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Do Taxes Fund Spending?

Let’s step way outside our comfort zone here and take part in a discussion that, I think, we need to have. It is about money. If the article reproduced below is an accurate reflection of how debt and deficit work, then we need to talk about it instead of playing the mindless games we play at the moment in respect of taxes, spending, the supply of money and debt and deficit, in general. There are many similar articles available online under various headings, such as, High Powered Money, Monetary Base and others but this one is, I think, the easiest to understand.

The article is taken from the Democratic Underground website but its authorship is unclear. It is quite long but, as you will discover, necessarily so. If it is an accurate description of the story of money then we need our politicians to come clean and end some of the more absurd claims they make about debt and deficit.

The article starts here.

Taxes don’t fund government; public debt doesn’t need to be paid off

money supply In this post, I foolishly wade into the sticky morass that is monetary policy. Bear with me.
A common way to look at how taxes, government spending, and public debt work is a very intuitive one:
The government takes in taxes. These taxes are used to pay for government spending. If the taxes are more than the spending, the government runs a surplus for the year. If the taxes are less than the spending, the government runs a deficit for the year, and must issue bonds (borrow money) to make up the difference.

This is intuitive but completely wrong, and gets backwards what is actually going on.

I want to start with the end of that paragraph in particular: “and must issue bonds (borrow money) to make up the difference”. Even a very conventional economist will eventually admit that this isn’t in fact true; the government (assuming it has its own central bank – so we’re not talking about the Eurozone right now) can also “print money” to make up the difference. It can simply say “well, through the magic of central banking we now have the money to make up the difference between receipts and outlays.”

So, borrowing is one way a government can “make up the difference”; not the only way. And looking at the question with that in mind, one is led to the fundamental fact that a government like the US’s actually can’t ever “need” dollars; it is capable of generating as many of them as it wants instantly. So looking at taxes as a way of getting dollars that the government needs for spending is clearly wrong.

But why, then, does the government tax or borrow at all? Why not just create the money it needs every year? Even a high school economics student can tell you, “inflation”: doing so will decrease the value of money to the point that it’s not worth doing. But this also leads to my first point:

Taxation isn’t a way to get the government revenue that it doesn’t (and can’t) need; it’s a way to control the money supply.

tax Since the government can’t need a dollar, and can create them at any time it wants, it’s possible to look at every dollar paid in taxes as disappearing from the economy, and every government dollar spent as being created when it is spent. Actually, it’s better to look at it that way: as we’re fond of saying, “a government is not a household”, and getting rid of a model that treats it like one is a good thing.

So why does the government borrow money? I’m glad you asked. Look at a bond issue from the perspective above, of money being created when the government spends it and destroyed when the government receives it. When the government borrows money, it takes (ie, destroys) a dollar now in exchange for a promise to spend (ie, create) a dollar and a bit more later. It’s a way of signalling the intended future size of the money supply, and of growing it at a predictable rate. Just like with banks, debt is where growth comes from. Furthermore, since we use the bond market to set interest rates (ie, how much the “a bit more” above actually means), it’s also a way of gauging the market’s reaction to the proposed future money supply.

Currently, for the US, that “a bit more” is actually negative in real terms – people are asking for a lower return on bonds than the already-low rate of inflation. To put it facilely, the world is paying the US government for the privilege of lending us money. What the market has achieved (whether it “wants” this is a different question, one I can’t answer) is that instead of promising a steady future growth of the money supply, the debt as it stands will decrease the (real) money supply as the government pays (creates) less in real terms for redemptions than it received (destroyed) for the original bonds. On a side note, this is probably a decent argument for stopping all taxing (which has the same effect on the money supply as negative-interest borrowing) until the interest rates come up enough that borrowing is again a net real money-creator rather than money-destroyer. Also as a side note, this is what’s “actually” going on with the QE attempts at the Fed: if the debt isn’t monetized now, it will end up shrinking the real money supply when it’s redeemed, which nobody wants (like I said, an easier version of the same thing would simply be to stop all taxation for a year or two and let the deficit get up to where the market “wants” it).

But then the debt would increase. Quelle horreur! I often hear “we can’t leave this debt for our children to pay off”, and I scratch my head a little each time. This leads me to my second point:

The national debt never needs to be “paid off”.

debt It never needs to be smaller than it is. In fact, “paying it off” would be a pretty horrible idea and would send the fixed-income market (and with it, most of our retirement funds) reeling. Again, governments aren’t households. For that matter, raising taxes and cutting spending to “pay off the debt” (one or both of those being everybody politician’s basic plan, seemingly) completely misses the point, I suppose because it buys into the “taxes pay for government” fallacy. US debt is dollar-denominated. The US government can create as many dollars as it wants. If the debt per se is actually a “problem”, particularly “the most pressing problem of our day” or whatever, then we can pay it off tomorrow if we want (we don’t want, which is why we haven’t) at the cost of inflation.

But what about interest payments? What about them? They’re kind of the point: the purpose of the bond was to destroy some money in the past and create a somewhat larger amount of money in the future. This is a feature, not a bug. Whenever I mention that real interest rates are negative someone always says, “yeah, but they won’t always be”. To which my response is, “great, then the debt will finally be able to go back to doing its job of predictably increasing the money supply”. We would like positive (if low) real interest because we would like the debt to continue to be a money supply growth tool.

The public perception problems here are tied up together. If you think (wrongly) that “taxes fund government” rather than (rightly) “taxes are a way the government controls the money supply”, then you also think “debt means that at some point in the future we will need to pay more or receive less to pay it off”. But, of course, being “in debt” of something you control the supply of is a ludicrous idea. It may well be useful at points in the future to destroy more money (raise taxes) or create less (cut spending) in order to change the balance of the money supply expected in the future, but (firstly) this is hardly the end of the world it’s presented as, and (secondly) we only “need” to do either if it’s more convenient for us in terms of the size and value of our money supply.

parliament Governments are not households. There is no repo man who is going to come take Mount Rushmore. The national debt is a (pretty good) technique we have to manage current and future money supply, and it complements money destruction (taxes) and money creation (spending) pretty well.

 

 

 

Also by John Kelly:

Hockey’s Class Warfare

Leadership Speculation: Don’t you just love it?

What a Circus!

Dealing with Drugs: a new approach.

81 comments

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  1. Edward Eastwood

    Congratulations John and welcome to the wonderful world on Neo-Keynesian economics or Neo-Chartalism.

    As you’ve just discovered, it is the antithesis of Neo-liberalism myths concerning deficits and ‘debt’, surplus and deficits.

    It is also the most powerful and important tool to be used in the debunking of the economic myths that have been force fed on the public for the past three decades.

    Should you wish to investigate further, you can do no better than to familiarize yourself with Bill Mitchell and his site.

