The Politics/Religion/Conspiracies Deathmatch Thread

[The Dunster]

I have a fundamental problem with the "debt is bad" philosophy in both parties at the moment.

if I'm building an asset today that will last for say 100 years, it will generally outlast all but the newest babies, therefore future generations will be the beneficiaries of the asset. it therefore seems reasonable to me that the future generations help to pay for the asset, which can only be done through the raising of debt (with the future generations, including myself, into the future paying taxes to reduce the debt over time). it appears to me that neither party thinks it is reasonable (saddling our kids and grandkids with debt was a common theme in the past few elections).

I laugh (or is it cry?) whenever I hear the libs going on about debt and deficit while they are simultaneously saddling our kids and grandkids with the biggest liability imaginable - uncontrolled climate change.

Taxes do not fund government spending in a modern monetary economy where the government is the monopolist supplier of a fiat currency.

In other words the government does not have a budget constraint in terms of its own money.

The government can afford to build anything it wants as long as the costs are denominated in their own currency.

The constraint is only on the availability of goods and services denominated in that currency available for purchase.

Here is the reason why federal governments crap on so much about a surplus budget being a good thing:

If the non-government sector wishes to save then the government MUST have a Budget Deficit.

Hence, if the Government sector is in surplus then the non-goverment sector must be in deficit - No exceptions because Debits always equal credits under accrual accounting rules.

The reason why both major parties desire to run a surplus budget is because they want the private domestic sector to spend more than they earn.

Reason: For people to spend more than they earn they need to obtain credit -Hello Banks - Hello Bank share prices rising.

Both major parties are unfortunately captured by the financial sector in this country and that is why they seek to run a surplus.

Note also: If governments continually run surpluses then it is IMPOSSIBLE for the non-government sector to save because:

Government surplus = non-government deficit.

If you add an external account to the identity then it gets even worse as Australia has had a current account deficit throughout much of its existence due to the majority of our big players being foreign owned. THis is shown as the net income component in the National Accounts - and another reason why the so called mining boon was only of benefit to a selct few rather than the entire population as the Gina's and Andrews of this country try and tell us.