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How MYEFO masks Deception and Ignorance

Scott Morrison’s MYEFO released today and his speech outlining his government’s “achievements” leaves one breathless for its ignorance, its deception and his own arrogance.

Morrison’s ability to waffle and sound convincing knows no bounds, yet he speaks such rubbish in macroeconomic terms, that he drags the rest of us down with him.

A terrible deception has been perpetrated on the Australian people. We have been led to believe that we borrow our own currency from foreign nations, that the money gathered from borrowing and collected from taxing, funds spending.

It’s simply not true. And why is it important for us to know this? Because, empowered with this knowledge we can change the way our country is run. We can call out our politicians for their deception, their ignorance and force them to address the issues that are most important to us.

The issues that are most important to us are our health, our education and our right to work, as individuals, as members of families; young families have a right to expect to find affordable housing, as communities and as a nation. Morrison’s MYEFO promises none of these. It has downgraded wage growth and clearly wants to keep lowering it.

It fails to address the cost of living. It demonstrates how trickle-down economic thinking attacks all of us. It is clear the projected lower deficit comes at the expense of University students, migrants and family day-care.

These are precisely the areas we should be ensuring have a solid foundation, one that maximises our productive capacity and encourages greater participation in nation building.

Yet Morrison champions their relegation to the ranks of less important simply to make the numbers look better without demonstrating some offsetting benefits.

Spending cuts, spending cuts and more spending cuts. That’s all our government understands.

The Australian people are being taught that there are financial limits to our development. Wrong! We are being taught that surplus budgets are a worthwhile goal in themselves without explain why. Wrong again! We are being taught that our tax dollars determine our future prosperity. Also wrong!

One must ask, therefore, that if, as Morrison claims, jobs created in 2017 are running at twice the rate of population growth, why is it that over 700,000 people are still looking for work, the same number as four years ago?

If over 360,000 jobs have been created this year, why has the number of jobless not dropped by half or a quarter? At least!

The most difficult pill for people to swallow is the concept that our Federal Government is self-funding and creates the very money it “spends”. It isn’t spending your tax dollars at all.

In other words, at the Federal level, it is neither your tax dollars nor the dollars collected from sales of Treasury bonds that are spent. Every single dollar the Federal Government spends is new money.

Opponents argue that taxes fund spending indirectly because governments balance spending against tax revenue and borrowings. It’s called double-entry bookkeeping. Fine for companies and State governments, but not monetary sovereigns.

Many only see the government, the actual dollar creator, as having debt; that it has liabilities, not that we the people have assets; assets that we need more and more of, as time goes on, to achieve any semblance of personal freedom and relative security from harm.

This subject is so poorly understood by many well-meaning people on all sides of the aisle, that until we understand it and destroy the myths and legends we have substituted for it, our nation’s full potential can never be realised.

Every federal dollar is keystroked into existence. Every single dollar spent by government is a private sector asset. So, where do our hard-earned tax dollars and borrowed dollars go if, in fact, they do not pay for spending on roads, schools, politicians life pensions and spin doctors? They are destroyed by the Reserve Bank when they mark down Treasury’s accounts. They are never used again.

This MYEFO and its underlying implications continue the deception, the false impression, that Morrison knows anything about macroeconomics.

It is population growth that is helping to shield him from realising his own ignorance and the rest of the country from knowing where money comes from.


29 comments

  1. Alpo

    John, it will take time for the basics of Modern Monetary Theory to percolate through mainstream thinking…. but it will, eventually.
    In the meantime it’s essential that Labor abandon the Neoliberal rhetoric at a faster pace…. I am still somewhat worried about Bowen and Leigh for instance.

  2. Kronomex

    MYEFO – MightY Economic F*ck Over by a clueless moron who uses magic accounting spells.

  3. Alan Luchetti

    True enough Alpo. And the sooner it is realised that “Modern Monetary Theory” is neither modern (cf Innes, Knapp, Keynes, Lerner) monetary (it’s also fiscal) nor a theory (it’s factual), the better.

