealth Super Scheme some years ago.

   Since there have been no new members joining that version of the CSS for some time, the money to keep it going had to come from somewhere – typically as an allocated payment from each Federal Budget.

   Costello as Treasurer deliberately left it unfunded for several budgets to make his bottom line look better until it was possible to sell Telstra to bail it out and keep it running.

   As well as forgoing any future dividends that Telstra used to pay to the Government, the taxpayer now has to pay for such things as Mobile coverage expansion and Community Service Obligations – items that were previously internally funded by Telstra and the point is approaching where the sale of Telstra will become a financial loss to the taxpayer and an ongoing financial liability.

   Not to worry, the politicians have protected their own interests and is just one of many examples of privatisation that will ultimately be shown as scandalous.

   Despite various assumptions, it has nothing at all to do with aged pensions or anything else – it’s there for a specific purpose.

   It’s not a “Sovereign Wealth Fund” to be dipped into for any other reason.

   Maybe when the last retired member (or spouse of the last member) has died, there may be an opportunity.

8. Steve Laing - makeourvoiceheard.comNovember 4, 2016 at 3:21 pm

   I listened to Friedplanet this morning lecturing the Victorian government that they were responsible for the job losses at the Hazelwood Power station, and that they should be using the money they got from the privatisation to fund the problem caused by the drop in power generation and the job losses.

   And this is the problem with privatising energy infrastructure right there. Who is responsible if a private company just decides for commercial reason to close down key infrastructure? There doesn’t seem to be any question that the French owner has any obligation to make up the shortfall. Yet Friedegg seems to have no strategy, other than blaming Labor of course.

   Perhaps this is something that the Future Fund could be investing in? Yeah, right…

9. HarquebusNovember 4, 2016 at 3:22 pm

   Kaye Lee
   It is energy dense resources that is required to do those things. Fiat currency creation and renewable energy can not.
   I wish not to argue with you. Unfolding events will soon prove which of us is correct.
   Cheers.

10. John KellyNovember 4, 2016 at 3:23 pm

    We have no need of a future fund. A currency issuer can always meet its commitments in its own currency. Costello, Morrison and Cormann don’t seem to understand this and I have no doubt they eye off the FF with envious glances wondering if they could plunder it to pay off so-called debt. They are fools.

11. Kaye LeeNovember 4, 2016 at 3:26 pm

    Infrastructure Australia has warned that without action now, traffic congestion will cost the economy $53 billion a year by 2031.

    Figures confirmed at Senate Estimates Committee hearings last week show that in the 2015-16 financial year, the Government invested $5.5 billion on transport infrastructure. That is $2.5 billion less than the $8 billion it promised in its infamous 2014 Budget.

    And because the figure was pumped up by a $490 million payment to the Western Australian Government as GST compensation, the cut was closer to $3 billion – or more than 35 per cent less than what was actually promised.

    That followed a $1 billion cut from the previous financial year, again on the Government’s own Budget projections.

    In the recent election campaign the Government funded no new public transport projects.

    Even worse, Budget forward estimates show that commonwealth investment in rail infrastructure will decline every year between now and 2019-20, at which time it will hit zero.

    Not a dollar.

    Investing in the right infrastructure projects has the immediate short-term effect of sustaining economic activity and creating jobs.

    Over the longer term, it makes the economy more productive, which sets up further jobs growth and promotes future prosperity.

    You don’t create jobs and economic growth by promising to build infrastructure.

    You actually have to build it.

    http://www.sbs.com.au/news/article/2016/11/03/comment-you-dont-create-growth-promising-infrastructure-you-have-build-it

    How about the Future Fund builds and owns the high speed rail and the NBN

12. ZathrasNovember 4, 2016 at 3:28 pm

    Sorry, my mistake – the overall Future Fund IS classed as a Sovereign Wealth Fund but only because it now also manages other specified Funds under it’s investment umbrella.

    However the original Future Fund itself remains “to offset the Australian Government’s unfunded superannuation liability from 2020”.
    The taxpayer cost it’s avoiding is the Budgetary handout it used to rely on to fund itself.

