One of the defining features of the neo-liberal era has been the buildup of private debt, particularly household debt. The banks and policy makers all assured us that this was fine because wealth was being built with the debt until, of course, it came tumbling down for many as a result of the GFC. Recent commentary on Australia’s record household debt problem and the increasing number of Australian households that are now on the brink of insolvency and cannot pay their bills seems to think this is a new outcome – the result of record low interest rates as thew central bank (RBA) tries to curb the descent into recession. The fact is that the problem emerged in the 1980s as neo-liberalism took hold of the policy process. We have to understand that period to fully appreciate the household debt problem now.

I guess the venality of the new US Presidency isn’t creating enough news for the Australian press. On January 29, 2017, the Fairfax press wheeled out the veritable debt scaremongering in this article – Scott Morrison to lift credit limit as Australia’s debt hurtles towards $500 billion – reporting that the Australian government “will be forced to lift its own self-imposed credit limit in the coming months as debt hurtles towards half-a-trillion dollars”. Instead of writing about how stupid and unnecessary this ‘self-imposed limit’ is, the journalist wanted to talk about the disaster that awaits us as the debt of the currency issuing government “hurtles” like some asteroid to its death towards half-a-trillion dollars. As I said, must have been a day that imagination in the journalistic world was lacking. The worst part of the story is not the idiocy of its logic or the fact that it links to an inane Australian Debt Clock homepage, but, rather, the reported response from the Labor Party Shadow Treasurer. The Labor party is meant to represent the workers and claims to be the progressive force in Australian politics. That ladies and gentlemen is the sick joke of all time. This is a party that has abandoned its traditional remit (to defend the well-being of workers) and instead spouts neo-liberal gibberish without knowing it.

There is now a so-called “New View of fiscal policy”, which, in fact, is not all that different to the “Old View” although the proponents are hell-bent on convincing us (and presumably themselves) otherwise. The iterative bumbling along of mainstream economists, dammed by reality but steeped in denial, continues. The latest iteration comes from the Chairman of the US Council of Economic Advisors, one Jason Furman, who was supervised in his doctoral studies by Greg Mankiw at Harvard. He is also “closely linked to Robert Rubin” a classic “Wall Street insider” who was Treasury secretary under Bill Clinton and a gung-ho deregulator with a seedy past (in January 2009, he was named by Marketwatch as one of the “10 most unethical people in business”). Please see – Being shamed and disgraced is not enough – for more on Rubin. Furman’s lineage is thus not good. Furman supports free trade, social security private accounts and Wal-Mart’s labour practices which allows it to offer such low prices (for junk!) (Source). Furman is part of the core ‘Democrat neo-liberal establishment’, which received its comeuppance in last week’s Presidential election. His views on fiscal policy should come as no surprise then.