Smoot Hawley Act

[JW Frogen]

OK, I get it, your view is the government should do anything and everything that makes the populace feels like the government is doing something.

Spend our children’s money for their future.

Government save us from ourselves, it is YOUR responsibility, even though you are US.

Purple monkey dishwasher.

[Leftofcentresalterego]

Yes Frogen, I am of the opinion that governments should do something, as is nearly every government on Earth and even notably neo-liberal institutions such as the IMF who miraculously became Keynsians when the crisis hit.

Seems everyone is a dickhead bar Frogen. Oh, and probably Julie Novak.

You do understand how well-targeted defecit spending today will make the future defecit smaller than it otherwise would be, don't you? The biggest part of a downturn-driven defecit is not new government spending. It is the collapse in revenue as businesses become less profitable or fold altogether. This in itself causes many more people to become unemployed which further adds to the process as they no longer pay tax to the government but must instead be payed by the government so they don't go round smashing shop windows and stealing bread.

Governments can partly make up for the collapse in demand (though they can't stop it altogether) by spending when private sector spending becomes deficient. Far better to spend money shoring up demand and preserving employment, meaning government can end up paying off defecit more easily than to simply let the market sort it out.

[JW Frogen]

Let us borrow more money to get out of debt.

OK.

China is living in interesting times.

[Leftofcentresalterego]

The Australian government has not been carrying any debt

[My Little China Girl]

Trade deficits.....grasshopper.

[Jovial Monk]

Cool, guest posting here?

Under Rudd trade deficits have been declining. Under V1 & V2 they soared even tho the ming/China-India boom meant exports soared. And our o/s debt

[Leftofcentresalterego]

Trade defecits.........grasshopper

The thread is in reference to government borrowing.........dung beetle.

As long as our exports are food and dirt while our high consumption lifestyle of value-added things is imported........

And I don't think Howard's FTA with the US, whereby we import well over twice as much from them in dollar terms as we export to them is all that helpfull.

[Jovial Monk]

Gasp! Next thing you will be telling me that Howard and Costello were a comedy act rather than and I quote good economic managers.

And from the above you would think Vaile was a boy sent to do a man's job! How could you suggest that?

[Jovial Monk]

The money is being borrowed because in a downturn the government:

1. Gets less PAYE and company tax receipts, while at the same time
2. Govt is spending on dole payments

A double whammy to the budget you see? That is where the bulk of borrowed money goes, financing the deficit. Or what you prefer govts just print more money? Inflation, so nice to see you back!

The stimulus package gives money to those who missed out in our own neocon experiment, it also builds infrastructure. The government gets a fair bit of the package back in PAYE. company tax and GST.

Most right wingers are not that smart (e.g. Sheepy, MYIQRLOW) and haven't picked up on the fact that most of the borrowings is to finance the deficit due to the decline in tax receipts and increase in social security payments, a natural thing and one of the so-called "automatic stabilisers of the budget."

If the economic vandals Howard & Costello (V1 & V2 in short) HAD actually saved all the surpluses from the mining/China-India boom we wouldn't have to borrow, but all that money was pissed up against the wall in unsustainable tax cuts, giving millionaire retirees the pension, Regional Rorts, middle & upper class welfare etc etc.

And pressure for 'Buy xxx" etc is growing. That'll help, NOT!

[JW Frogen]

Trade deficits are very much part of the overall equation of this economic downturn both in the US and Australia, if a country has deficits that are too high the currency markets may start to consider their debt unsustainable and tank their currency or credit rating. Exporters might determine the market is less stable and so charge more for goods.

As for the FTA, we were running trade deficits with the US prior, saying we are simply going to maintain artificial barriers which did not make us a trading powerhouse in the first place, barriers which make goods more expensive in Australia and stifles any Australian incentive to do what really produces trade surplus’, innovate and create products the rest of the world wants to buy rather than stagnate and subsidies failure through taxation, is not really a long term solution to trade deficits.

Your reflex in almost every thread is to tax your way out of the problem and try and hide from the rest of the world.