Unlike Turnbull, Trump Holds No Fear of Debt
Whatever one thinks of Donald Trump, there was something he said in his inaugural address today, that Malcolm Turnbull should note well.
Trump said, “We will build new roads and highways and bridges and airports and tunnels and railways all across our wonderful nation. We will get our people off welfare and back to work, rebuilding our country with American hands and American labour.”
This could be a blueprint for Australia as well. Does anyone think The Donald would be concerned about where the money comes from? Not likely. One suspects he is already ahead of the game.
Speaking a week ago to CNN’s Chris Cuomo, he said, “First of all, you never have to default because you print the money, I hate to tell you, OK?” He was answering a question on the $20 trillion of US bond issuance and added, “I understand debt better than probably anybody. I know how to deal with debt very well. I love debt.”
Compare that boldness with the Australian government’s obsession with debt and bringing the budget back to surplus. Whatever one thinks of The Donald, he is right. He certainly has no fear of private debt and realising, as he clearly does, that sovereign debt is altogether different from private debt, one can surmise he will use it to, “make America great again.”
Furthermore, Trump has no fear of the American media.
How we yearn for someone like that here in Australia. Take the latest labour force figures released by the ABS. They paint a dismal picture.
As Professor Bill Mitchell repeatedly warns us, “we always have to be careful interpreting month to month movements given the way the Labour Force Survey is constructed and implemented.”
What Prof. Mitchell tells us though, is that the latest employment figures for December suggest, “the Australian labour market remains in a weak state and confirms that the September-quarter GDP figures, which showed real GDP growth being negative were probably part of a downwards trend.”
Unemployment increased in December to 5.8% making a mockery of the Turnbull government’s “jobs and growth” mantra. Furthermore, the underutilisation rate (underemployed and unemployed) is at 14.7% unadjusted.
Over the last 12 months, Australia has produced only 91,500 (net) jobs with 125,500 of them being part-time jobs. In other words, full-time employment has fallen by a disturbing 34,000 (net) jobs over the same period.
The disturbing trend toward part time work continues at an alarming rate where today, one in three Australian workers are part time, compared with one in five in 1988. This has serious ramifications for demand, for tax receipts and overall growth.
If ever our mainstream media had the ammunition they needed to press for a Trump like approach to drag our economy out of the doldrums, they have it now. Will they use it? Not likely.
Will our government cast aside their obsession with deficit spending? Not likely. Unlike Trump, our government fears the media. Every thought-bubble they have is followed by the question, “how will the media react?”
It may well turn out that while the world looks the other way, waiting in fear for how Trump might manage China or ISIS or immigration or any other of his more outrageous claims, the man himself might just reconstruct American infrastructure and in the process, restore its flagging economy.
And it probably won’t cost a sovereign cent.
378 total views, 2 views today
20 commentsLogin here Register here
Spot on as usual John. One want’s to tear ones hair out with these conservative austerity fools.
I was thinking the same thing, I recall something similar in his speeches during his campaign, it made me wonder how he thinks he was going to finance the promises.
From this article it is clear that he does indeed understand the soverign nations ability to create all the money it needs.
The run off from his expansionary policies will be to get the world moving again, how Australia will fair from his actions will be interesting to say the least. My guess is that if Trump does indeed get America back to work, there will be a lot of red faces in the establishment and their orthodox economists.
That is of course we don’t burn the planet or plunge us into the 3rd world war.
Since the Reagan – Thatcher era, neo-liberalism has spread like rust across the globe with truth being the greatest sufferer. The biggest lie of all is that “the government budget must be balanced just like the household budget”. A monetary sovereign, as Australia and America are, has no financial constraints whatsoever. Some times the truth is momentarily revealed, only to be suppressed by the neo-liberals. During an American Senate inquiry a few years ago, an expert witness was called to testify regarding the sustainability of the U.S. welfare system. The expert was Alan Greenspan was Chairman of the Federal Reserve Bank and when questioned about the governments ability to afford the Pension Bill, he stated, under oath, “It doesn’t matter if the question is about Social Security. It could be about Defence Spending, Education Spending, Infrastructure Spending, Student Debt, it could be about anything. What matters is there is nothing to stop the Federal Government to create as much money as it likes, whenever it likes. The issue that matters is will the real assets (goods and services) exist in the future for retiree’s pension / super cheques?
The Donald was mostly correct , but he made three slight errors. Here is an analysis of that speech by Ellis Winningham from an MMT perspective:
Perhaps the Donald will do one good thing at least: demolish the neo-liberal nonsense about govt. debt that is used by these people to cut govt. spending and demolish the welfare state.