    All of the answers to all of your doubts or questions lie within.

    http://bilbo.economicoutlook.net/blog/

  2. Pingback: Do Taxes Fund Spending? | OzHouse

  3. Lee

    Thank you John. I’m also trying to get my head around it at the moment and have recently commenced reading The 7 Deadly Economic Frauds of Economic Policy by Warren Mosler. Good resources that are easy to understand by those of us who never studied economics are greatly appreciated.

  4. John Armour

    Was it something I said ?

    : )

  5. John Kelly

    Yep. Always open to a new learning experience.

  6. Anomander

    Thank you John.

    I had it momentarily and the lightbulb flashed, only to lose it a few seconds later. I kept reading and suddenly the world opened-up before me in gorgeous clarity – WOW!

    This isn’t just one lie or several, it is systematic lying from all levels of government, the media, economists and people we trusted over a lifetime. Lies upon lies, telling a narrative that has no foundation whatsoever.

    I wouldn’t have thought it possible, but now I’m even more angry.

  7. Alex

    Taxes create demand for the government’s currency, and the government must logically spend or loan that currency into existence before they can be paid.

    When the government pays us a dollar, just two things can ultimately happen to that dollar: it can be used to pay taxes, or it can be saved. If it’s saved, the government is left with a deficit, and the government has accrued a bit of debt. Meanwhile the non-government has run a surplus, and the non-government has acquired savings.

    So all this hysteria over “debt and deficits” and the US running out of or being denied United States dollars is just that. People getting worked up over something that is in no way a bad thing – their own savings.

    Note, and this is where people get confused, as recently as 43 years ago the USD didn’t work like that. It was merely a proxy for gold. That’s what it means to have a fixed exchange rate, and when your currency is merely a proxy for something else – you can run out of it. If you don’t have enough gold, you don’t have enough USD. It’s under that regime, one long since passed, that most of economics is founded. Debt denominated in ones own free floating currency is what we are all discussing today, and the intricacies of that is something a lot of economists still do not understand.

  8. Alex

    Apologies, got lost for a second there thought I was on a US site!

    In the context of Australia the switch was even more recent. We’ve only had a free-floating currency for 31 years now. Before that time, we had to borrow USD for our debts. We now borrow only the same currency we issue.. and yet still some people get worked up about it, afraid we might run out. Which is utter nonsense of course, we are not going to “run out” of our own currency, and nor are we ever going to be denied it by markets should the government choose to borrow it.

  9. John Pratt

    Great piece John. The talk of a deficit is all smoke & mirrors. Howard set up a structural deficit when he gave tax cuts to the rich. Now the LNP want the poor, elderly & disabled to go without to pay for those tax cuts. I have never seen such a cash grab from the rich. It is tearing our society apart.

  10. John Armour

    Whilst I’m delighted to see something like this outside the confines of the economics blogosphere, there are much better explanations out there.

    The opening and closing comments on tax and borrowing are accurate enough, and serve the purpose of sowing doubt in the erroneous mainstream beliefs, but I think most readers will find the material dealing with bonds a bit confusing. I’d say it was actually wrong. It seems to be a conflation of the orthodox (but incorrect) description of the expansion of the money supply that’s found in economics text books, and some other ideas I didn’t have time to dwell on.

    One should move quickly, after reading this article, to a much more reliable description by Bill Mitchell while the apostasy is still fomenting.

    Understanding Central Bank Operations

  11. John Armour

    Terrific comments Alex !

  12. John Armour

    Howard set up a structural deficit when he gave tax cuts to the rich.

    Watch out for those structural deficits, John.

    Structural deficits, the great con job

  13. Totaram

    This follows on from the discussion on the previous article about Hockey’s budget. OK I get it. Let me see if I’m clear on this issue.

    First the difference is not AS stark as it might seem. There IS still a need to “balance” the budget in the long term so that inflation is kept under control. Purely printing money will lead to inflation in the long term. However, it DOES mean that all this Hoo-Ha about “debt” and getting back to surplus (especially by flogging off government assets) is a con.

    But that is clear even if you consider a national government as a household. People don’t sell their homes and pay off their mortgages simply to become debt free. They would only do this if they could not service their debt any more. The significant point about our government’s debt is that it can ALWAYS service the debt, at the possible risk of increasing inflation. But inflation is also controlled by the Reserve Bank by setting interest rates. So, by increasing the interest rate the RBA encourages “investors” to park their money there, thus reducing the money supply.

    The second point about a government is, as pointed out, there is no debt collector, if only because debts can always be paid by “printing” money. It’s true that it’s not even “printed” these days, except for the cash economy.

    The comparisons with Greece and Spain are also bullshit. Those countries only had problems because they have given up their fiat currencies and joined the the EU. They could have defaulted on their loans, gone out of the EU and gone back to their own currencies but they chose to stay in the EU. Currently, to stimulate the EU the central bank there has set the interest rate as negative, if I’m not mistaken. This would then have the same effect, or be equivalent to the QE being carried out by the fed in the USA.

    Why have people like Ken Henry and Martin Parkinson not explained it to the relevant treasurers, at least. Why did Wayne Swan fall for this “bringing the budget back to surplus” bullshit? He could have simply said that they are on track to balance the books in the long term. He just ended up looking foolish by singing from the coalition hymn book.

    Finally, though, I’m not sure that “saving surplus for the future” doesn’t mean anything. If that were the case Norway’s sovereign fund would have no meaning. They seem to have simply invested outside Norway as a kind of “hedge”. Australia’s own Future Fund does something similar. I think you CAN save for the future by investing in tangible assets. This is possibly the best argument for building infrastructure that is OWNED by the Government.

    Please correct me if I’m wrong somewhere.

  14. John Armour

    There IS still a need to “balance” the budget in the long term so that inflation is kept under control.

    Not so. We can run deficits in perpetuity.

    Indeed, if we run external deficits and the private sector saves more than it spends then according to equation of the sectoral balances, an accounting identity, the fiscal balance has to in deficit.

    Norway runs a huge external surplus so it’s not a valid comparison.

  15. Alex

    John, thanks and you’re right that how bonds are presented in the article is most odd.

    Personally I find the best way to consider bonds is that they’re simply convertible to AUD at a price fixed (for short term bonds) directly the RBA. For long term bonds it’s a little more complicated, as the exchange rate is being set by speculators of RBA policy rather than by the RBA directly, but it’s the same basic thing just with a layer of obfuscation basically.

    Now the notion that the government printing “bonds” to pay for its deficits is somehow less inflationary than printing “money” when one is directly convertible to the other at a price fixed by the RBA I really do find most absurd.

    Totaram: It’s quite possible to run continual deficits and have a non-inflationary impact on the economy – just consider Japan: Every year, the Japanese government finds it’s collected less yen than it made in payments, with the difference simply sitting in the pension accounts of its risk-adverse aging population. There’s just nothing in an aging population putting aside the government’s currency that is inflationary. It’s money not being spent, just being saved for when they’re older.

