Dr. Stangelove 2.0
Written by One Nation Economics Forum. Our own Aussie Economist.
Over recent years and even decades, there are usually two ‘Aunties’ or ABC’s. One that is more than critical of any sitting Coalition government. And another that is less than critical of any sitting Labor government. That is putting to one side that increasingly in the 21st century: the Coalition are Labor-lite; and Labor are Greens-lite. But when it comes to the Australian government’s burdensome debt, ‘it’s all good’ regardless of who is in charge.
For example, in March 2022, ‘your ABC’ published the following piece about the debt when ‘ScoMo’ was still PM:
“A budget deficit is when a government's spending exceeds its income, and Australia has run a deficit nearly ever year since 1901. Australia has its own currency, so the Government may not always even need to borrow to cover deficits because it can effectively print its own money.”
Then, in October 2022, ‘your ABC’ published this other piece about the debt with ‘Albo’ as PM:
“There are plenty of opinions about how much debt is too much debt. … Many economists agree Australia's debt is nowhere near crisis levels[.] … [And as] Richard Dennis, from progressive think-tank the Australia Institute, [has] argued[:] … But there's no debt crisis in Australia, far from it.”
Once again, the Ultimo elites want hard-working Aussies to believe them over their own ‘lying eyes’. But ‘a picture is worth a thousand words’, so they say. And two pictures, perhaps double. Trading Economics has provided two key pictures on Aussie deficits and Aussie debt, at the end of this article respectively. Exhibit A shows that deficit volatility has been getting worse-and-worse in since the 20th century. Even more worryingly, Exhibit B demonstrates net debt has skyrocketed over the past dozen years or so: both in terms of Australian dollars million (AUD$M), and per Gross Domestic Product (GDP%). The former is heading towards $800,000M, and the latter hovering around 30% of GDP.
There are sadly “many economists” who “agree” on plenty of ridiculous things such as “debt is nowhere near crisis levels”. But not all economists are ‘created equal’. Sound economists like Dr. Bob Murphy of the Mises Institute, in his book Lessons for the Young Economist, made the following important and timeless points about government deficits and debt:
“[Government] debt is the cumulative result of all previous [government] deficits and surpluses. … Deficits allow the [RBA] to purchase more Treasury bonds [ie debt], a practice that is inflationary. … [Also] deficits [and debt] divert real resources away from private-sector investment, and…make future generations poorer than they otherwise would be.”
However, far more ridiculous is the increasing number of so called ‘economists’, and so called ‘journalists’ at the ABC, who promote the pseudo-economics that there is no need to worry about debt as the Australian Government: “because it can effectively print its own money.” This is called Modern Monetary Theory or MMT. In June 2020, the former head of the Mises Institute Jeff Deist summed up MMT as “not modern”, “not monetary” and “not theory”. And he added that:
“[MMT absurdly suggests that] taxpayers don't fund government, because after all government first provides the ‘tokens’ (currency) taxpayers need to pay their [ATO] bills! … MMT is the perfect economic proposal for those who sincerely and deeply believe wealth simply exists in America, and will continue to exist, regardless of incentives. … The promise of something for nothing [this time by MMT] will never lose its luster.”
In a ‘nut shell’, a MMT viewpoint (intentionally or unintentionally) blinds Aussies in the ‘toxic 20s’ to the ‘ticking time-bomb’ that is their government’s debt. Such debt hurts private citizens by ‘crowding out’ productive investment and jobs along with further inflating the costs of doing business and living. The dystopian world of MMT brings to mind the 1964 movie of Dr. Stangelove or: How I Learned to Stop Worrying and Love the Bomb. According to MMT: stop your worrying and love the debt-bomb. According to common sense and sound economics, however, start worrying and ask: Please explain?