Mainstream economists grasping reality (just barely)

[Lefty]

From none other than the hallowed pages of the (British) Finacial times and also the premier cheerleader of neo-liberalism "The economist" - the realities of how modern fiat monetary systems actually function is beginning to dawn as scepticism of neo-liberalism begins (slowly) growing.

It gratifies me to see a mainstream economist expressing the understanding that if the private sector desires to net save, the government sector must be in deficit in order to accomodate this (especially in Australia).

The manic desire to run federal surpluses for surplus sake is all of about 15 years old and has been accomodated by the massive proliferation of instruments to sell unprecedented levels of private sector debt. Eventually, reality ie that deficits not surpluses are the norm must re-assert itself.

[JWFrogen]

And here comes the interest rate rises!!!!!

Fly my pretties fly!!!!!!!!!!!!!!!!!!!!

[Jovial Monk]

Yeah, they will, at least until the "neutral" setting of 5% or so.

[JWFrogen]

Yeah, they will, at least until the "neutral" setting of 5% or so.

They probably will go higher, and certainly would have gone much higher had not there been a surplus to negate the borrowing Labor has done.

[Jovial Monk]

Hmmm and but for the endless high-income earners tax cuts, the huge middle-class welfare etc, all unsustainable, all paid for by the China & India mining boom, we would have a $400Bn+ sovereign fund that meant we wouldn't have had to borrow.

[JWFrogen]

And you think a Labor government during the 90s would not have spent more?

You probably really do.

As to middle class welfare, I am all for it. Better to give it to the battler, the working family, those who earn their keep, or really try to, rather than the current Centerlink crowd sitting on their ass watching Ready Steady Cook putting the bottle of cooking wine down their throats rather than in the chicken delight.

[Jovial Monk]

I dunno, Froges. I would hope not, but endless rivers of resource rent tax etc etc would corrupt anyone.

All I can do is sigh at the sheer waste of money by Messrs Howard & Costello. What fuckwits!

[JWFrogen]

Tax is like marriage, you think you are getting easy sex and then the bill comes due.