13. Kaye LeeNovember 4, 2016 at 3:43 pm

    “About us

    We are Australia’s sovereign wealth fund, responsible for investing for the benefit of future generations of Australians. We were established in 2006 and today manage five public asset funds.”

    Why should the proceeds from the sale of Telstra not be invested for the benefit of ALL Australians? At least they invested in the Port of Melbourne 50 year lease but will that provide any new jobs?

    http://www.futurefund.gov.au/news-room/2016/09/19/Port-of-Melbourne-announcement

    “in September we were pleased to secure an investment in the Port of Melbourne as part of a broader Consortium. Once that transaction closes, the Future Fund will have a 20% stake in the Port of Melbourne to add to our significant existing Australian infrastructure investments in Perth Airport and Melbourne and Launceston Airports. Australian infrastructure investments will then make up around half of our global infrastructure portfolio.”

    Half? Why not all? It is our money after all – invest for OUR benefit!

14. Matters NotNovember 4, 2016 at 4:47 pm

    We wasted a mining boom. Let the TNCs take all the goodies and left us with next to nought. And it’s an ideological direction we continue to pursue. Slow learners one and all.

    Norway had both. First, they had a capable government and skilled bureaucrats (yes, they are valuable and important) who quickly realised that Norway’s oil boom had to be managed for the benefit of Norway, not the multinational oil companies. This meant not being intimidated by powerful multinational corporations and recognising the inherent bargaining strength of national governments. You can only exploit resources where they are. Host governments can – and should – determine how they are developed.

    In contrast to successive state and federal governments in Australia, this is precisely what the Norwegians did. First, they compelled the oil majors to build their required oil platforms in Norway, developing a world class manufacturing capability in the process. Secondly, and in another unflattering and revealing contrast to Australia, they ensured 90% of the windfall revenues derived from the oil boom in Norway remained there.

    Norway’s “problem”, unlike ours, has been what to do with the astounding amounts of wealth generated as a direct consequence of its activist and enlightened policies. A third critical innovation was establishing a sovereign wealth fund.

    Sovereign wealth funds serve two purposes. First, they put aside the windfall revenues of today for future generations – a possibility our own leaders seem incapable of contemplating given their truncated political horizons. Second, by investing most of the wealth overseas, they put downward pressure on the domestic currency, allowing other domestic industries to survive.

    At a time when we are collectively waving farewell to much of the manufacturing sector, this is another sobering lesson – especially for the young who will not benefit from all that squandered wealth and may wonder where they will actually work.

    The current debate – such as it is – in the West will likely go nowhere. Kevin Rudd’s demise is a reminder of what happens to politicians in this country who dare to take on the miners.

    See what happens when governments intervene. And do so aggressively. We let Gina, for example, import all the mining infrastructure from the US instead of demanding local production. Norway with its belief in big government wouldn’t have allowed that.

    MARK BEESON. WA provides a masterclass in what not to do with a resources boom.

15. Kaye LeeNovember 4, 2016 at 5:01 pm

    We are having our ADF dress uniforms manufactured in China because “it’s cheaper”. Truly, this lot don’t have any idea. They would rather domestic industries die and people be unemployed if they can save a few bucks on this invoice…..unless it’s subs and then we have boundless wealth to share.

    http://www.abc.net.au/news/2016-09-12/xenophon-slams-decision-new-army-uniforms-made-in-china/7834566

    We even imported paper for the ballot papers for the election.

    http://www.i-grafix.com/australia/industry-slams-govt-foreign-ballot-paper-imports/

    “We have to follow the Commonwealth Procurement Rules. Every government agency has to follow these rules for any procurement of goods. Under these rules the agency has to assess the value for money of the goods and weigh up the services against the cost.”

16. JaquixNovember 4, 2016 at 5:03 pm

    Kaye, this lot know the cost of everything, and the value of nothing.

17. HarquebusNovember 4, 2016 at 5:12 pm

    Norway’s wealth fund came at a cost. So has ours.

