Monday, May 6, 2013

All aboard the Austerity train!

I actually have trouble watching show like Lateline and 7:30 on Television these days because I find it hard to hold in the urge to yell at our political class as they demonstrate how little they know about stuff in general. It's soundbite A , then soundbite B etc. All of which are boiled down to the point of no return and contain almost no actual information what so ever.  *humph*
The wondrous theme of my rage over the past month is over, well our Sovereign debt in Australia which seems to be the opposition's favorite kick ball at the moment. Worse still until recently we had a Labor government committing to surpluses in a time of downturn. Madness, and sadly madness that hurts people as Government is the investor of last resort in hard times.
Wait, that sounds like I'm saying that the Government needs to borrow more. That sounds like I'm saying that the government isn't on a spend thrift roller-coaster ride of spendatude. (but that it should be) What about living within our means you hippy! (I hear you cry) That spending will need Tax revenue! From Us!!!

Well no, kinda, yes in parts. But all those common kneejerk responses that make us all feel that austerity from the government would be a good thing are sadly based on a number of incorrect assumptions about the way money works in a place like Australia.(Which has a sovereign floating currency)
There is a lot written on this, online and otherwise but a good starting point for people like you and I who have little to no background in macroeconomics would be this piece by Stephanie Kelton at the university of Missouri Kansas city. Professor Kelton breaks down the arguments against Austerity in some real nice bite sized chunks.