goosecat wrote on Sep 6^th, 2024 at 3:55pm:



Each successive Govt. spends more than they receive in taxes.
We are going into more and more debt.

Australian debt clock:
http://australiandebtclock.com.au/

goosecat wrote on Sep 6^th, 2024 at 3:55pm:


All good points made by 'goosecat'.

...except the comment re Alan Kohler, who knows government deficits and debts per se are not necessarily inflationary, excessive real purchasing power (beyond the productive capacity of the economy) IS inflationary.

So - how to restrain excessive purchasing power  without the blunt tool of interest rate rises which harm the least well off, that is the question.   

freediver wrote on Sep 7^th, 2024 at 1:03pm:


You mean economists with their "well established principles" are divided? Note:  your first sentence contradicts the second.

FYI the mainstream want continuous growth; they along with uni chancellors, want inceasing overseas students...and contibuing high immigration, regardles of the downsides. (Eslake wants "highly skilled immigation" ie stealing talent from the rest of the world.  Nice). 

Quote:


To repeat the mainstream neoclassical dogma:

Economcs studies the  distribution of 'limited' resources in the face of 'unlimted wants'.

It's obsolete BS; there is no REAL shortage of essential resources in our modern AI and IT production systems.

Only the 'gimme more' of greedy conservatives.   

How can we afford AUKUS?.  What on earth were they thinking?.   

thegreatdivide wrote on Sep 7^th, 2024 at 11:48am:

I wasn't referring to Kohlers opinion of gov debt, which I should have made clear.
I was referring to his constant whinging regarding interest rate rises, RBA and GDP growth reduction.

I know his mindset; He sees these realities through a share-market investment lens centred on GDP growth being good for business and share prices generally.
He was one of many investor "experts" whinging and predicting absolute economic death and share market loses if the RBA kept raising rates back when we were still in the 2% range.

You need to be able to understand his personal bias to one particular narrow thought process that he at various times tries to expand on for media career sake, but habitually falls back into as his economic measuring stick for all things.

goosecat wrote on Sep 7^th, 2024 at 4:06pm:


Kohler is thoroughly acquainted with MMT, (including personally communicating with prof. Bill Mitchell, a leading heterodox economist), and even presented key MMT propositions in an article he published in 'The Australian' some years back when the GFC was threatening to destroy the global economy.

That's why he "whinges" about RBA monetary policy and
"GDP growth reduction" (not sure what you mean by that; even mainstream economists acknowledge the qualitative limitations re GDP.    

Quote:


He has changed his views since his contact with MMT; eg he knows a currency-issuing government can always defeat "bond vigilantes" if the nation remains productive, however large the national public debt. (eg, bond traders have been betting against the BofJ for ages (because of Japan's massive public debt), and keep losing their shirts).

Quote:


And guess what: if in fact Lowe and now Bullock HAVE set in motion the processes that will "smash the economy"  (via >4% interest rates), share markets will crash.  But in any case, ordinary people (renters without savings and late-comer mortgagees ARE being smashed NOW by high interest rates which are supposed to contain inflation.

Quote:


Correct, so find out how Kohler's ideas are evolving eg
In 2020:

https://www.abc.net.au/listen/programs/melbourne-saturdaymornings/alan-kohler-ex...

It’s ok to print money: Alan Kohler

...written in 2020, at the start of the pandemic; since then, the resistance of the mainstream to MMT has seen Kohler cease his promotion of MMT, while still understanding that  debt is immaterial to a currency-issuer, so long as the nation's resources and productive capacity are sufficient.

His more recent view (in 2024)

https://www.thenewdaily.com.au/finance/2024/04/01/alan-kohler-monetary-theory

Alan Kohler: Modern Monetary Theory has become modern fiscal practice

A few years ago everybody was talking about Modern Monetary Theory, both ardently for and scornfully against, but nobody was doing it.

Now everybody is doing it but hardly anybody is talking about it, apart from American economist Stephanie Kelton, promoting a film on the subject.

Doing what, exactly? Governments are showing by their deeds that deficits and debt don’t matter.

Global government debt has hit a record high of $US82 trillion, more than double what it was before the GFC, and no sign of slowing since the end of the pandemic.

The world’s governments, in aggregate, haven’t managed a surplus for 20 years, and even then, it was small and brief.

MMT is not mentioned by name, but its prime heresy – that deficits don’t matter – has become gospel.

Australian Treasurer Jim Chalmers will soon announce his second surplus, but the government’s long-term forecasts show a return to deficits that last at least 10 years. If they thought it mattered, politically or economically, they wouldn’t.

In the United States the Congressional Budget Office is also projecting deficits forever, with endlessly rising government debt.

There is no serious objection to this, but there hasn’t been a mass public conversion to MMT, so what’s changed?

.......

But what Kohler doesn't say is public debt is still preached as an evil (by mainstream economists and mainstream media) to the vast unknowing electorate who think government debt is like their own household debt - which they want to pay-off ASAP; so in fact there IS "serious objection" - at least in the vast ignorant electorate - to the idea government debt doesn't matter.

See the complete Kohler article in the MMT thread:

https://www.ozpolitic.com/forum/YaBB.pl?num=1645944963/960#969

#969i





 

freediver wrote on Sep 7^th, 2024 at 4:09pm:


"Fundamentals" - as claimed by the current manstream guru Greg  Mankiw; here is what Steve Keen has to say (see latest MMT post) 

This makes economics degrees extremely powerful, as Paul Samuelson, the author of the first post-WWII textbook, which set the mould for all its successors, fully appreciated. In the preface to a teaching guide to his textbook, he wrote that:

"I don't care who writes a nation's laws--or crafts its advanced treaties--if I can write its economic textbooks." The first lick is a privileged one, impinging on the beginner's tabula rasa (lit. 'empty slate') at its most impressionable state.  (Samuelson 1990, p. ix)

The "first lick" in one of the dominant economics textbooks today—Greg Mankiw’s Macroeconomics {Mankiw, 2016 #6107}—is a model which teaches students that government spending is a bad thing.[/b]

After laying out the model in the previous 30 pages, Mankiw explains that, according to the model, an increase in government spending reduces investment:

Consider first the effects of an increase in government purchases …  The immediate impact is to increase the demand for goods and services… But because total output is fixed by the factors of production, the increase in government purchases must be met by a decrease in some other category of demand. Disposable income  … is unchanged, so consumption … is unchanged as well. Therefore, the increase in government purchases must be met by an equal decrease in investment.  (Mankiw 2016, p. 73)

Mankiw cautions that there are some “simplifying assumptions” in this model which are relaxed later—such as output being fixed. But this foundational model plants in students’ heads the idea that government spending—say, on giving pensioners additional money for heating during winter—will come at the expense of the future growth of the economy.

The removal of some assumptions in subsequent models doesn’t change the underlying proposition: government spending in excess of taxation harms the economy. This belief, etched on “the beginner's tabula rasa at its most impressionable state”, as Samuelson put it, is why Starmer and Reeves think that letting pensioners freeze will be good for the economy.

In reality, it won’t—not merely because the simplifying assumptions of this model are wrong, but because its fundamental assumptions about what government spending does, how it is financed, and the impact of government spending on private investment, are also wrong. I'll  explain why in the next post.

I already explained the obsolete concepts supporting  Mankiw's neoclassical orthodoxy.