from Microsoft News:

Court case over Glencore's Great Artesian Basin carbon capture storage plan ends

A Queensland farming group that took the federal government to court over a carbon storage project in the Great Artesian Basin says the case will not proceed after the parties struck an agreement.

Lobby group AgForce challenged Environment Minister Tanya Plibersek's 2022 decision to exclude mining giant Glencore's carbon capture and storage (CCS) project from assessment under the Environment Protection and Biodiversity Act.

Why did Pilbersek do that?

Answer: because the government wants the money and jobs created by the fossil industry.

It's time for the Oz  Treasury to create money (Oz dollars)  out of thin air, to purchase available resources required for transition to the green economy.

Just sayin'.   

Bobby. wrote on Jul 30^th, 2024 at 8:58pm:


Good post.

But the Oz government can't raise the below-poverty level dole, or fund sufficient public housing,  BECAUSE it is lowering taxes AND producing surpluses to pay off debt.

Like the loser Rachel Reeves who is now claiming the government's coffers are empty, so she can't reduce child poverty in the UK - disgraceful in a wealthy country like the UK.

So she's as useless as the Conservatives she replaced - confirming the absolute fraud of democracy. 

Fact is a currency-issuing government doesn't NEED  to borrow (sell bonds), it needs to increase productivity.

I think Trump knows this, which is why he doesn't talk about debt and deficits, except when the 'debt ceiling' has to be raised to prevent a government shut-down - the false mainstream narrative.

The US might eventually prove the mainstream  narrative is wrong, given the US can never repay its debt without going into recession.  

More on government imposed 'austerity':

Scotonomics: Why 'fiscal rules' equals austerity

By William Thomson.

It's been only 24 hours since Rachel Reeves (Treasurer of the new UK Labour party) announced she had to make some “incredibly hard choices” as she withdrew investment from English public infrastructure and removed the winter heating allowance from millions of pensioners.

Richard Murphy, as usual, summed up things wonderfully, suggesting that rephrasing a famous Keynes quote (he said "anything we can do we can afford") was the least of Reeves’s economic crimes.

Whereas the "darling" of many a Scottish and UK politician, Paul Johnson, director of the “independent” IFS (Institute for Fiscal Studies) wrote on Twitter/X:

“Getting rid of Winter Fuel Payment. That is a saving of £1.5bn. A sensible choice”.

(my comment ..I hope he freezes to death next winter ....)

Maybe the SNP will now think twice about framing the IFS, a deeply orthodox think tank, as the authoritative economic voice?

So I decided to zoom out on this first step back on the austerity treadmill.

Most people think that the austerity project started in the UK and across Europe as a response to the 2008 bank bailouts. If you are one of those, you are a little bit off—by around 85 years.

American economist Clara Mattei spent tireless months trawling the archives of the Bank of England and the Bank of Italy to unearth the birth of austerity as a political reaction to the alternative economic models that blossomed across Italy and the UK after the end of the First World War.

Following the horror of the war, the British and Italian governments promised to build more new homes, introduce universal education, and support worker involvement and ownership of production. Austerity was created to take back control. As Clara writes, austerity “is capitalism's protector’.

And who leads the charge? Economists like Rachel Reeves.

Hiding behind “objective economic science,” our Chancellor ("treasurer") and the Government she serves can frame deeply political decisions as some kind of economic fact. There is a hole to fill, so we have to cut our cloth/spend within our means/make difficult decisions, etc, as if this is the only option. However, this is a complete fabrication of our economic reality.

Austerity was, and still is, medicine only for the poorest in society. At no point in its 100-year history has austerity meant we were all in it together. In her book, The Capital Order, which I highly recommend, Clara explains that austerity takes three forms: Fiscal, industrial, and monetary. Each reinforces the other to reduce the consumption and power of workers while re-establishing the wealth and power of the wealthiest in society. And we see this unveiled by our new Chancellor.

A reduction in welfare (fiscal), cancelling infrastructure projects (industrial) and maintaining high interest rates (monetary). A playbook that is more than a century old.

This time, it plays out under the guise of "fiscal rules". The UK’s totally unscientific and totally arbitrary fiscal rules say that government debt should fall as a percentage of GDP in the final year of a five-year forecast, and the annual budget deficit should not be more than 3% of GDP over the same time period. There is also a particular nefarious welfare cap, which almost guarantees that is where the axe falls first.

These are the rules of the game, and they completely alter the way you manage the economy. They are also only supported by one bunch of economists. They are dismissed by many economic schools of thought.