    Conversely, by going into debt people can spend money they don’t even have yet, and that has potential to be inflationary even if the government is running a balanced budget. The budget outcome and inflation are related (as is unemployment), yes, but there’s nothing to say that a deficit, or even many years of deficits, will be inflationary. Even if it’s paid for by “printed money” (ie Quantitative Easing).

  16. John Armour

    But inflation is also controlled by the Reserve Bank by setting interest rates. So, by increasing the interest rate the RBA encourages “investors” to park their money there, thus reducing the money supply.

    The RBA might think that but I’m not so sure. The chain of causality is not as obvious as we think it is. When rates are pushed to the lower bound for example, savers (like retirees) take a pay cut, and spending falls.

    As to higher rates encouraging investors to park their money (regardless of where) that doesn’t have an effect on the money supply per se, just the usual depressing effect that all saving has on the spending circuit.

    The money supply really has little to do with the central bank. The RBA just supplies reserves (which are not loaned out) to meet the needs of the commercial banks as and when they want them. The banks only need reserves to keep the payments system ticking over.

    Money Multiplier and other myths.

    These days, what’s called the ‘money supply’ is mainly bank money, and it rises and falls with the business cycle, quite independently of the central bank who probably watch it’s gyrations on their screens through their fingers.

  17. John Armour

    Why have people like Ken Henry and Martin Parkinson not explained it to the relevant treasurers, at least. Why did Wayne Swan fall for this “bringing the budget back to surplus” bullshit? He could have simply said that they are on track to balance the books in the long term. He just ended up looking foolish by singing from the coalition hymn book.

    That’s always puzzled me too Totaram. Every time Swan opened his mouth I doubled up in pain. I’ve said that the LNP sold him a noose, telling him it was a nice bow tie.

    Paul Ormerod wrote a book in 1994 called “The Death of Economics” that opened my eyes. Unfortunately a whole generation of economists had been brainwashed by then with neo-liberal ideology and I don’t expect much will change until they’ve retired.

    Have you ever tried to convince a proselyte that homeopathy or astrology is bullshit ? I think we’re facing the same problem.

    Science progresses one funeral at a time as (I think) Max Planck said (yes, just checked). And the same for economics.

  18. John Armour

    Totaram,

    I think you CAN save for the future by investing in tangible assets.

    I would just add the words “CAN ONLY SAVE”.

    And I think you’ll find Bill Mitchell agrees with you…

    The Future Fund Scandal

  19. John Kelly

    I hope you guys (John, Alex, Totarum) appreciate what you are doing to my brain. There’s only so much a 69 yo can absorb in one sitting.

  20. John Armour

    I just turned 70 John, but I did get most of this stuff bedded down some years ago, before I turned silly. Otherwise, yes, I agree, it’s confronting. And highly counter-intuitive. But as I’ve said in the hearing of a lot of old friends here, when the penny drops make sure you’re wearing steel cap boots.

  21. silkworm

    I disagree with the gist of this article. It is true that the government can print money, and as the article says, this is avoided because it leads to inflation. Inflation should be avoided because it falls hardest upon the poor. Inflation operates like a flat tax. It is better for equality to raise money through progressive taxes than the “flat tax” of printing money.

  22. RalphG

    It will be much better for your sanity if you simply forget everything in this blog. And for goodness sake stay well away from Bill Mitchell’s site.

    Failure to do so will result in an understanding of how our monetary system really operates and this can never be unlearned. Trust me, I should know. I’ve been reading Bill Mitchell’s blog almost daily for the past 3 years.

    Avoid the frightened look on your childrens’ faces when you yell at some idiotic economic commentator on the television telling you that the government “must get the budget back into surplus”. Avoid frightening your pets as you rage against Joe Hockey telling you that the government must “live within its means”.

    But if you are going to persist in trying to understand this heresy then, as John Armour so aptly said, “when the penny drops make sure you’re wearing steel caps boots”.

  23. Bacchus

    It is true that the government can print money, and as the article says, this is avoided because it leads to inflation.

    That’s what neo-liberal economics would have you believe silkworm – it is not true though 😉

    When I’m not on a mobile device, I’ll find an explanation that makes more sense than I can 🙂 Simplistically, inflation is a function of available resources, rather than just spending. If government and/or the private sector seeks to “buy” more resources than what is available (for example, employees), this will cause rising inflation. As long as there is spare capacity in an economy, inflation is easily controlled.

  24. John Kelly

    Don’t listen to RalphG, Silkworm. Forget everything you have been told to date and come along for the ride. As RalphG intimated, once you get your mind to accept it, bells start ringing in your head. It may send you crazy but at least you won’t die wondering.

  25. Jason

    Thanks so much John Kelly, and the other commenters. This is fascinating stuff. It is slowly starting to put the pieces of a jig saw together for me!

  26. John Armour

    To paraphrase Keynes, it’s not that these new ideas are so difficult, the difficulty lies in clearing your head of the old ones.

    We’re like political prisoners in a cell where the Tannoy squarks 24 hours a day in an accent not unlike Matthias Cormann’s: “deficits bad”, “debts for our grandchildren”, “taxpayer’s money”, “maxing out the nation’s credit card”, “Labor’s mess” and so on until we all go mad.

    Metaphors are useful: I think of the flow of government spending as being a hydraulic head in a hydro-electric scheme driving the turbines of the economy before flowing to the sea. Deficit spending is nothing more than a “flow”, “water under the bridge” as Bill Mitchell I think has sometimes referred to it. It’s a mistake to think of it as a debt piling up somewhere that has to be paid back…to somebody (?).

    By similar logic, this metaphor shows the silliness of the idea that surpluses are somehow useful as national saving, or that they can be put away for a not-so-rainy day (to persist with the water analogy).

    There’s another slightly more complicated metaphor describing the economy as a tank with 3 input pipes and 3 drains. The inputs are government spending, private investment, and export income while the drains are taxes, household saving, and the cost of imports.

    These flows all play against each other to maintain a certain level in the tank which is national income.

    When I got this, that was when the penny dropped for me.

  27. sam

    Thanks for publishing this.

    I emailed aimn about publishing some concepts of modern monetary theory. (or was it to show some of the insanity in neo-classical economics).

    Wether this has anything to do with that or not i dont know. But thank you anyway.
    The debate about the ‘budget’ (should be called fiscal or financial statement as ‘budget’ has incorrect connotations) has been terrible in Australia. Even within the left they have NOT attacked the crux of the issue which is this insanity to ‘pay’ off ‘debt’.

    The ‘budget’ has been made this ideological ‘hard constraint’ against which the government can raise hands + flail about and say: ‘would like to help but we dont have the money’ is a disgrace.

    Im hoping Australians protest with placards calling for: ‘full employment’, ‘soverign currency issuing government cannot be in debt’ or even ‘government sector surplus = increased private sector debt. Only one of these two can go bankrupt’.

