The budget

[JW Frogen]

Once again, reality check, appopriate levels or not, Labor's debt must be paid for. It will be paid either by increased taxes on future workers or greater and greater interest on the bonds used to back it, or if neither course is used, inflation and a worthless currency.

Governments can not just create wealth by printing paper, even on electronic screens.

[skippy]

Once again, reality check, appopriate levels or not, Labor's debt must be paid for. It will be paid either by increased taxes on future workers or greater and greater interest on the bonds used to back it, or if neither course is used, inflation and a worthless currency.

Governments can not just create wealth by printing paper, even on electronic screens.

You are right to an extent frogy, if the people are stupid enough to elect a Liberal government increased taxes for the poor and middle class, the removal of many social structures and massive inflation will indeed occur.

[JW Frogen]

I am not saying Labour's current spending might not be justified, (that is a different question), I am just injecting some reality into LeftyCenter's belief that it does not have to be paid for.

All questions of social benifit must be weighed against questions of future cost to economic production, the latter being the only way societies can have any social benifits.

[Jovial Monk]

Labor's spending will be constrained to 2% increase a year. Most of the deficit is not due to spending, it is due to loss of tax revenue and increased unemployment benefits paid out. The Howard/Costello budgets were always in structural deficit and with the end of the mining boom that made a huge impact on the budget position.

The borrowings/deficit will be paid off as the economy recovers and as (I hope) Labor keeps removing all this bloody middleclass welfare Howard brought in to buy elections. They are doing that, too slowly perhaps for my liking, and will continue to do this--Swan will eventually have a budget that will be structurally in surplus as well as producing cash surpluses. This could be sooner than we think as China recovers.

[Leftofcentresalterego]

Frogen, why do you continue by implication with the line that there is a limited supply of Australian dollars, or if not that any action by the currency monopolist to increase the supply by any amount automatically de-values the currency? Neither is the case. Again, they borrow while running a defict in order to drain excess reserves as a matter of monetary policy - to allow problem free interest rate targeting.

You haven't yet proposed how economic growth - which requires a steady increase in liquidity - somehow "creates" new Australian currency as if by magic. Bullshit. Someone must issue it first. And the only entity capable of that is the Australian government. In order to be overly inflationary, new spending by government must exceed both the capacity of the economy to absorb it and the private sectors net desire to save.

And I still don't think you've commented on the fact that the three decades that no federal budget was in anything but (smallish) deficit, are remembered as the golden era of strong growth and extremely low (2%) unemployment. Quite the antithesis of the scenario you propose.

At least the righties are beginning to admit that deficit spending during recession is necessary.

[Jovial Monk]

Just a recovery in the economy will lead to the debts being paid off. I fervently hope they don't make the mistake of Costello & just use high tax revenue to first make it look like he got a surplus budget then pay off debt while spending nothing on infrastructure. Fervently hope they pay off some debt, spend some on infrastructure (incl education & health infrastructure) and put some in a sovereign fund.

Until the Hawke/Keating govt every budget was in deficit.

[White Indigene]

Note too that most of the voluntary debt is issuing bonds domestically. So the government is taking money out of the economy - to put the same money back in for spending projects. Take 10 buckets of water from the deep end of a swimming pool, walk around to the shallow end and pour them back in. Net loss of water from the pool - nil.

Yes but while only one man is Aquarius, the rest get unemployed.
This never had to happen, by your same mathematics.

"All for nothing; and nothing for All" ( repeat chant whilst flying the flag).

[Jovial Monk]

Gibberish as usual from WI.

[JW Frogen]

Frogen, why do you continue by implication with the line that there is a limited supply of Australian dollars, .

A currency is a promisary note; it only has the value the world writ large determines will be actually promised...and...delivered.

[JW Frogen]

"All for nothing; and nothing for All" ( repeat chant whilst flying the flag).

Nice line, I am going to steal it.