    I am very worried by Leigh and Bowen. Labor regularly promises to starve the economy of currency “better” than the Libs and I think they are sincere in their intentions, not just buckling to prevailing misunderstanding of the difference between issuer and users of fiat currency.

  4. Jaquix

    I cant believe a thing that Motormouth Morrison says. I dont even bother listening closely any more. But what is patently obvious is that the Liberals are just dishing up more of the same – help the rich and sock the poor (in simple terms ha ha). But everything they do transfers wealth (and/or privilege) upwards, at the expense of those below. An Aunt of mine born in 1919 told me years ago that in her day, the governments made a definite concerted effort to ensure the “lower orders” were not educated, because it suited their purposes. Seems nothing has changed in a century. I cant believe its just over a year since this government was elected. Seems so much longer. And if they continue on their merry way, they will inflict a lot more damage on Australia before they are finished. I hope the Labor party is keeping a list of items that need fixing. They only need to take 10 seats off the Liberals and they are in government. Hoping for much more, but the media is hell bent on keeping these incompetent horrible people in power.

  5. townsvilleblog

    Kaye, accoding to the fund starved ABS who couldn’t run last year’s Census properly, I smell a rat!

  6. mick loughlin.

    He’s another one who believes his own bullshit. It’s pathetic.

  7. Kaye Lee

    townsvilleblog,

    The ABS figures are extrapolations from their survey group which represents about 0.32% of the civilian population of Australia aged 15 years and over. Households selected for the Labour Force Survey are interviewed each month for eight months, with one-eighth of the sample being replaced each month so the difference between the outgoing rotation and the incoming rotation is greatly magnified.

    “… the incoming rotation group in November 2017 had a higher employment to population ratio than the group it replaced and was higher than the ratio for the entire sample. The full-time employment to population ratio of the incoming rotation group was higher than the ratio for the entire sample. Its participation rate was above that of the sample as a whole and also above the group it replaced.”

    We shall see if it keeps up.

  8. Harry

    “The latest labour force data released today by the Australian Bureau of Statistics – Labour Force data – for November 2017 shows that total employment growth was relatively stronger than October with a bias towards full-time employment growth. Unemployment rose because of the sharp rise in the participation rate following on the stronger employment growth. The combination of a rising participation rate and relatively strong employment growth is a good sign even as unemployment rises in the period that the labour force adjusts to its new cyclical high. Whether this virtuous cycle continues remains to be seen. Broad labour underutilisation (underemployment and unemployment) was at 13.7 per cent summing to 1,799.7 thousand persons, which tells you that there is still considerable slack in the labour market. The teenage labour market improved (if we consider total employment growth) but teenagers failed to share in the full-time employment growth (going backwards).

    Overall, my assessment remains – the labour market has improved over 2017 but still fluctuates between good and bad from month to month and has a lot of slack remaining. We are not in a position to say that there is a sustained growth path ahead.

    The summary ABS Labour Force (seasonally adjusted) estimates for November 2017 are:

    Employment increased 61,600 (0.5 per cent) – full-time employment increased 41,900 and part-time employment increased 19,700.
    Unemployment decreased 4,100 to 707,700.
    The official unemployment rate was steady at 5.4 per cent.
    The participation rate increased by 0.3 points to 65.5 per cent. It still remains below its December 2010 peak (recent) of 65.8 per cent.
    Aggregate monthly hours worked increased 9.8 million hours (0.6 per cent).
    The quarterly estimates were published this month and showed that underemployment fell by 0.2 points to 8.3 per cent. The total labour underutilisation rate (unemployment plus underemployment) decreased by 0.3 points to 13.7 per cent. There were 1,092 thousand persons underemployed and a total of 1,799.7 thousand workers either unemployed or underemployed”.