What else he will do remains to be seen. It will be a mix of this and that Buckle up!
This idea of printing currency to substitute for energy is absurd.
“The bottom line is that we can’t sustain our present rate of consumption no matter what energy source we rely on. And clinging to oil, gas and coal in the hopes of keeping the endless growth machine alive will be even worse: leading to a spiral of debt and economic recession that has already begun.”
“We need more energy to get more stuff to grow the economy. So what happens when we can’t get as much energy as before? Growth slows.”
Wots this then? A positive article about Trump? Will be having none of that…
Sean, I find much of what Trump says positive. That’s part of the problem analysing this fellow. We just don’t know if and how what he says will translate into action. But his attitude to sovereign debt is encouraging.
Indeed John. Have said as much myself. Was being a tad facetious, since my own arguments are apparently ‘stinky’ and evidently unwelcome.
It would have been great to see Trump run against Sanders. It would have shifted the whole debate well to the left. Sanders would have had to move left on intervention/war, Trump on social services, and whoever won would have had to govern from the left.
He is a fake and a capitalist. People who vote for him and seemingly people commenting here will have a rude awakening.
Harquebus is right. Trumps and LNP obsession with fossil fuel kills us.
You economy obsessed, artificial progressives, discuss the color we might paint the house with, while Rome is burning
Sooo, wait a minute.
The only ‘leader’ who understands MMT and sovereign currency is the dumpster?
“First of all, you never have to default because you print the money, I hate to tell you, OK?”
On my recollection, he has not been bankrupted personally. He has, however, sought bankruptcy protection for several of his companies. That would give him intrinsic knowledge of ‘finite’ finances. He just got the PIN code for one of the world’s biggest ATM’s. Good luck, America. He has yet to disclose his personal tax ‘arrangements’ and seems unlikely to divest himself of his ‘company’ interests, other than a ‘pea and shell’ trick of passing their control to relatives.
“Over the last 12 months, Australia has produced only 91,500 (net) jobs with 125,500 of them being part-time jobs. In other words, full-time employment has fallen by a disturbing 34,000 (net) jobs over the same period.”
Whilst I don’t understand how you can produce 91,500 (net) jobs with 125,000 of them being part-time jobs, I am always concerned about under-employment and un-paid employment, whether it be ‘overtime’, ‘volunteerism’ or any other euphemism.
Whilst you may see cause for optimism, I can only see another heist coming on.
Thank you, Mr Kelly. Take care
Sean, it was caught up in the spam folder, which apparently happens a lot. There is nothing sinister about it.
Klaus Petrat: “Harquebus is right.” and he said “This idea of printing currency to substitute for energy is absurd.”
Would you please care to explain? Who has suggested printing currency to “substitute for energy” (what ever that might mean)?
Of course Trump has no fear of debt because he doesn’t pay his bills or creditors.
This article is exactly why I think the ideology of parties matters. No matter how much rhetoric the Liberals carry on with they do not believe in Govt intervention to create jobs. Turnbull has said clearly to the media a number of times that is not the Government’s responsibility to create jobs. Their aim is to create an environment by cutting red tape that allows businesses to create jobs.
Labor does believe in govt intervention and also protectionism to a degree. They took to the election a number of policies on infrastructure investment, guarantees of apprenticeships in government infrastructure jobs, and a body to look after the steel industry using Australian steel as a priority. 100 positive policies, go check them out. Hopefully people will decide not to give Mal a third go.
Debt fueled growth is requiring ever more debt and is providing less and less growth due to diminishing energy returns.
Who suggested TARP and QE?
Search criteria: EROEI
wow a hint that ‘a fair go’ is still alive, John.
The heading gives the impression trunbull, the rabbott et al are feared of debt? The pricks and the media made the electorate frightened of gillard’s debt or labor’s debt but accepting of liberal debt.
It seems ridiculous to me that aussies are protesting against a legitimately and democratically elected septic tank when the tudge-trunbull debt algorithm sent over 200000 Australians a debt letter with an error rate up to 20%(40000 people) and burden of proof from 2011 on the victim and computer robots overseeing the system. Poor Bill protest and he supports dole bludgers so is wedged again.
The cashless card, the basic card both sound good to those who are far from the bush. Sadly we will not see an evaluation process before these pricks introduce the Australian version of the food stamp system. Poor bill wedged again.
Labor politicians have too many members who are unable to grasp the significance of modern money, not least of whom is the shadow treasurer!
Pingback: A Tease: turnbull government tax market
Pingback: Unlike Turnbull, Trump Holds No Fear of Debt | THE VIEW FROM MY GARDEN