    As already mentioned: Bill’s grilling of the budget a few weeks ago pointed out every time Australian government tried to aggressively return to surplus it caused a recession. And likewise the Howard years of budget surplus were inversely proportional to the private sector taking on historic levels of debt.

    keep up the good work.

  28. sam

    silkwormJune 20, 2014 at 10:27 pm

    I disagree with the gist of this article. It is true that the government can print money, and as the article says, this is avoided because it leads to inflation. Inflation should be avoided because it falls hardest upon the poor. Inflation operates like a flat tax. It is better for equality to raise money through progressive taxes than the “flat tax” of printing money.

    Sorry. This is factually incorrect.
    It is NOT inflationary if targeted at raising capacity. Or are you ignoring all the unemployment/underemployment around the place? Hell even if done badly eg: japan 1990’s. It does not cause inflation.

    Inflation: Aggregate Demand > Capacity.

    Point relative to this article is that there are ‘sub-paritions’ of the economy where there is a lack of fiscal velocity. People DONT have money to spend and capacity /contraction of output as a result. There are a plethora of mechanisms to bring economy out of an artificial capacity restraint and one that works superbly is job creation and structural defecits.

  29. Lee

    “The debate about the ‘budget’ (should be called fiscal or financial statement as ‘budget’ has incorrect connotations) has been terrible in Australia. Even within the left they have NOT attacked the crux of the issue which is this insanity to ‘pay’ off ‘debt’.”

    Because Labor are just as guilty of selling out to big business. Gone are the days when politicians went into politics to help anyone other than themselves and their wealthy mates. I have contacted the Labor Party and told them how disappointed I am that they have been drifting to the right. I’ve asked what they intend to do to make the wealthy pay their fair share of tax. The reply I got detailed all the items in the budget that they intend to oppose (social issues) but they are silent on the issue of tax for the wealthy.

  30. Lee

    “Im hoping Australians protest with placards calling for: ‘full employment’, ‘soverign currency issuing government cannot be in debt’ or even ‘government sector surplus = increased private sector debt. Only one of these two can go bankrupt’.”

    I went with ‘Jobs Not Jets’ for the March in May. I thought restricting it to 3 words would help the LNP to understand it.

  31. Kaye Lee

    “Have you ever tried to convince a proselyte that homeopathy or astrology is bullshit ?”

    We had that exact experience recently here John. This woman took over on every article giving out very dangerous medical advice. She was anti-vaccination too of course. When I told her that I would fight for her right to believe in birth charts but I would not allow her to print dangerous incorrect medical advice on my articles, she threatened to report me to the ACMA.

    I too yell at the tv screen every time I hear Cormann read his script. He is like one of those dolls where you pull out the string and you will just get the same phrases repeated over and over regardless of what you ask him. Those same phrases will be repeated by every Coalition MP (except for Barnaby who gives his own colourful version). Watching Alan Tudge on Lateline last night made me want to throw something.

  32. John Armour

    I disagree with the gist of this article. It is true that the government can print money, and as the article says, this is avoided because it leads to inflation.

    You missed the important qualification Silkworm: taxation.

    It’s not the best article, but if all it does is explain that taxation funds nothing it has been useful.

    Ignore the stuff on bonds because it is wrong and quite misleading. Read the Bill Mitchell links if you want to know the real purpose of bonds.

    Inflation should be avoided because it falls hardest upon the poor. Inflation operates like a flat tax. It is better for equality to raise money through progressive taxes than the “flat tax” of printing money.

    It depends on what you mean by ‘poor’. Inflation most hurts savers and lenders. Hyperinflations wreck things for everybody.

    Your assumption about the link between ‘printing money’ and inflation is not borne out in the real world because ‘printing money’ is what we’ve actually been doing since the end of the last bout of inflation (triggered by the Oil Shocks) in the late 70s-early 80s, a period when inflation has been steadily falling.

    What would most promote equality would be full employment but this will only happen when governments drop this insane obsession with austerity and the need to “repair the budget”.

    They can only get away with it while we the people choose to stay ignorant.

  33. Lee

    “Have you ever tried to convince a proselyte that homeopathy or astrology is bullshit ?”

    I’ve been a member of forums for many years that expose health fraud and quackery. People like Roslyn Ross appear on them all the time. They accuse everyone else of being close minded. The irony is, they get bombarded with loads of good evidence to refute what they say and they still refuse to let go of their misguided beliefs.

    After reading various articles on economic matters I can see that the field of economics contains some economists with a poor understanding of their field, just like the science field contains some scientists with a poor understanding of how science works. I expect every field is the same. The challenging part is coming from a different background and ensuring that what I am reading about economics is reliable.

  34. Bacchus

    Silkworm,

    I think John A & especially sam have explained inflation much better than I can, but in case you want more, I return to Bill Mitchell:

    Spending growth outstripping economy’s capacity:
    Modern monetary theory and inflation – Part 1

    Inflation casued by supply shocks:
    Modern monetary theory and inflation – Part 2

    A very intereting analysis of how this silly notion that printing money causes inflation got started:
    Printing money does not cause inflation

  35. DanDark

    Oh no not Roslyn lol
    Shhhhh or she might come back
    What a nightmare she was 🙁

  36. John Armour

    The challenging part is coming from a different background and ensuring that what I am reading about economics is reliable

    It’s hard work Lee. It started for me reading Paul Ormerod’s “Death of Economics” back in 1994 and moving on to MMT through Bill Mitchell in 2009.

    The”truth” has always been there, in academic papers and in various publications by central banks, but why should ordinary folk have to go to such extra-ordinary lengths to find out they’re being bullshitted to by all the market economists we see pontificating on the telly and their politician proselytes ?

    But this just raises the question: how come all the mainstream economists promote this nonsense ?

    I believe they have so much riding on their maintaining these myths that they can’t afford to jeopardise their standing and careers and call out ‘the emperor’s naked’. They have been well and truly brainwashed in a kind of religion as divorced from reality as homeopathy and astrology.

    There’s actually better ‘evidence’ for the resurrection of Jesus Christ because nobody saw it not happen, whereas anybody could pick up the phone and ask Glen Stevens how the RBA controls the cash rate. And why Glen Stevens goes along with the bullshit is anybody’s guess.

    I have a theory about how all this came about.

    Up until the early 70s, following the end of WW2, we enjoyed the Keynesian “golden age” of full employment and increasing wealth for the working class. This posed a threat to the elites who regarded the economic pie as theirs to apportion as they saw fit. The champions of the elites were the Ayn Randies of the Chicago School of Economics, led by Milton Friedman who during the 60s were honing their arguments for a different kind of economics, the opposite of Keynesian beliefs that promoted the idea of government intervention to manage demand in the economy and maintain full employment.

    The oil shocks of the 70’s and the phenomenon of stagflation opened the door for Friedman’s Monetarism and the ousting of Keynes (or what was thought to be Keynes).