    Above extract from Professor Bill Mitchell’s blog.

    http://bilbo.economicoutlook.net/blog/?p=37602#more-37602

  9. Jagger

    MYEFO brought to you by the IPA, spoken by Scott Morrison on behalf of the LNP.

  10. stephengb2014

    I once tried to explain the reality of where our money comes from, I was accused of levels of stupid.

    When I asked my accuser’s where money came form, one man seriously stated it came from the Rothschilds and a secret group of jews?

    This is the point where I knew that there was little point in going on!

  11. win jeavons

    What is the value of new jobs, if one needs more of them , per person, just to make ends meet. In my book a job is that which will support a person adequately . Probably rapidly vanishing . Bring on a fair UBI ! This kleptocracy understands one thing very well; how to enrich their clique while sidelining all the rest of us.

  12. Freethinker

    John, Morrison speech was not intended to you or the readers of this blog, he directed his speech to the electorate that he knows that can move and manipulat in the government favor, to those that believe that the Coalition are the only ones that can manage the economy, to those that do not care about the cuts in welfare, family payments,etc
    The one that believe that a responsible government should cut on all those things that the country cannot afford.
    Once that got that message across trough the media that is in their side, they will come with the second stage which will be:
    The good news is that the economy is heading in the right direction so a income tax will be justified and a responsible and affordable pay rise.
    Game,set and match nd the history will be repeated again.

  13. Trevor

    Yet more vituperate gullibility from the happy clapper Morriscum escalating the Abbott/ Turnbullshit Govt for loosers further into the realms of stupidity wins with Ozland religious Christian bigotry as public policy.

  14. Glenn Barry

    You’d better believe what Scott Morriscum says or else his imaginary friend will come and smash ya
    So many things are wrong with this man on so many levels

    @Kronomex – I think you’ve correctly identified the metamorphosis in Turnbull, one difference though he shall be known as “Il Douche”

  15. Zathras

    If real employment is rising at the rate Morrison claims then income tax receipts should be increasing for the additional PAYE employees while corresponding Centrelink unemployment expenses must also be falling.

    If there really is a double-whammy at work, why the need for extra welfare cuts?

    Retailers should also be rejoicing over all that extra money surging through the economy but all we are hearing is the usual gloom and doom stories.

  16. Florence nee Fedup

    Truth is economy is not back to where Gillard/Swan left it. Surplus higher. Govt debt higher. Personal debt higher after Rudd/Gillard brought it down from high Howard years. Unemployment high still. No wage growth. We are paying more, getting less.

    All this while the global economy has been improving. Under Swan we led the world. Now we are rapidly falling behind.

    That is a fact, I tell you so. Or words of the PM to that effect. Pity the PM never apologizes for when he gets it wrong.

    If PM wants a new renaissances after the last four years of the Dark Age, he needs to start the years off with a clean slate.

    Drop Kill Bill & focus on good governance. Take Bill’s get out of jail offer by working with him to put the citizenship farce to bed. Lance the boil this week. Otherwise will fester for many months next year with no benefit for government.

    Stop playing politics with energy & clean renewal future. Same with Medicare.

    Lead your team. Time to stop being a figurehead. Doesn’t work.

  17. Florence nee Fedup

    I have noticed under Howard, Abbott & now Turnbull, the more one cuts welfare, user pay etc, the higher the personal even government debt, lower wages. Why does this happen? Economy shrinks not grows.

    Those at the top never understand for them to prosper they need a healthy, well-skilled &; paid workforce.

    What is clear, Morrison has no idea of what he uttering. Learnt script.

  18. Freethinker

    Everything is working to plan, control the media,destroy ABC, cut funding to Universities, cut in welfare, look into “purchasing votes” by a small cut on income taxes, target the ignorant electorate with claims that they cannot dispute because they cannot understand it.
    Creating division between classes especially between the poor and in need and those in the middle class.
    Installing a extreme right politicians in the cabinet to implement policies that will be hard to reverse or will take long time to undo the damage that they will cause to the ones that are not in the elite class.
    Make no mistake, these people are no idiots, they know exactly what they want and chances are that they will succeed if the opposition do not come with drastic policies that the people like to hearing.