    “So while Norwegians debate how they will attain carbon neutrality in just 14 years, the Government is potentially opening up vast new oil and gas export fields on the edge of the high Arctic.”
    http://www.abc.net.au/foreign/content/2016/s4546534.htm

    “Few nations have codified rights of future generations in such a powerful, binding way. And few nations show such blatant disregard for these rights. Norway’s own per capita fossil fuel CO2 missions exceed those of Sweden by about 70 percent and Norway’s fossil fuel production is about 20 times its own use.”
    http://www.desdemonadespair.net/2016/10/climate-scientist-to-norway-prime.html

18. KyranNovember 4, 2016 at 5:33 pm

    “Why aren’t we using our Future Fund?”
    For a start, we have a government that prefers ‘abuse’ to ‘use’. We have a government that places more importance on the ‘Fund’, than the ‘Future’ it was intended to invest in.
    Isn’t today the day when the Paris Accord takes effect? We ‘committed’ to it, but we are yet to ‘ratify’ it.
    All talk, no action. Welcome to Australia.
    The adani thing in Queensland fascinates me, for all of the wrong reasons.
    A state where ‘black lung’ has at least 15 cases reported this year. A disease we were told was eradicated in 1984. All of the articles I have read suggest they simply stopped recording its occurrence in 1984, because it was eradicated. Historically, it is a disease that occurred in ‘underground’ mining, associated with ‘coal dust’. It is now resurgent in ‘open coal’ mining.
    A state where taxpayer funded repatriation of land, after these corporate rapists have departed, is de rigueur. (Yep, palmer is merely one of the miscreants.)
    The Indian government have openly stated their intention to decrease coal imports.
    The corporate arm of the Indian government, adani, have been importing coal from Indonesia, through Singapore, with a healthy markup for the exorbitant cost of producing the invoice in Singapore.
    The ‘Oxford Institute for Energy Studies’ (an excellent site, IMO) published a report titled “Indian Steam Coal Imports”. The ‘Executive Summary’ is brilliant. It relates the government declaration ‘they will decrease coal imports’ to the reality. The domestic coal in India is of such poor quality, it creates ‘ash’ which results in lung disease. The coal adani was importing from Indonesia is not much better. That is why the Queensland coal appears to be important.
    They have run out of bankers. It’s either the ‘Future Fund’ or the ‘Northern Australia Infrastructure Facility’ (which only has $5bil). The corporate financiers, banks and Super funds, have said ‘not interested’, on commercial bases. Our government is now the lender of the last resort.
    That’s before any reference to the Great Barrier Reef and the jobs created by eco tourism, in the ten’s of thousand’s, as opposed to the hundreds created by adani.
    In Victoria, we have this not unusual situation of ‘state owned enterprises’ that were sold off. The buyer in Hazelwood was a company that was from overseas. They presided over the Hazelwood fires. And denied that their failure to invest in ‘plant and equipment’ was causative.
    It’s not like they were Alcoa, the biggest consumer of electricity in Victoria, that not only pays feck all for the electricity it consumes, it demands subsidies, without any requirement to invest in its own infrastructure.
    Just today, the government has announced a ‘fund’ to pay compensation to the victims of institutional child abuse. Will they possibly freeze the ‘corporate’ accounts of those institutions that allowed, assisted, perpetrated, (or even worse, concealed) the very abuses they decry ever occurred?
    Just today, the AEC said its computer system was broken. Governments haven’t invested in their own infrastructure. AEC, ABS, etcetera.
    Does anyone else see a link?
    ‘They’ are meant to look after ‘us’. Welcome to Australia.
    Grateful, as always, Ms Lee. Take care

19. bossaNovember 4, 2016 at 6:03 pm

    @ John Kelly

    Oh they understand it alright, it’s just that using a sovereign issued fiat currency internally rubs them the wrong way. For one thing, it would destroy the idea of public debt, and secondly, it would expose the privatisation scam they’ve run for years to ‘pay off the (non-existent) debt’. Anyway, they always have the non currency issuing states to count on to sell off the farm if they fail, by depriving them of funds. i.e. $80billion in Education & Health.