If you understand the impact of the rules – most commentators and politicians don’t – you are almost guaranteed austerity unless the UK experiences significant above-trend real economic growth, which is not going to happen, as we detailed here, or the UK miraculously turns into a trading powerhouse. So, it's far from a caveat.

Austerity is assured because the Government is trying to create a surplus or at least a balanced budget: This is the point of the rules. Let me say it as clearly as I can: Fiscal rules = austerity.

If you support fiscal rules that lead to a government surplus or a balanced budget over a five-year period, you support austerity. Our representatives will have a hard time acknowledging this, especially those calling out “austerity” while supporting fiscal rules. Here’s looking at you, Scottish Government!

The Building a New Scotland: A Stronger Economy with Independence paper includes this line: “We would set out clear fiscal rules” (based on the false government as household analogy). This means austerity in exactly the same way as we will experience under Labour or the Tories as part of the UK.

All the comments by Scottish politicians around austerity fail to notice this economic fact. The Government deficit allows the foreign and private sectors to run a surplus.

When you understand that a government deficit creates a private-sector surplus, you can not fail to notice that a fall in government spending equals a fall in the private sector's assets. High interest rates protect the assets of the already wealthy, so the axe falls on the rest of us.

Labour, Tory and the SNP support fiscal rules. We can argue about the stupidity of who said what and when. The main takeaway is that we aren’t discussing surely the most important point: 'fiscal responsibility'

Daily Mail

Majority of people now say it's impossible to achieve American Dream

The percentage of Americans in middle-class households fell from 61 percent in 1971 to 51 percent in 2023, per the study,

However, these jobs have shifted toward lower-paying service industries with fewer benefits and weaker worker protections. Ney argues that the rise of China's manufacturing and exports hasn't been balanced by job growth in other sectors, leading to a net loss of opportunities for American workers.

The decline of the American middle class isn't just about wages. Automation has also eliminated many jobs that once provided a secure path to the middle class, as Jeremy Ney points out.

This is evident despite a seemingly positive rise in median income for middle-class households (from $66,400 in 1970 to $106,100 in 2022). But the bigger picture shows a shrinking share of total U.S. household income held by the middle class.

The income gap between classes has widened dramatically, and upper-income households saw a much steeper increase in median income (78 percent from 1970 to 2022) compared to lower-income households (only a 55 percent increase).

In the 1970s, the middle class held the majority of U.S. household incomes at 62 percent. Today, their share has shrunk to just 4 percent.

Conversely, the upper class has significantly grown its wealth, increasing its share of income from 29 percent to 48 percent. Lower-income households haven't seen a substantial change in their portion of the pie.

Will Harris reverse these unsustainable trends?

cont.

https://profstevekeen.substack.com/p/the-meme-that-is-destroying-western-957?utm...

The meme that is destroying Western civilisation Part VII

What government deficits do to government finances

In the last post (Substack; Patreon), I showed that a government Deficit increases the net worth of the private sector: if government spending exceeds taxation, then the non-bank private sector’s Asset of Deposit accounts rise, with no offsetting Liabilities. Therefore, a Deficit increases the net Equity of the private sector. But what does it do to the government?

Double-entry bookkeeping helps you work this out. Table 1 and Table 2 show the Banking Sector’s and the Private Sector's positions, and they also show what’s not yet complete with the model. Both Loans and Deposits are shown twice, once as Assets and once as Liabilities, so their bookkeeping is complete. But Reserves are shown only once, as an Asset of the Banking Sector. So we need to add another table in which they are a Liability.

Table 1: Bank Lending and a Government Deficit from the banking sector's point of view

Table 2: Bank Lending and a Government Deficit from the non-bank private sector's point of view

That’s the Central Bank’s Table, the first cut of which—without completing the double-entry—is shown in Table 3. To complete it, we have to add an entry on the “Spending minus Taxation” line that fulfils the accounting formula Assets minus Liabilities minus Equity equals Zero.

Table 3: The Central Bank's as yet incomplete table

To do this, we need to add another Liability for the Central Bank: the Treasury’s account at the Central Bank, known as the “Consolidated Revenue Fund”. The funds that increase Reserves come out of this account, as shown in Table 4. Including its initial value in the system shows that the Central Bank’s Equity position is strongly negative—before I introduce Treasury Bond purchases in a subsequent post (Central Banks are in a different legal situation to private banks, and can function in negative equity—see the Bank of England paper “Accounting in central banks”).

Table 4: The Central Bank's table before considering bond sales

The model is still incomplete, because we’re showing the Treasury CRF as a Liability, but not yet as an Asset. This shows that we need one more table—for the Treasury itself. This is Table 5.

