Ask US economist Warren Mosler whether the national disability insurance scheme should be paid for by a new levy or by spending cuts, and you’ll get a jarring answer – neither.
He’ll also tell you the question shows both the government and the opposition don’t really understand how public services are funded in a modern economy.
Articles from A Senex View
As was discussed in the two previous posts, there is no financial need for these governments to borrow at all in order to fund their deficit spending.
Australian Modern Monetary Theorist Bill Mitchell has explained in an eye-opening post how the private-sector desire for bonds was made very evident in his country in the early 2000s during the period of a conservative government that oversaw ten budget surpluses in eleven years.
Understanding Modern Money Operations is Easy
1. Dollars are created when government (and their central banks) spend. Contrary to popular belief, governments DO NOT NEED to collect taxes or to borrow before they spend. They can simply create dollars from thin air.
A guest post by Mick Peel
People reliant on pensions and benefits are recognised as being amongst the poorest in our community. Age and disability pensioners have always received higher payment rates than the unemployed. But since 1997, when the Howard government started to index pensions to average weekly earnings but continued to index unemployment payments to the consumer price index, the gap has widened significantly.
This post is about the myth of the fiscal cliff also known as insolvency/debt ceiling debacle. An attempt to stop it before fiscal cliff lunacy migrates to Australia.
Statement: We can’t keep adding debt to the national credit card.
Response: We can if we want to. There’s no limit on the credit card except the one imposed arbitrarily by parliament.
In the US, the Federal Reserve sees Quantitative Easing as having effects on the price of assets (real property and stocks) so households feel richer and spend more, thus creating jobs.