20. bossaNovember 4, 2016 at 6:11 pm

    The Sovereign Wealth Fund and Super Funds are both scams – we don’t need them. They exist in order to continue the theft from the people, to shift the money upwards to the 1%. Likes surpluses they are nothing but theft.

21. totaramNovember 4, 2016 at 7:46 pm

    Kaye Lee: Your question is of course rhetorical and you have given any number of responses in answer to it. As many people here know, the only reason they are not using the Future fund is because they wish to continue this scam, which was created as a scam. I seriously doubt that Peter Costello doesn’t understand what a scam it is, but even if he doesn’t, ignorance is no excuse, as the legal eagles will tell you. This man continues to “double dip” into his fat salary on the Future Fund (gifted to him by Kevin Rudd, no less) and his parliamentary pension, while many of his countrymen and women suffer in poverty. I’m sure he thinks he is teaching them to take responsibility for their own lives rather than lean on the govt., which is there purely for the likes of him! If only we could explain this to all and sundry!

22. totaramNovember 4, 2016 at 8:05 pm

    Bossa: Just to add a qualifier to your comment which is completely correct: Norway’s situation is different, as is the situation in Qatar, UAE, etc. Those are Sovereign funds created out of Foreign currency earned through export surpluses, and are rightly invested in foreign currency, in foreign lands. Australia’s future fund consists entirely of Australian dollars “saved” as “budget surpluses” and from the sale of Telstra, again in AUD. A sovereign nation that issues its own free-floating fiat currency does not need to “save” that currency – a totally absurd idea. The fact that the propaganda gets people to believe the opposite is truly remarkable!

23. Kaye LeeNovember 4, 2016 at 8:41 pm

    Apparently Parliament is only going to sit for 18 out of 52 weeks next year. But we will make sure we put aside billions for their future needs because they work SO hard when in office.

24. Michael TaylorNovember 4, 2016 at 8:43 pm

    Kaye, that’ll mean that Abbott will have 34 weeks of visiting Indigenous communities or cycling around the country.

25. Kaye LeeNovember 4, 2016 at 8:44 pm

    Beaut 🙁

26. HarquebusNovember 4, 2016 at 9:03 pm

    That people think that creating fiat currency can solve the physical problems that plague global economies is truly astounding. They are dills of the highest order.
    Physical realities trump economic absurdities every time.

    I recently heard Deutsche Welle use the term “economic scientists”. That is propaganda.

27. FreethinkerNovember 4, 2016 at 9:08 pm

    Given them a break, look how hard is working Senator David Leyonhjelm meeting Malcolm after hours.
    Repealing section 18C of the Racial Discrimination Act, which prohibits intimidating, insulting, offending or humiliating people based on race, was one of his suggestions to “collaborate”with the government with on the industrial relations legislation.
    I do not if we have to blame these individuals or just put the blame o those that have voted for them.
    Apparently the electorate want more the same.

28. bossaNovember 4, 2016 at 9:41 pm

    @ totaram

    Agreed, and thanks for pointing out that important difference.

29. JohnBNovember 4, 2016 at 10:43 pm

    Future Fund performance
    As at 30 September 2016 the value of the Future Fund was A$124.650bn, meeting its
    benchmark return over the quarter and showing a return of 7.6% pa since the Fund was established in 2006 against a benchmark return target of 6.9% pa.

    The whole Costello F.F. scam relies on our ill informed citizenry accepting the notion that a sovereign govt. follows the same accounting fundamentals as a commercial business.
    It doesn’t.

    A user of a nation’s currency can by investment/industry ‘earn’ a return greater than outlay – a profit; however a currency issuing govt. is the source of all currency (of its own issue) in circulation – Australian currency issued represents a liability of the RBA in favour of the holder.
    i.e. all currency on issue is a liability of the issuer; aka govt debt.

    When, (for whatever reason) an amount of circulating currency (govt. debt) is returned to consolidated revenue, the govt’s. financial liability is consequently reduced by that same amount.
    Any monies returned to consolidated rev. constitutes reduced govt. liability. It can never recover more money than it has issued, i.e. it can never make a monetary profit.

    The 7.6% return is illusory – it is not ‘profit’, it is merely a return of the govt’s own issued debt.