  19. Rob

    Scomo: he opened his mouth…he’s lying, again!

  20. stephentardrew

    John Love your work. It was you that woke me up to MMT. I saw a recent video with Mosler, Kelton, and a whole lot of MMT economists who have a five year plan to spread the word it is simply a matter of reaching critical numbers. Steve Keen has also noted a lot of young economists are disillusioned with neoclassical economics. I think it might surprise you how many you have reached and from there they too have spread the word. We non experts are continually trying to inform ourselves and others yet we still make errors nevertheless I am not going down without a fight and neither are many others. I spread the good news whenever, and however, I can. So much appreciate your effort mate keep it up. To alll of my friends who have taken on the basics of MMT I say thank you and let’s keep the ball rolling. Remember Labor is our real problem as we must once more turn them to progressive politics and away from their sleep neoliberal self-interest.

  21. Royce Arriso

    Hi Stephen–John Kelly had a hand in my epiphany, too. The other big eye-opener for me was serendipitous. Reading AJP Taylor’s ‘Origins of the Second World War’, was gob-smacked to learn that Classical economics had long ago been tried and found wanting. It was thrown in history’s rubbish bin during the Depression years, when calls by Classical economists for more and more austerity made things–obviously!-worse.
    Am now firmly convinced that the ‘household analogy’—that assertion which maintains an economy resembles a giant domestic budget—far from being merely a mentally lazy metaphor, is in fact the lynchpin of the gigantic system of wealth transfer which is Neoliberalism.
    It is this whopper which facilitates the whole process. Cuts to programs of public benefit can be justified on the basis of scarce funds–an outright lie for a currency-creating govt. And Commonwealth so-called ‘debt’ can be depicted as a giant maxed-out credit card, its existence the clearest proof that all govt is INHERENTLY inefficient and debt-ridden.
    These are Libertarian aims, part of the anti-social aims so dear to adherents of that toxic ideology.
    .
    THEIR SOCIOPATHIC DOGMA NEEDS TO BE PUBLICLY SPRUNG BAD.

  22. Clarry

    So at what point does,must a Gov,t stop issuing money and why???

  23. Royce Arriso

    “So at what point does,must a Gov,t stop issuing money and why???”
    First task; distinguish between (Commonwealth) govt expenditure and what you term “issuing money.”
    The latter term seems to infer printing notes.
    And I wonder if that function is so important when most (Commonwealth) expenditure is via electronic transfer.
    As on Pension day, for example.

  24. economicreform

    Morrison is a snake-oil salesman and con artist par excellance. By comparison, finance minister Cormann is an amateur in both respects. Both are economic illiterates.

  25. economicreform

    “So at what point does, must a Gov.t stop issuing money and why???”

    The federal government has a duty to create and issue as much money as the real economy needs in order to function in a healthy manner. That is not happening at present. Moreover it also has a duty to ensure that the money thus released is directed towards those sectors of the population who are most in need and can benefit most directly from the fiscal injection.

    In order to fully understand the mechanism by which the government creates and distributes new money into the real economy, one must have a thorough understanding of what money is, and what it is not. This might involve grappling with some counter-intuitive concepts, and unfortunately this is where most people get into difficulty — and become fair game for the con-artists, spivs and snake-oil salesmen.

  26. Alan Luchetti

    Are all you MMT cultists seriously maintaining that if Wikileaks and/or agents of the Putin administration hacked into the Reserve Bank and the Treasury and emptied all the dollars out of all the accounts representing Consolidated Revenue and bond sale proceeds, bond holders wouldn’t have have to whistle, the defence forces wouldn’t be paralysed, and pensioners wouldn’t starve? Preposterous!

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