On Friday the 11th of July 2014, The Australian published, “Educating crossbench in conventional economics” , about the importance of our Government living within its means and keeping debt under control.
Whether PUP, Labor & the Greens are concerned about any of our medium term debt problems ; only time will tell.
The question I have for The Australian is, are you serious and dedicated about the national interest?
If it is important for our new representatives in the senate to make responsible decisions around government spending and taxation that take into account our medium and long term national interest, should we not expand our discussion around debt?
If you believe that being responsible with our budget and our government debt is limited to returning the budget to surplus and paying down our government debt so that we have more room to move if we face another crises or downturn, then, according to your worldview, you have fulfilled your responsibility.
A more fundamental question is, “If our money supply has been increasing nearly every year and only a very small percentage of that money is currency being issued by the RBA, where is the majority of new money coming from?”
If we expand our net of great thinkers a little wider than just Ross Garnaut, Martin Parkinson, Ken Henry, Glen Stevens and John Daley to include one of your regular contributors to NewsCorp, namely, Steve Keen, what further questions can be raised about the importance of debt?
The graphs above are from the paper, “Debunking Macroeconomics” by Steve Keen, which can be downloaded here:
Economic Analysis & Policy, Vol. 41, No. 3, December 2011.
From the above we can see that the change in the money supply, whether it is M3 or broad money, is critical to any discussion about the state of the economy because there is a strong correlation between a change in the money supply and unemployment.
And if you counter with, “What has the money supply got to do with debt?” then you need to stop and really think about the question, “Where does our money come from?”
If a change in the money supply is linked to changes in unemployment, why are you not educating our new senate representatives about that?
If we should not be living beyond our means and ever increasing debt is a problem, then why are you not speaking about the massive increase in mortgage debt Australian households are taking on that is far larger than what our government is taking on?
If it is appropriate and responsible for our government to return to a balanced budget and then a surplus, to pay down the debt and be in a safer position for the next downturn, why is it not appropriate for households to do the same?
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There is another reason Steve Keen gives us to start taking an interest in debt.
The graphs above are from the paper, “Debunking Macroeconomics” by Steve Keen, which can be downloaded here:
Economic Analysis & Policy, Vol. 41, No. 3, December 2011.