Deleveraging the cause of very high unemployment?

[Jovial Monk]

http://www.debtdeflation.com/blogs/2009 ... nce-trick/

Debt to GDP was higher last year than it was in 1929. Oops. Thanks Bush & Howard, fuckwits and retards.

[Leftofcentresalterego]

Yeah, I find that a bit concerning JM. Ridiculous private sector debt levels but all that spending is underpinning rather a lot of jobs. If the economy finds a new equalibrium at a new, lower level of consumer spending as the debt is reigned in and people try to start saving once more, unemployment could indeed be very high and not return to a (relatively) low level for years.

In this case, whether the neo-cons like it or not, government spending will be needed to plug the private spending gap.

[Jovial Monk]

Yeah but but but but that will have our great great great great etc kids paying off the debt. Or so Sheepy and a few other wankers scream. Not that the debt is huge as a % of GDP.

Of course sheepy wants smaller govt, but screamed against DFAT being made to come up with a small efficiency dividend. He wants a smaller deficit but really screamed against the moves to remove the rebate even though that has been shown to be a huge waste of money that has diverted huge resources from the public hospital system without decreasing even by half a percent the workload on public hospitals. With supporters like Sheepy no wonder the Fib party is up shit creek in a barb wire canoe.

[Leftofcentresalterego]

Sheepy's wrong. The notion that debt is needed to finance the deficit arises from the fact that running a federal deficit creates an excess of reserves in the central bank where it interfaces with reserve accounts that the commercial banks are required to hold. This excess sloshing around would create problems for the reserve in maintaining it's official interest rates. So official policy is that every $ of deficit (fiat created) must be offset with a corresponding $ of actual debt by issuing bonds in order to "drain the excess" to allow monetary policy to operate smoothly and headache-free.

But yeah, it's only a very small % of GDP at the moment and is far smaller than either consumer spending as a whole or the real debt racked up by Australians on credit cards. Which puts the size of the deficit in perspective (tho it will rise). John and Jane Doe spent more on plasma screens by going into debt than the govt is thus far spending on the deficit.

There are definately much better ways of spending money than middle/upper class welfare. Methinks this budget will see some more screams from sheepy

[White Indigene]

Does Japanomics play a part

Monkbean??

[Jovial Monk]

Japan is in deep recession WI, which does not help us. That answer whatever question you were asking?