    But it is worse than that – the FF monies are invested in (and via) various entities in various nations. Each of those entities get to slice off a commission each time it passes through their hands – currency exchanges get their trading commissions (both on the way out and the way in).
    Boards of directors/CEO’s, foreign shareholders share benefit from FF investment.
    When those investment funds are active in foreign nations, the foreign nation receives benefit from sales/GST type taxes, income taxes, while foreign citizens benefit from subsequent local productivity. There is also the matter of exposure to instability of foreign currencies, with associated hedging costs. All in all, a cosy haven of financial parasitism.
    Externalities above are all losses to Australia – had the same money been invested in Australian industry, citizens and all levels of govt. benefit as the money turns-over in local economies.

    Costello has created a financial gravy train for himself to head – it is a govt financed investment entity that disperses govt. funds through ‘selected’ business associates – a position of significant influence within financial circles which no doubt has many ‘in kind’ political rewards.

    If those same F.F. monies were invested in the Australian economy it would be amplified in the form of GDP growth – providing a ‘real’ return/gain for the businesses and citizens of Australia.

30. PKNovember 4, 2016 at 11:57 pm

    @Harquebus Once again trying to sound knowledgeable which is totally laughable… trying to “creating a fiat currency” hate to break it to you but Australia has been living in what we call a fiat currency system since 1971, when the US president at the time, Richard Nixon, suspended the convertibility of the US dollar into gold. At that point, the system of fixed exchange rates—in which all countries agreed to fix their currencies against the US dollar, which was in turn benchmarked in price against gold—was abandoned.

    So now of you run with the Gish Gallop… as you are really just embarrassing yourself and showing your ignorance…

31. Matters NotNovember 5, 2016 at 12:24 am

    This is one problem I have with proponents of MMT and the rationale for their criticisms of other constructs of reality Statements such as:

    The whole Costello F.F. scam

    Earlier (on other posts) other ‘supporters’ argued that Friedman et al ‘knew’ the ‘truth’ of how the monetary system actually worked and/but developed alternative theories to deliberately mislead. In short, they were in the conscious, deliberate ‘misleading’ business. They were ‘plotters’.

    Moreover, other ‘expert’ economists are also part of this plot.

    Where is the evidence of this ‘plot’?

    Bolt. for example, argues that claims re global warming are part of a plot. I don’t accept his ‘plot’ arguments.

    Why should I accept yours?

    Or is it ‘self evident’? To you? But not me?

    Like the existence of ‘god’ for some. But not me.

    BTW, not talking about MMT, just the ‘plot’,

32. Ric TestoriNovember 5, 2016 at 2:03 am

    PK
    A small error: “Australia has been living in what we call a fiat currency system since 1971” is incorrect because AUS dollar continued at a fixed exchange rate with UK Pound until 1983/84. It took us 12 years to wake up to the benefits of a floating exchange rate.

33. JohnBNovember 5, 2016 at 2:23 pm

    Scam:- a confidence game or other fraudulent scheme.
    Scam/fraud may trigger some sensitivities, but we must call it for what it is – organised deceit to the benefit of the 1%.
    One can choose to regard those designing/promoting/administering neoliberal economic practices for personal & business gain as ignorant innocents, but I take a different view.

    Costello is an intelligent man – the impacts of the Howard era economic policies are clear:
    his 9 ‘surpluses’ (+ asset sales) 1996-2007 reduced govt. (AU$) net debt by $140bn, but it caused private (real) debt in that same period to increase by $1,150bn.
    The winners in that wealth shift claim the Howard/Costello record as a great achievement – does that constitute deceit or honest naive ignorance?
    The impacts since mid 1970’s are clear, neoliberal economics benefit the wealthy, not the citizenry – yet it is still implemented/advocated by politicians, its myriad of defects unacknowledged or denied.

    Macroeconomic reality has been clearly explained in many public forums – proponents of trickle down cannot refute MMT detail; they dismiss it offhandedly, or avoid debate on core issues.