Table 5: The Treasury's table before considering bond sales

We can now explain how the government creates “fiat money”—as opposed to the “credit money” created by the banks. The Treasury goes into negative financial equity, which creates an identical magnitude of positive financial equity for the non-bank private sector, in the form of new money in private sector Deposit accounts. The fall in government financial equity—which we can call “reducing public saving”—causes an identical rise in the private sector’s financial equity, which we can call “increasing private saving”. The sum of the two is zero, so they’re like two sides of a seesaw: if one goes down, the other must go up by an identical amount.

Mainstream economists get this wrong because they don’t check the accounting, leading to statements like this in mainstream economics textbooks that befuddle the minds of our politicians and media:

the government finances the additional spending … by reducing public saving. With private saving unchanged, this government borrowing reduces national saving.

(Mankiw 2016, p. 73)

Why don’t they study the accounting and correct this mistake? Because they don’t want to know! The belief that money is “neutral”—that it doesn’t affect real economic activity—is so ingrained into them, that acknowledging the real situation would undermine their entire paradigm.

This is why I’ve taken to describing the mainstream as not “Neoclassical Economists”, but “Ptolemaic Economists” (with apologies to Ptolemaic Astronomers, whose models of the Solar System were far more capable of predicting the future location of planets than Neoclassical economists are capable of predicting the future of the economy). They have a persuasive but structurally totally false model of the economy, and, just as Galileo found with Ptolemaic astronomers and his telescope, Neoclassical economists refuse to look down “the accounting telescope” to see what the actual structure of the economy is. As is so typical of humans, they would almost (?) rather die than change their beliefs.

But isn’t there something wrong about the government deliberately going into negative equity? Shouldn’t a responsible government always be in positive financial equity? I’ll consider this issue in the next post.

Meanwhile, in Argentina, under the 'genius' mainstream 'economist'  Milei ("cut governement spending"):

https://apnews.com/article/argentina-milei-economy-austerity-government-protest-...

As President Milei’s austerity hits hard, jobless Argentines appeal to the patron saint of work

...mainstream economics forcing people to resort to ancient Catholic mythlogies re saints....

Deplorable. 

Summary (after 950 pages):

If you understand how money is created, you can understand how a currency-issuing government (with a treasury, and non-independent central bank) can purchase the goods and services needed to implement public sector policy (as voted by the electorate, in a democracy), when those goods and services are available for purchase, wihout taxing or borrowing from the private sector (you and me, private businesses, etc).   

Ideally, in a mandated full employment (ie using all available resources), zero interest rate scenario, inflation will be controlled by price controls and rationing if necessary, to obviate the need for the blunt tool of central bank monetary policy intervention - always damaging to some sectors of the economy.

[International trade will need to be a consideration for each currency-issuing government; the goal is to eliminate enforced government 'austerity' which is the consequence of seeking to reduce taxes and debt, as per the mainstream neoclassical "balanced budget" narrative.

Hence a revamped IMF will be necessary, ie, one which is
dedicated to overseeing a fair distribution of resources among nations, rather than burdening developing nations with unpayable debt, as at present]. 

socialism still beguiled leading intellectuals and politicians of the West. They could not resist its siren song, of a world without strife because it was a world without private property. They were convinced that a bureaucracy could make more-informed decisions about the welfare of a people than the people themselves could. They believed, with John Maynard Keynes, that “the state is wise and the market is stupid.”

Israel, India, and the United Kingdom all adopted socialism as an economic model following World War II. The preamble to India’s constitution, for example, begins, “We, the People of India, having solemnly resolved to constitute India into a Sovereign Socialist Secular Democratic Republic . . .” The original settlers of Israel were East European Jews of the Left who sought and built a socialist society. As soon as the guns of World War II fell silent, Britain’s Labour Party nationalized every major industry and acceded to every socialist demand of the unions.

At first, socialism seemed to work in these vastly dissimilar countries. For the first two decades of its existence, Israel’s economy grew at an annual rate of more than 10 percent, leading many to term Israel an “economic miracle.” The average GDP growth rate of India from its founding in 1947 into the 1970s was 3.5 percent, placing India among the more prosperous developing nations. GDP growth in Great Britain averaged 3 percent from 1950 to 1965, along with a 40 percent rise in average real wages, enabling Britain to become one of the world’s more affluent countries.

But the government planners were unable to keep pace with increasing population and overseas competition. After decades of ever declining economic growth and ever rising unemployment, all three countries abandoned socialism and turned toward capitalism and the free market. The resulting prosperity in Israel, India, and the U.K. vindicated free-marketers who had predicted that socialism would inevitably fail to deliver the goods. As British prime minister Margaret Thatcher observed, “the problem with socialism is that you eventually run out of other people’s money.”