    Despite Friedman’s theories being built on false premises, a misunderstanding about how the monetary system actually works, and their abject failure when applied (“unfortunately for Mr Friedman his theories were tried” is how J. K. Galbraith put it) his legacy lives on through succeeding generations of graduating economists who infest Treasury Departments and universities still. It’s impossible to embarrass them, because they have “faith”, like all zealots.

    So, it’s up to us.

  37. DanDark

    That Judith Sloan I think her name is, she is starting to morph into Abbott
    If she is on abc now spinning her shit, I turn it over, she is just plain evil that one.
    The devil reincarnated, she is truly insane that woman, and I use the word “woman” lightly.

  38. Lee

    Well it was war that led to a significant breakdown of the class system in the UK. The landowners could no longer afford their stately homes and most of the surrounding land has now been broken up and sold off. The business of entailing property to keep it in the family has long since gone.

    Once we recovered from the effects of WW2, the wealthy have seen a way to regain their power and they’re taking it. It’s political suicide to out them in the media and corrupt politicians are also benefiting, so they won’t say anything. Most of the economists who actually know the truth don’t want to kill their careers prematurely either by speaking out.

    I’m just blown away by the greed of these people. Gina Rinehart could give away 19/20 of her wealth, stop working tomorrow and still live in absolute luxury for the rest of her life. Why does she want even more money at the expense of the poor? Same goes for all of them. They don’t need the money. They’re just plain greedy, selfish and nasty.

  39. Royce Arriso

    To reinforce above comments, Bill Mitchell (‘billy blog’) is the go-to boyo, especially for novices like myself. The sheer dead weight of crapuloid neo-con spin that bears down on us all must be shown for what it is. And nothing so effectively shines a metaphorical Dolphin up the grimy conservative clacker like good hard evidence. Don’t they hate it?! Struggle on, our beloved Australia!

  40. DanDark

    It is a deep Iacking in self worth, thar pushes Gina and co
    They have been taught from a young age, if you own nothing,
    you are a nobody, and well Gina is a nobody, just with a lot of money

    I know a lot of nobody’s, with a just a few coins, that have more self worth,
    Than the banks with money, wealth is a mask, to make them feel worthy, that’s all

    But it is a fools game, and Gina has always been a fool, just got a fatter one that’s all
    She is a “sloth” with a very twisted brain, that was inherited to her by the one and only Lang the Mangler.

  41. John Kelly

    John Armour, your two metaphors were just perfect for me. The second one perhaps better than the first. I get it. The penny fell and I had to jump away because I wasn’t wearing steel capped boots.

  42. John Armour

    John Armour, your two metaphors were just perfect for me…

    That’s just terrific,John. We all learn in different ways, and the skill of a good teacher is to keep coming up with different metaphors until everybody in the class ‘gets it’.

    Those 2 just about exhaust my repertoire so I’m really chuffed they worked for you.

    Glad you still have all your toes too.

  43. Totaram

    Thanks John Armour for your comments. Clearly there are other economic relationships I need to take into account. I had come across MMT and Bill Mitchel some time ago but did not give them the attention they deserve. Well, back to school for this 69 year old as well. I’m sure it will be fun.

  44. Lee

    Here’s an interesting lecture from 2013 by Bill Mitchell, it it’s a familiar story. He’s the 3rd lecturer down the page, and there are links to a booklet and video.

    http://www.cdu.edu.au/about/professorials

    Full employment abandoned: the triumph of ideology over evidence

    After World War II, the advanced economies adopted the policy goal of full employment and actively used fiscal and monetary policy to ensure that goal was achieved. This policy framework supported sustained economic growth and also reduced income and wealth inequalities. Importantly, it also supported a reduction in world poverty and the economic transformation of the poorer nations. The corporate sector and its conservative allies in politics, however, did not support this policy framework. They preferred a larger pool of unemployed people to use as a threat against wage demands. Events in the 1970s (OPEC oil shocks) provided the circumstances where the conservative paradigm gained the policy ascendancy. Well-funded neo-liberal think tanks and right-wing multilateral agencies, such as the IMF and the World Bank, fed the media with the conservative narrative, which successfully dominated the values debate, stripped the government of its political capacity to purpose public purpose and demonised the most disadvantaged citizens. Significantly, the rise of neo-liberalism undermined economic development in the poorest nations. Poor countries such as Timor-Leste are now trapped in a vice of unjustifiable fiscal austerity. The reality is that the political transformation is not supported by evidence, but demonstrates the triumph of a power elite pursuing its narrow ideological interest at the expense of a shared economic prosperity.

  45. DanDark

    smokin’joe, is a cigar smoking tap dancing fat arse, that should be counting rice grains at the bottom of the silo
    Eleventy cannot count the fingers on his hands, he is a backward gambler that’s all, that married a corrupt banker ms cabbage
    he is a nobody fool, who is a big fat liar, and its been proven Jay 😉

  46. John Armour

    Thanks for that link to the lecture by Bill Mitchell, Lee. I’d never seen it before so I’m especially grateful.

    It’s a sad tale of betrayal isn’t it ? Reminds me of that Michael Leunig drawing of a farmer butchering a sheep that’s hanging from a rafter in the barn, while its sibling looks on with idle curiosity, oblivious to what it all means for its future.

    The graph on page 9 Figure 1 showing the yawning gulf opening up between productivity and wages tells it all, how capital has been taking a bigger and bigger share of the pie, that once was shared fairly, in once-upon-a-time “Fair Go” Australia.

    It’s even sadder that the betrayal seems to have started with the Hawke-Keating governments in Australia.

    There’s an important bit missing from the graph on page 14 Figure 3, the plot line for the external balance. The complete graph can be seen in another article by Bill… The PBO-humiliation all round.

    Looking at the complete graph, showing all 3 sectors of the sectoral balance, if you invert the fiscal balance (T – G), taxes minus spending, so that it plots as positive rather than negative, that is, showing it as an injection into the economy rather than a deficit, you can see how the summing of the values of all 3 components of the sectoral balances comes to zero, thus verifying the integrity of the sectoral balance identity.

  47. John Armour

    So we should just be in debt or print more money

    I’m surprised you can use a keyboard Jay.

  48. Kaye Lee

    “Here the left want only certain people to pay taxes, want refugees but not if they are brought here to work, we want to protect all dieing industries and expect to keep our jobs and our right to not to learn more if we price our companies out of business. Hockey may not be likeable, but at least he sees the reality”

    I completely disagree with everything you have said here Jay. As it is, big business and wealthy people have the ability to avoid paying tax – they would rather pay millions to accountants to work out how to avoid it than to just pay their share. It causes a great deal of resentment when someone like Rupert Murdoch can just shift money around so he ends up getting an $882 million tax RETURN from us. Google and Apple and Westfield have all been exposed for tax “minimisation” – probably not illegal but definitely immoral.