    Prof Michael Hudson:
    “…when you talk about the fraud that has essentially become the basis for making financial money, you have that as the new form, the new economy, without anybody saying it.
    I don’t know any textbook that talks about how the way to get rich is to steal money. The way to get rich is to borrow money to buy a property that’s going up in value, and make the economy shrink and grab property from the public domain….

    …Whenever you have a misunderstanding of reality, year after year, decade after decade, and now for a century – when a false picture of the economy is painted, you can be sure that there is a special interest that’s benefiting.
    A false picture of reality does not happen by nature – it is subsidized… and the banking sector has subsidized a junk economics that is taught in the universities, broadcast from your newspapers, mouthed by the politicians whose election they sponsor, to try to make you believe that you’re living on Mars – in a different kind of a world, instead of the actual country that you’re living in, … to pretend that there is no financial class that is trying to grab what belongs to the public at large….”

    The worldwide shift of wealth to the 1% is no accident – it is orchestrated by powerful wily financiers…and there is no shortage of ambitious self serving politicians seeking enlistment to their cause.

34. Kaye LeeNovember 5, 2016 at 2:29 pm

    JohnB,

    I think that is the debate MN has been asking for – whether wealth transferral was a deliberate goal or an unintended outcome. I don’t think he has expressed a view – just asked a question which has often been misunderstood. That was a good answer imo but does it address original intent or just support to keep it ongoing?

35. HarquebusNovember 5, 2016 at 3:07 pm

    John B

    “Any monies returned to consolidated rev. constitutes reduced govt. liability. It can never recover more money than it has issued, i.e. it can never make a monetary profit.”
    If governments print more currency than they owe, which they invariably do, then they will have produced a profit. Yes?

    PK

    The removal of the 5 cent piece is being considered. That’s what happens when currencies are continually debased. They become worthless.

    “All paper money eventually returns to its intrinsic value – zero.” — Voltaire.

    There is only one thing to consider regarding fiat currencies. They all fail.

36. totaramNovember 5, 2016 at 4:29 pm

    Matters Not: If you want to debate the existence of the “plot”, you need to define it first. I would rather not get into that. Formal proof ,of such “intention”, as we agreed earlier, would be hard to provide. I did not make the point at that time, but I might do it now, that by the same token, such intention is impossible to disprove.

    When we speak of a plot, we mean it in a loose sense. What we mean is that various persons, with similar pecuniary interests, found that certain ideas being developed by some economists could be very useful to them. The fact that this occurred is evidenced by the formal setting up of well-funded “think tanks”, which helped to develop and propagate these ideas. These ideas were seen mostly in the context of the cold war and the necessity of “fighting communism”. For the “plot” to fight communism, you will agree there is clear evidence, as it was the stated aim of the USA and other western nations. Once the Soviet Union crumbled, the vast apparatus developed for putting forward the benefits of capitalism could be easily turned to putting forward the benefits or even the necessity of neo-liberalism. Evidence for that is the “encouragement” given to Milton Friedman and his “School” .

    Perhaps you should read the book I recommended, as there is a lot of evidence in there. You simply rejected that book on the basis of of some “review”. Who wrote that review? What is the credibility of that reviewer? Why not read the book and make up your own mind?

    The fact that certain lies (govt. debt, deficit, disaster, etc.) are repeated on an ongoing basis, by a large number of “commentators” in the MSM should make it clear that there is a concerted propaganda effort going on. And it is enormously successful, judging by the number of people who swallow it. Beyond that, I don’t see the need to argue.

37. Kaye LeeNovember 5, 2016 at 4:33 pm

    It would be a very good idea to remove the five cent piece…it would save metals and minting costs. Paper money will no doubt also become redundant in this world of cards and computers. It is like moving from scratches on a stick to an abacus to a slide rule to log tables to a calculator and then a computer. You are such a doomsayer Harquebus and once again, with nothing to offer in the way of an idea or a suggestion.

38. JasonNovember 5, 2016 at 4:42 pm

    Harquebus, waiting for evidence of the claim all fiat currencies fail. The record of history shows different: http://www.pragcap.com/all-fiat-money-systems-fail-right-wrong/

    What do you propose a gold standard again? If so why gold? What is so important about mining a shiny yellow metal? Why limit growth to mining using real resources when fiat currency works much better and is basically free to create. Economies can grow much faster. There’s a reason the gold standard was abandoned it didn’t work.

