Keynes in 2011

[Rainbow Moonlight]

well it says that same article he decided to float the dollar against Stone's advice... but with shadow treasurer Howard's approval.

[Jovial Monk]

Stone was arch conservative, think he stood for the Nats and was in Parliament for a while?

[Leftwinger]

After having read this topic .. I think it's very impt that people realise 2 things :

1) Not everything is able to be googled and

2) Nothing beats lived experience.

Absolutely.

I have no education more formal than my own meandering experience. But I'm driven by a desire to understand what makes things tick, what makes the really big cogs turn. That's what's so great about the net - you can talk in almost real time to an endless variety of professional people who are only too happy to instruct you in the basics of their various disciplines.

I am only a humble school caretaker - IQ is telling the truth on this (one rare) occasion - so I was honoured after a year of nightly correspondence with a professor of economics, to recieve an invitation to a conference at Newcastle university. I don't mind admitting that the prospect of attending was daunting - a school janitor among economics professors, professionals from banking and financial markets and various entrepenuers.

Anyway, I feel that the school of thought variously calling themselves "chartalists" or "modern monetary theorists" (MMT) are correct in calling the broadly accepted description of the way the modern day monetary system functions as outdated. We are no longer on a gold standard or gold-exchange standard (Bretton woods system). We run a pure fiat monetary system (fiat = Latin for "let it be done" in reference to the Biblical divine act of something being created from out of nothing) and fully sovereign governments such as ours are in full operational control of their economies (in a monetary sense). The thing we chose to call money is not so much a physical thing as it as an abstract concept, manifest as intrinsically worthless tokens. It does exist - but not in the normal physical sense. It's value is driven by the power of the sovereign to impose a tax obligation.

Note that our situation does not extend to the Eurozone countries who are members of a monetary union. Individual nations gave up their sovereign right - unwisely in my opinion - to issue their own currency and set their own monetary policy. Now that the shit has hit the fan, they are struggling with such shackles.

Intruiging stuff anyhow.

[harry climber]

Well we do know that former Prime Minister Paul Keating did not have any tertiary qualifications and that Keating didn't even attend any tertiary institution.

[Sappho]

God .. you are such an ignorant fool.

No matter .. sit down in the corner with your dunce hat and enjoy your bliss.

Rather than insult the person who has brought quality evidence to support their claim, could you please provide counter evidence to justify your claim?

FFS I ALREADY DID!

I don't appreciate you yelling at me for no particular reason Lisa. It's not fair and it certainly does nothing to encourage my remaining on this forum.

I'm outta here... before I break my promise to Aussie.

Tomorrow is a new day.

[Jovial Monk]

A commentary on the Irish experience, cause and consequences of austerity:

http://www.irishtimes.com/newspaper/opi ... 04548.html

Irish citizens bear the costs of these mistakes not only through higher unemployment, but also through lower wages, higher taxes and cutbacks in public services. That there will have to be some cutbacks is inevitable, but it is not inevitable that they be of the current form or magnitude. The Government’s steadfast and continuing policy of bailing out the Irish banks and their bondholders is at great personal cost to Irish citizens. The fundamental economic policy question is who should bear the costs of the mistakes. And this is where the first question, what should be done with the banks, links with the second, how to reignite the economy.

Under capitalism, those who provide capital, whether through bonds or equity, are supposed to oversee what is done with their funds; this accountability is what makes capitalism work. It is the system of incentives that underlies the success of a market economy. We tolerate a high degree of inequality in defence of these incentives – it is argued that high rewards are necessary to compensate for risk and to motivate responsible entrepreneurship.

In Ireland, as in much of the rest of the world, though, those who seemed to believe in markets, started to rewrite the rules in the midst of the crisis. They argued for the socialising of losses, while the gains had been privatised. Such a system of ersatz capitalism is doomed to failure, and is fundamentally corrupt and inequitable. Some argued that globally it was necessary to support the too-big-to-fail financial firms but this logic certainly doesn’t apply to relatively small institutions in a relatively small country at the cost of its citizens. There are alternatives.

Many Irish citizens now realise the cost of bailing out bondholders (whether in Germany, the US, the UK or even Ireland) is being borne by them. It is a massive, unjustified and unjustifiable redistribution of resources.

The IMF and ECB are lending money to ensure Irish taxpayers bail out Irish bank bondholders, but with little concern for economic growth and welfare. . . .

But Ireland should realise this may be only the first step in the bloodletting. As we noted, already there is recognition the Government underestimated the adverse effects on the economy – and thus overestimated tax revenues and the budget. [My emphasis] But even worse, there are grounds to believe the €85 billion may be inadequate because of the ongoing posture towards the banks.

The bit in red is what I believe (and I think Lefty believes) is the reason all this austerity stuff is self defeating—and leading to a new Long (or “Great”) Depression.

All this stuff about paying the bondholders in full before anything else should be awfully familiar to all Australians: Otto Niemeyer visited here in 1930 and stated the British bondholders would have to be paid before anything could be done about the Depression etc. The resulting Premiers’ Plan saw Australia one of the worst affected nations of the Great Depression.

Unfortunately even now in Australia the lunatic belief in surplus budgets above all other considerations could see austerity bite here too. With the private sector deleveraging the govt should continue to run Budget deficits.

[Leftwinger]

Yep - and if the private sector as a whole desires to be in surplus (the historically normal situation) then the government budget WILL be in deficit most of the time, barring an enormous trade surplus. NOT my opinion - basic fact of national accounting. Not a theory, not an opinion, not a polital stance of any kind - it is completely devoid of politics.

Does anyone know how many budget surpluses the great Liberal party hero Robert Menzies presided over? Hint - it's a nice round figure. As a socialist, I have no love for the memory of Menzies. But his budget deficits underpinned the most succesful era in Australia's history, in terms of high growth an very low unemployment (average of around 2.5% over most of the post war era).

There's a widespread and mistaken (though perfectly understandable) belief that government is in full control of it's budget postion - it is not! The budget outcome will be what it will be. The analogy of government budget = big version of household budget or business budget could not be further from the truth.

[Jovial Monk]

Menzies would be called a socialist and barred from Joining the (il)Liberal Party if he were alive today. Note also that Frazer could not in conscience remain in the (il)Liberal Party.

[Leftwinger]

I seem to recall that both Malcom Frazer and Doug Anthony signed a petition to stop Howard from selling the snowy, Frazer describing it as "privatisation gone mad". This from a former Liberal PM!

[lisa jones]

Good point there Lefty!

Let's not forget that Paul Keating is considered to be the father of economic rationalism in Australia. Interesting given he was a Labor PM hey.

Having read some of the posts on this page alone .. I'm left wondering about these "left" & "right" terms we use on political forums such as this. How accurate or relevant are these terms as descriptors today given that the boundaries have become so blurred?