    I think you would find that most people on the left feel that asylum seekers SHOULD be allowed to work while waiting for their application to be assessed – better them than importing 457 visa workers to be exploited. Industry assistance is problematic but the benefits of employment must be considered in the equation – not just the bottom profit line. The social costs of unemployment are a large factor in those decisions.

    Before you kill off industries you should be developing new ones. Sacrificing the renewable energy industry and cutting funding to research is crazy. Pinning our economy on industries that are winding down is very short term thinking. Cutting funding for education and support groups and closing trades training centres shows the government do not truly care about providing learning opportunities.

    Joe Hockey might be a very likable man but he has just brought down the worst budget ever showing exactly what his goals are – screw the poor and boost the rich. They must not be allowed to get away with this.

  49. John Armour

    Thanks for that link to the article on Steele, Kaye Lee.

    How come he hasn’t been shot ?

    I tried to order his book from the depository but it’s currently out of stock. That’s got to be a good sign.

    Economics seems to be a common thread running through Steele’s matrix of the preconditions for revolution.

    It behoves us all to do our best to understand economics to first understand the extent of the les and deceit and then to use our anger to overturn the dominant paradigm and reclaim government for the people. Pretty straightforward really.

  50. darrel nay

    I think bigger deficits mean bigger government. It is clear from our discussion that, like our tax system, the economic system is needlessly complex. Certainly the powers that be don’t want us to figure it out or the growing corruption in this country would be clearly exposed (derivatives scams and fixed markets). The extent of corporate influence rides on the back of government involvement. Surely if we can choke government power we can limit corruption and big-money influence ie. reduce fiscal deficits to reduce the size of government to reduce corruption. At the end of the day these “parties” spend and borrow vast sums of our money in our name and then they have the nerve to dictate to us how we should live.

    I notice that there were large protests in Germany this week. The protesters want to end the central bank and they join a growing group of people who are tired of the way central banks around the world are milking nations for their own benefit. Central banking, as I understand it, is a concept lauded by Marx (with bankster funding from Rockerfeller) to squeeze the middle-class and produce a more centralised control grid. I had a quick look at our own Reserve Bank Act recently and it is laughable the lack of accountability placed on this group. I may be incorrect, but I believe that, contrary to the understanding of most Australians, the Reserve Bank of Australia is actually a foreign-owned banking cartel who refuse to be publicly audited. They set rates behind closed doors and many people imagine they privately profit from advanced knowledge of such critical decisions (witness the ongoing libor scandals). Further, I am told the Reserve Bank now contracts out the printing of our currency and lends every dollar in circulation at interest – the government borrows the money from the RBA and we have to repay with interest.

    Certainly corruption can less-easily be masked in a simpler @/or smaller system.

    Cheers

  51. John Kelly

    Thank you for your sarcasm, Jay. I’m happy to acknowledge that I’m on a learning curve. Clearly, you are not. I have no idea about Scandinavia although you didn’t state which countries you were referring to. I have been to Norway, Sweden and Finland but sadly, didn’t stay long enough to complete a PhD on their economic structure. The people were very friendly though. All I can say to you is that you take a deep breath and open your mind to a new way of thinking. I did and as RalphG mentioned in an earlier post, once you get it, you can’t ‘un-get’ it. The Neo-Liberal way of thinking has a use-by date and to quote one of my favourite groups of the past, i.e. Peter, Paul and Mary, “So get out of the new way if you can’t lend a hand, for the times they are a changing.”

  52. Carol Taylor

    Jay, and Hockey may not be likeable, but at least he sees the reality. It is a sense of entitlement that dogs australia. And just imagine what could be achieved if Hockey had the gumption to tackle the big end of town, and *their* sense of entitlement. But of course that won’t happen, those without the intestinal fortitude to make real decisions, make real changes will wimp out and tackle those least able to defend themselves; the pensioners, the disabled and students trying to better themselves. BTW did you know that Hockey cancelled the Pensioner Education Supplement..it’s only a pittance but this small allowance has always been targeted at those least able, those with the least wealth in our society who want to bring about improvements in their lives and who have the perseverance and determination to try to get off the pension. So what does Hockey do? He cancels it.

  53. John Armour

    I may be incorrect, but I believe that, contrary to the understanding of most Australians, the Reserve Bank of Australia is actually a foreign-owned banking cartel who refuse to be publicly audited.

    I’m quite familiar with your sources Darrel. Their post code is some little rock in the asteroid belt.

    Your beliefs are quite delusional and I don’t think there’s any point in trying to convince you otherwise.

  54. Matthew Oborne

    It was Joe Hockey who called for deregulating the banking industry just before the GFC. At the time he was calling for it many sources had correctly identified the problems that did cause the GFC, yet Hockey in typical conservative fashion ignored the potential disaster which eventuated, so no Hockey is a lucky man, lucky he wasn’t treasurer when he wanted deregulation, lucky more competent people than he were looking after the regulation. The only part of the surplus debate I dislike is that net and gross debt are used interchangeably to imply that when we had a surplus the government had no debt at all.

    If I used the Liberal standard for having no debt I would in theory have no mortgage,

    my bank of course would not see it that way.

  55. RalphG

    Darrel Nay: “I may be incorrect, but I believe that, contrary to the understanding of most Australians, the Reserve Bank of Australia is actually a foreign-owned banking cartel who refuse to be publicly audited.”

    You are incorrect. From the RBA website (http://www.rba.gov.au/qa/role.html):

    “The Bank is a body corporate wholly owned by the Commonwealth of Australia.”

    Darrel Nay: “Further, I am told the Reserve Bank now contracts out the printing of our currency”

    The printing of Australian currency is performed by Note Printing Australia, a wholly owned subsidiary of the RBA, and has done so for the past 100 years.

    http://www.noteprinting.com/about-npa-history-and-management.shtml

    Darrel: Nay “I think bigger deficits mean bigger government.”

    Sorry, but it would seem that not much thinking went into your post.

  56. Lee

    Oh dear, Jay hasn’t been reading any of the references posted. He’s been far too busy drinking the conservatives’ koolaid.

  57. Lee

    “Joe Hockey might be a very likable man”

    Mmmm… no… Joe Hockey is the embodiment of the smiling assassin. He’s in parliament for no other reason than to take care of himself and his wealthy mates.

  58. Kaye Lee

    Lee, I have never met him so I have no opinion on whether he is likable or not. I agree he is a man with personal ambition who wants to maximise his wealth and that of his “class”. Tony Abbott, on the other hand, I did know personally during our university days and I can assure you – he was an arrogant intolerant bully then and I have seen no reason to feel he has changed

  59. darrel nay

    Thanks Ralph – I have been wrong many times and appreciate your info.