39. JohnBNovember 5, 2016 at 5:21 pm

    @KayeL, November 5, 2016 at 2:29 pm
    “…but does it address original intent..”
    I suggest that without specific/explicit information becoming available the ‘original intent’ can never be proved – but original intent is somewhat irrelevant to the ongoing implementation of economic policies that undeniably promote social/wealth inequality.

    It is the contemporary proponents of neoliberal economics we must target – why in the face of such damning evidence of societal damage do our politicians support it and keep it ongoing?

40. JohnBNovember 5, 2016 at 5:32 pm

    @Harquebus November 5, 2016 at 3:07 pm
    “…If governments print more currency than they owe, which they invariably do, then they will have produced a profit. Yes?>>”

    Your question is nonsensical – a govt cannot issue more currency than it ‘owes’, because the the moment the currency is issued the govt. incurs a liability to the recipient.
    Currency issuance creates liability for the issuer.
    All ‘money ‘things are the liability of the issuer.

41. Matters NotNovember 5, 2016 at 5:45 pm

    JohnB

    One can choose to regard those designing/promoting/administering neoliberal economic practices for personal & business gain as ignorant innocents, but I take a different view.

    Indeed! And you may be correct. What I was looking for evidence of ‘intent’ on behalf of the ‘designers’. Evidence that they aren’t/weren’t ignorant innocents but fully aware that what they were engaged in was harmful re the wider society. I suspect that no such evidence is forthcoming and ignorant innocents might be the best explanation. But thanks for your response.

    totaram

    When we speak of a plot, we mean it in a loose sense. What we mean is that various persons, with similar pecuniary interests, found that certain ideas being developed by some economists could be very useful to them.

    found that certain ideas being developed could be useful to them. Can agree with that. Concepts developed by sociologists and psychologists, for example, are used all the time for less than desirable purposes or outcomes. My point all along was that because ‘theories’, ‘insights’, ‘concepts’ and the like are used in particular and peculiar ways is not the fault of the ‘developer’ or ‘theorist’. My objection was about claims that they had ‘intent’.

    As for:

    You simply rejected that book on the basis of of some “review”. Who wrote that review? What is the credibility of that reviewer?

    Simply not true. I provided links to the two reviewers. Perhaps you could have followed those links and then checked them out for yourself? Clearly you didn’t.

    I stress again, this issue isn’t about that value of MMT which seems to have much to offer, but whether Friedman et al were deliberately trying to mislead. I have seen to evidence to support that claim.

    But thanks for your response.

42. Matters NotNovember 5, 2016 at 5:51 pm

    ‘to’ should be ‘no’ (above.) no evidence to support the original claim made by some MMT proponents.

43. HarquebusNovember 5, 2016 at 6:01 pm

    Kaye Lee.
    I advocate precious metals as currency. Most here already know that.

    The question was;
    “What do you propose a gold standard again? If so why gold?”
    And the answer is;
    Because governments can’t create it out of nothing.

    Search criteria: All fiat currencies fail

    JohnB
    “because the the moment the currency is issued the govt. incurs a liability to the recipient.”
    Pensions, Newstart, subsidies etc?
    As no liability is incurred by these recipients, wouldn’t that result in a continuous increase of the currency in circulation?

44. totaramNovember 5, 2016 at 6:11 pm

    MattersNot: ” whether Friedman et al were deliberately trying to mislead. I have seen to evidence to support that claim.”

    And I have seen no evidence to dispute that claim. Quits?

    I don’t recall links to the reviewers. It’s hard to check back and verify, because I don’t remember the context of the post. It is possible I missed those links. Care to repeat?

45. Matters NotNovember 5, 2016 at 6:25 pm

    totaram I can’t provide the links and indeed I can’t even remember the name of the book. ‘Economics’ is not really my interest and certainly not my expertise.

    As you suggested, let’s leave it at that.

