skip to Main Content

Amazing reversals … democratic repression

The G-20 held its annual Finance Ministers and Central Bank Governors Meeting in South Korea over the weekend. It was amazing to see just how comprehensive the impact of the deficit terrorists has been on the way in which the G-20 has shifted its views on the way to deal with the on-going economic crisis. The G20 communique released today clearly illustrates that the G-20 group have been won over by the terrorists and are now supporting austerity measures. This is another one of the amazing reversals in the public debate that are now becoming regular events. All of the reversals are making it harder for governments to do what we elect them to do – use their policy tools to advance public purpose. The increasing constraints that governments are voluntarily accepting to satisfy the demands of amorphous groups such as the “bond markets” impinge on the democratic rights of every citizen. We expect our governments will act in the best interests of the nation. Sadly they are no longer doing that because they have fallen prey of the deficit terrorists. We have a new term for this – democratic repression.

Read more

Saturday Quiz – June 5, 2010 – answers and discussion

Here are the answers with discussion for yesterday’s quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of modern monetary theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.

Read more

Poisoning the minds of the young

Today I am writing about child cruelty. We would all react to child cruelty in the same way – it is repugnant and undermines the chances of the child maturing into a fully functional adult replete with capacities that promote self esteem and allow meaningful and enduring relationships. So what would we think of child cruelty when a high level government agency is engaged in it? What would we think of a government that was poisoning the minds of the young? Many Americans write to me accusing me of being a communist sympathiser and claiming that freedom was subjugated under those regimes via brutal indoctrination mechanisms embedded in their societal infrastructure. Maybe it was. But the Americans don’t actually have to look very far nor resort to history to find regimes that use indoctrination to oppress their citizens’ free spirits, including the intellectual development of their children. On Thursday, June 3, the Director of the US Congressional Budget Office wrote his Letter to a Seventh Grader. It contains pure indoctrination designed to develop fears about budget deficits at an early age.

Read more

Federal minimum wage increase not generous enough

Today, Fair Work Australia, the new body that the incoming Labor government set up to replace the Fair Pay Commission, which the conservatives had crafted to cut real wages, released its first decision. The Minimum Wage Panel of FWA released its first Annual Wage Review under the Fair Work Act 2009 (Fair Work Act) and awarded minimum wage workers an additional $26 per week which amounted to a 4.8 per cent rise. With inflation running around 2.9, the decision provides for a real wage increase barely in line with productivity growth. The decision will apply over from July 1, 2010 to June 30, 2011. The decision does little to restore the real wage losses that low-paid workers have endured over the decade is it sufficient to restore the deterioration of low-pay outcomes relative to average earnings in the economy.

Read more

Australia GDP growth flat-lining

The Australian Bureau of Statistics released the March 2010 National Accounts data today and it revealed that the Australian economy has grown by 0.5 per cent only in the first quarter of 2010 and the trend is now dead flat. While the Australian economy sidestepped the global economic crisis with just one negative quarter of real GDP growth courtesy of the aggressive fiscal stimulus packages, private sector spending continues to subtract from growth. Private capital formation declined in the March quarter. The current performance of the Australian economy will make any not be sufficient inroads into the high rates of labour underutilisation that remain. The RBA claimed yesterday that economic growth is back around trend but the data shows that is far from the truth. Today’s data confirms that the fiscal contribution was the only reason Australia stayed out of official recession.

Read more

RBA finally decides to stop sabotaging growth

The Reserve Bank of Australia (RBA) announced today that its policy rate would stay unchanged at 4.5 per cent. This brings to an end (for now) the tightening cycle which began in October 2009 and has seen 6 rises since that time. The scene is clear. The Eurozone is deteriorating further into another crisis with social unrest coming to the fore. In terms of the local economy all the talk of an impending boom is waning. The proximate indicators suggest that economic growth in Australia is very weak (across many indicators) and it is hardly the time to be further increasing interest rates. Today’s decision also put into stark relief the calls from the OECD last week to impose a very significant monetary tightening to accompanying fiscal austerity measures. The RBA is clearly not following that nonsensical logic.

Read more

The “gas now, pay later” myth

Today I was reflecting on a book I read a few weeks ago which has been picked up by progressives and the mainstream alike as a visionary construction of the latest crisis and its remedies. It is so comprehensively wrong that I am amazed celebrated. It reinforces another theme that the mainstream conservatives are increasingly rehearsing in the media and in policy debates – governments have exhausted their options and have to take fiscal austerity measures as the only way to bring their public debt ratios under control. The point is clear – there is very little concrete argument about how the proponents of austerity see growth returning. There is a lot on cutting peoples’ living standards via prolonged unemployment, the retrenchment of pension and health entitlements etc; transferring public assets via privatisations – but not a lot on how austerity promotes growth. Further, the idea that sovereign governments have exhausted their fiscal space is just a total fallacy. They may have exhausted their political space but that is quite a different matter requiring a different solution.

Read more

Saturday Quiz – May 29, 2010 – answers and discussion

Here are the answers with discussion for yesterday’s quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of modern monetary theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.

Read more
Back To Top