  60. darrel nay

    Certainly I am still learning how things work. I was just looking at the Reserve Bank Act 1959 and there are a few sections that are interesting and maybe Ralph, or someone else, could clarify them for me.

    sect. 75 …the Bank may:
    (c) act as the agent of an ADI carrying on business within or beyond Australia.

    sect. 76 The Bank may, by instrument under its seal, appoint a person (whether in Australia or in a place beyond Australia) to be its attorney and a person so appointed may, subject to the instrument do any act or execute any power or function which he or she is authorised by the instrument to do or execute.

    sect. 87 The validity of an act or transaction of the Bank shall not be called in question in any legal proceedings on the ground that any provision of this Act has not been complied with.

    These sections seem to provide the framework for the transfer of authority offshore.

  61. Stephen Tardrew

    Great Post again John:

    Not an expert but have read Bill Michell on MMT and and others and thoroughly agree with him as well as the other great posters on this blog.
    <
    The seriousness of these issues cannot be overstated. We are running headlong down the path to recession winding back manufacturing employment and welfare support by actually taking capital out of the economy while increasing unemployment. You have to be a logical dunderhead to think that shrinking the economy will lead to growth. Reducing debt leads to recession and our foray with austerity will be the nightmare from hell. Reduce youth education and employment opportunities and what the hell does any sane person think is going to happen. Real unemployment and underemployment is actually over 13%. Debt is just one aspect that flows through the economy finding its necessary level to meet current circumstances and as Bill notes fill employment is full utilization of the economy in which capital flows benefit everyone regardless of debt. To use unemployment and underemployment to control the economy is primitive archaic medieval neocon class warfare.
    <
    You have to be off your rocker to continually repeat more of the same neocon austerity garbage that has been prove time and time again to be recessionary. Then we will undoubtedly be up for Abbot, Hockey and Co initiation deregulation (Oops already happening) which will lead us back into a new series of toxic assets and derivatives leading to another recession.
    <
    How the hell can we trust economic rationalists, LNP or Labor, who want to lead us back into the depth of neoconservative, Chicago School gush up, slow drip down, boom bust economics that got us where we are today.
    <
    Conservationism right an left is fear based regressive primitivism clinging onto an unworkable past while denigrating the best and most creative contemporary economists who refuse to be conditioned by primitive attachment to worn out redundant, provably false, econometric models.
    <
    Lee's post of the Video of Professor Bill Williams is not a nest for vapid leftist radicalism but a well presented academic approach to Modern Money Theory – a well though out explanation of the fallacious a debt crisis.

  62. Totaram

    I am a bit confused by this Jay person. I read every post carefully, starting with the article. Where did John Kelly say anything about numbers? Apparently Jay thinks John doesn’t understand numbers. How did Jay get this idea?
    Perhaps this proves that Jay is just trolling. But, I will be happy to discuss what Jay understands about numbers and thinks that John Kelly does not understand about them. I do have a PhD in mathematics.

    Thanks again to everyone that has contributed here. Much has been achieved.If there are lots of people “lurking” on this blog (as there usually are), we hope they will be informed and educated by this discussion, and follow up on their reading and understanding.

  63. RalphG

    Darrel,

    Of the three sections you quoted, only Section 76 appears to have anything to do with “the transfer of authority offshore”. Do you think it unreasonable for the RBA to appoint someone as its attorney to represent their interests both here and overseas?

    The RBA acting as an agent for an Authorised Deposit-taking Institution is something you would expect them to be able to do. These ADI’s would have accounts at the RBA and the act gives the RBA the ability to accept deposits or make payments on their behalf.

    What intrigues me is the number of websites which claim that central banks are sinister organisations acting in the interests of their “private owners”. It seems to me that far too many people watched the Zeitgeist movie and believed that it portrayed the truth.

  64. Lee

    Glad you enjoyed the video John, and yes we have been betrayed. Thanks also for the extra info.

  65. darrel nay

    I considered not writing the following comment but I will take Ralph’s comments as genuine because he seems like a good bloke and he has taken time to provide me with info. from the RBA website and elsewhere. I will try to address his surprise that many people find central banking organisations sinister.
    I appreciate that AIM is a left-leaning forum and from this perspective I have watched the de-industrialization of Australia most recently evidenced by the mass job-losses at Holden. I would hope the Labor party will ensure that producing vehicles remains a part of our culture. Vehicle manufacturing is, or at least was, a job many Australians loved and were proud to do. The Libs, or at least Holden, will claim that the job-losses are just a reality of globalisation. I am convinced that the events at Holden, the 2013 Australian banker bailouts and many other contemporary events fit into an unfolding picture which is being orchestrated by large and certainly sinister foreign interests.

    Let me begin by quoting a leading central banker from “David Rockefellers Memoirs” p.405
    “some even believe we are a part of a secret cabal working against the best interests of the United States, characterizing my family and me as ‘internationalists’ and of conspiring with others around the world to build a more integrated global political and economic structure – one world, if you will. If that’s the charge, I stand guilty, and I am proud of it.”
    In this quote Rockefeller basically admits to treason against his neighbours and community which most societies would view as being sinister in the extreme.
    Further, in an article titled “The Federal Reserve Cartel: The Eight Families” by Dean Henderson, which can be found at
    Henderson writes “Following the 1975 Nugen Hand Bank/CIA coup against Australian prime minister Gough Whitlam, his British Crown appointed successor Malcolm Fraser sped to the US, where he met with President Gerald Ford after conferring with David Rockefeller.” This also seems a little sinister.

    In the abovementioned article Henderson writes that “Historian Carroll Quigley wrote in his epic book Tragedy and Hope that BIS {Bank of International Settlements} was part of a plan to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole … to be controlled in a feudalistic fashion by the central banks of the world acting in concert by secret agreements.” It is perhaps worth noting that there are significant sections of the RBA Act dealing with secrecy.

    Further concern is sure to be raised by anyone who looks into The Business Plot of 1933 when Major General Smedley Butler appeared before the McCormick Dickstein Committee to outline how he had been recruited by Rockefeller and others to carry out a coup against the American Government.

    Rockefeller and other central bankers have also been linked to funding the Nazis, Apartheid, Stalin and any number of other sinister actions.

    I am no expert in these matters, but I think the evidence is available to show that there are some murky issues surrounding international banking connections and I just hope that these Holden workers and the many other Australians whose jobs have been out-sourced or who have had their hours cut, are given reason to be positive in the future, by whichever party rules.

    Peace

  66. Bacchus

    I am no expert in these matters, but I think the evidence is available to show that there are some murky issues surrounding international banking connections…

    Darryl,

    You need to be careful of the sources of your “evidence”. There is a huge amount of misleading crap on the intertubes sucking in the gullible who choose to believe whatever is fed to them. It generally doesn’t take much research to discover where these sites have it so wrong… 😉

  67. petermartin2001

    Yes very good article.