    But logically, it’s up to the claimant to provide the proof of an assertion. The emphasis is not on the ‘questioner’ to disprove same.

46. Kaye LeeNovember 5, 2016 at 6:30 pm

    As I have said before, Friedman was aware that inequality would be a result but he advocated government intervention to address it. His suggestion was a negative income tax. Without discussing the pros and cons of that, it is apparent he was aware this would be a negative result for which compensation must occur.

    http://macaulay.cuny.edu/eportfolios/thorne15/files/2015/03/Cole-Milton-Friedman-on-Income-Inequaity.pdf

47. Kaye LeeNovember 5, 2016 at 6:40 pm

    ” Friedman’s critiques usually can be reduced to two main points: (1) These policies tend to distort incentives, resulting in a less efficient allocation of resources (i.e. economic waste); and (2) they do not in fact result in major reductions of income inequality—indeed, they often have, perversely, the opposite effect.

    Now, this second aspect of his argument might be interpreted as simply a good rhetorical tactic. Appealing to one’s opponents’ own values in order to defuse their policy proposals is indeed a masterly application of practical dialectics. To apply this tactic effectively, moreover, one need not share one’s opponents’ values. It is enough merely to show that they are inconsistent on their own terms.

    This raises the question: Is this what Friedman is doing? Merely poking holes in his opponents’ logic? Or did he in fact share their concern with equality as a valid social goal and was simply criticizing their practical implementation of a shared ideal? If he was really as unconcerned with economic inequality as he would have us think, then, having made his case, he could have rested it there. He would have no reason to go further and actually propose an effective policy to achieve, in practice, the goals that the piecemeal interventions he criticized failed to achieve.

    However, this is what he proceeds to do.”

48. totaramNovember 5, 2016 at 6:45 pm

    Here’s more on Friedman and encouragement of his school of economics. Why should I repeat what someone else has done?

    Nobel prize – hardly noble

    http://bilbo.economicoutlook.net/blog/?p=11893

    It’s all in there. Just read it. any one who is interested.

    The book was:

    Economists and the Powerful : Convenient Theories, Distorted Facts, Ample Rewards

    Google and get your free pdf. if you like.

49. JohnBNovember 5, 2016 at 9:57 pm

    @Harquebus November 5, 2016 at 6:01 pm
    “…Pensions, Newstart, subsidies etc?
    As no liability is incurred by these recipients, wouldn’t that result in a continuous increase of the currency in circulation?…

    The govt. always retains the liability for currency issued – however that same issued currency in possession of a recipient currency user is an asset of that user.

    If unspent by the recipient it is their ‘savings’, an increase in money supply but generally dormant in effect; if spent it flows through the monetary system, taxed at various transaction points etc on its way back (eventually) to consolidated revenue.

    So yes, there is an increase in circulating currency, however there is usually a related increase in economic activity; tax incurred at each transaction diminishes that increase.
    The more economic activity, the higher is productivity (GDP) and govt. taxation receipts.
    Provided demand has not exceeded supply capacity, inflation is unaffected.

50. HarquebusNovember 5, 2016 at 11:29 pm

    JohnB

    Increased circulating currency does not necessarily increase GDP. Zimbabwe and Venezuela are examples.
    It has been until recently, increasing energy supplies that has enabled the GDP growth of the last century and a half. Now it is increasing amounts of debt that provides the GDP growth. The productive parts of the global economy are stagnating or decaying due to energy constraints and not for lack of government spending.
    Whether it is the economy, GDP, population or other, if a system depends on growth to function then, it is by default programmed to fail.

    “This UN report states that their study demonstrates the close relationship between economic trends and natural resource use.
    Well of course they are related! But our economic system doesn’t take natural resources into account. Mow down a forest for timber and GDP increases. Build a $200 million dollar water treatment plant to replace the free water purification services the forest provided, and GDP grows.”
    http://energyskeptic.com/2016/limits-to-growth-2016-united-nations-report-provides-best-evidence-yet/

    Some do not agree with Gail Tverberg but, I think she has a better grasp of our situation than most.

    What really causes falling productivity growth — an energy-based explanation

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