    I’d just like to make the point that the budget deficit can’t simply be decided by government to be some arbitrary figure. The EZ’s 3% for example is absurd. That’s one of the main reasons they are in the mess they are in.

    The government’s deficit has to equal the non -governments surplus. Its simple accounting.

    Or: government surplus (GS) + non-government surplus (NGS) =0

    We can divide up the non government surplus into domestic private sector (DPS) and Rest of World (ROW)sector.

    Therefore we have

    GS + DPS + ROWS =0

    Gov Deficit = – GS
    Private Sector Savings = DPS
    ROWS = Trade or External Deficit

    Therefore Gov Deficit = Private Sector Savings + External Deficit

    So a country running a small external deficit , like Australia, whose private sector is net saving , like Australia, cannot possibly run a Government budget surplus. If the government tries they will crash the economy.

  68. darrel nay

    reply for Bacchus

    The abovementioned quote is famous and is in Rockefellers own memoirs – it is not a conspiracy. Readers can view the exact page at http://forum.prisonplanet.com/index.php?topic=184634.0. To give some more context, how about his quote to the New York Times on August 10, 1973 – “Whatever the price of the Chinese Revolution…The social experiment in China under Chairman Mao’s leadership is one of the most important and successful in history.” Tens of millions of people were murdered in this ‘successful experiment’.

    Mainstream media loves to use the tactic of criticising people for being conspiracy theorists in order to try to sideline views which don’t conform to their propagandist view. I could offer countless examples but, just to illustrate the point, I remember when any suggestion that the west were arming Muslim extremists was met with that classic retort of “it’s just a conspiracy theory”. Now the west openly admits it funded and trained the Mujahideen in Afghanistan as a part of its Cold War operation against the Soviets.

    just a thought

  69. darrel nay

    Please excuse that I mistakenly posted the “reply for bacchus” in this thread – please ignore it as I have now posted it on “The Ridiculous Debt @ Deficit Scam” where it was intended to be. All this monetary theory must be doing my head in.

    Cheers

  70. silkworm

    Darrel Nay, one of the favourite topics for conspiracy theorists is climate change. Since you have self-identified as a conspiracy theorist, would you care to tell us where you stand on this topic? Do you, for example, believe there is a conspiracy amongst scientists to falsify the climate record?

  71. darrel nay

    Rather than label myself a conspiracy theorist I would prefer to say that history often proves the “conspiracy theorists” correct – Watergate, the Snowden spying information and the Wikileaks files should attest to that.

    As for climate change, surely anyone who is aware of the cycle of ice-ages and the warmer periods which occur between them accepts that climate change is a reality. I have not studied the ‘climate-gate’ e-mails so I can’t add much to that point.

    Peace

  72. darrel nay

    Further, my opinions on climate change are of limited significance. I would speculate that if the carbon levies were introduced on a voluntary basis the movement could progress without the resistance generated by forcing levies on those people who are not in agreement.

  73. corvus boreus

    darrel,
    trying to be polite, but the too cute ‘climate always changes’ response avoids the issue of anthropogenic influence. The ability of human activities like deforestation to affect the biospheric climate can be easily shown without even touching upon the clever folks’ science of the composition of atmospheric gases(that shady thing that forest do, as well as photosynthesising), and the higher up the scientific ladder you go, the more it all stacks up.
    We have stripped the carbon, living vegetation and subterranean deposits, burned it(heat there) and transferred it to our atmosphere and oceans as atmospheric gas and petro-plastic pollutants.
    The “climategate” e-mails, criminally obtained, were 2 statements suspicious in isolation(as quoted by Fox ‘news’ et al) but innocuous and explained within the context of the surrounding dialogue, and investigated exhaustively and repeatedly with full vindication of the scientists involved. The only conspiracy there was a criminal act of illegal hacking of personal correspondence to maliciously spread misinformation(sounds like newscorp to me).
    Your idea of a voluntary levy reads a bit like the idea to allow forgoing a random breath test based upon scepticism of the capacity of ethanol to impair driving ability.
    If I seem a little harsh and intolerant upon this, it is because I have educated myself as a life science rather than numbers person, and the serious shit-storm we have placed ourselves in by our rampant destruction to feed a growth and consumption addiction needed addressing long ago. The feedback loops have started, and we may have quibbled about statistics, parameters of absolute proof and levels of responsibility past the point of no return.

  74. Pingback: MMT is gaining followers! | Modern Monetary Theory: Real Economics

  75. darrel nay

    Rather than provide the expected reply to Bacchus – which would simply lead to a predictable response I will offer an abstracted reply (on the basis that my opinion on global warming is of limited significance). I will humbly assert that we are falling into a trap, in this country, of asking typical questions and providing a predictable range of answers. If we continue to converse within the box, as it were, we will keep heading down the same path. This path I refer to is characterised by near-record levels of divorce, a massive state-sponsored program which pumps ADD drugs (and the like) into children and a series of wars which never seems to end – our values are being gradually degraded by global corporates. I will contend that the current dialectic will only lead us further down the rabbit-hole. I would like to see more loving, a bias towards inclusion and less legislating (TPP – an agreement posing as free-trade but smelling of corporate fascist dictatorship).

    Will we see a new politic which embraces our ‘opponent’ or will we continue our current oppositional style of debate? Perhaps we may seek a new path which is paved with peaceful individual freedoms. A truly honorable society, respectful of individual differences will lead us to prosperity.

    Love your day and love each other

    PS – I read the beautiful story Petal on AIMN yesterday and shared it with my partner – it’s an inspiring read and I thoroughly recommend it.

  76. silkworm

    Darrel, I never mentioned the stolen emails, but you had to bring them up, under the illegitimate and misleading title “climategate.” This proves that not only are you a climate change denier, you are a dishonest one at that. Henceforth you will be known as Darrel Nay-sayer.

  77. darrel nay

    Dear Silkworm,

    Thank you for the label and may I say that although a rainbow is one song it shines with many colours.

  78. Danny Belcher

    Are you saying that the (private) banks who are part of the fed system do not earn interest on their loans? Sure the rate may be low today but the historical returns can’t be denied.

  79. Pingback: In a nutshell, the Commission of Audit includes plans to: • End Medicare with a $15 GP tax, a hospital tax, and cuts to the PBS • Slash the minimum wage by about $130 per week • Cut pension and family payments, making students and low and middle inc

  80. Nanu Grewal

    Came up with a mnemonic to help remember the FOUR purposes of taxation “Don’t Call For Funds”

    D= drainage ie destroying dollars to control
    C= coercion ie forcing citizens to trade in Aussie dollars when they ply their trade in confibes of Australia…or risk going to jail
    F= favour…ie allowing politicians to subsidise or penalise interest groups as they wish …as Brumi stated in 1948
    F= fodder….tax questions are the ultimate straw men giving politicians endless fodder for quasi-intellectual “mature debate”

    In the 4….no mention of taxes “paying” for any government spending

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