The Politics Thread 2021

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greeneyed
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Re: Coronavirus

Post by greeneyed »

Mickey_Raider wrote: November 11, 2021, 11:12 pm
greeneyed wrote: November 11, 2021, 10:14 pm Mickey… if your thesis is correct, we should immediately abolish all taxes and revenue raising. Just “print money”. What do you think will then happen? Really a discussion for another thread though… so over to the Politics Thread with this one.
We have definitely had this discussion before and certainly can have it again in another thread if you so desire; although I am
Not sure how productive it would be.

But as for your above proposition, that is a non-séquitor. My thesis is in no way presupposes the abolition of all taxes and revenues.
But it is the logical extension of what you’re saying. You just said that government goods and services are simply funded by “government fiat” (that is they print the money, they simply regulate) not by taxes. So if were true, taxes and other government revenue could be abolished.
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Mickey_Raider
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Re: Coronavirus

Post by Mickey_Raider »

greeneyed wrote: November 11, 2021, 11:57 pm
Mickey_Raider wrote: November 11, 2021, 11:12 pm
greeneyed wrote: November 11, 2021, 10:14 pm Mickey… if your thesis is correct, we should immediately abolish all taxes and revenue raising. Just “print money”. What do you think will then happen? Really a discussion for another thread though… so over to the Politics Thread with this one.
We have definitely had this discussion before and certainly can have it again in another thread if you so desire; although I am
Not sure how productive it would be.

But as for your above proposition, that is a non-séquitor. My thesis is in no way presupposes the abolition of all taxes and revenues.
But it is the logical extension of what you’re saying. You just said that government goods and services are simply funded by “government fiat” (that is they print the money, they simply regulate) not by taxes. So if were true, taxes and other government revenue could be abolished.
Of course they could be abolished.

However it would almost certainly result in disaster.

Taxes play a crucial and indispensable role in regulating the net money supply. They can also be very effective in curtailing deleterious behaviours in society (tobacco, carbon etc).
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greeneyed
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Re: The Politics Thread 2021

Post by greeneyed »

It would be a disaster, but not because they “play a role in regulating the supply of money”. It’d be because taxes are what’s required to fund public goods. A government’s ability to run a deficit and borrow depends on the private sector’s confidence that there’s a future flow of tax revenue to pay for government debt. No tax, the whole box and dice collapses. The government can “print money”, but in those circumstances it’d be worthless for private sector actors. That’s why they couldn’t be abolished.

The microeconomics of taxes and charges is secondary in those circumstances too.
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Mickey_Raider
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Re: The Politics Thread 2021

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No, a governments ability to run a deficit is unrestricted.

If the government wants to fund the building of a house the proper questions are:

“Are there builders/materials available who can do this work?”
“Do we have the fiscal space to fund this ?(linked to the first question, as if all materials/labour is already occupied then creating the fiscal space would be inflationary)

If the answer to the above two questions are yes, mark up that CBA/ANZ account of that builder and away you go.

Government has some red ink on the balance sheet. Private sector gets some black ink. Private sector also gets additional risk free financial assets in the form of interest bearing Treasury bonds when the government chooses (is not forced, but chooses) to match (note match, not fund) deficit spending with bond issuance.

So no, the private sector is not sitting there hand wringing about the Australian government deficits (forecast until 20-freakin-60, FYI.)

They are sitting there with their hand out reaping the dividends of said deficits and getting wealthy.

THEIR RED INK IS OUR BLACK INK.
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greeneyed
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Re: The Politics Thread 2021

Post by greeneyed »

Recipe for the financial system to collapse. Having explained why governments’ ability to run deficits is ultimately restricted, all I’ll now say is I’m glad you’re not running the government’s fiscal policy or running monetary policy.
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Re: The Politics Thread 2021

Post by Mickey_Raider »

greeneyed wrote: November 12, 2021, 8:02 am Having explained why governments’ ability to run deficits is ultimately restricted, all I’ll now say is I’m glad you’re not running the government’s fiscal policy or running monetary policy.
It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.

Im going to go do some work now but I look forward to doing this again soon.
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papabear
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Re: The Politics Thread 2021

Post by papabear »

You guys are speaking at cross purposes.

Yes governments can print money and pay for stuff without taxation.

Equally, doing so with no fiscal responsibility (ie taxation of money being pulled from the system broadly similar to the amount they are putting into the system) or hold ever will only lead to inflation and if left unfettered likely very large damaging inflation potentially rendering a currency worthless.

The value of something is a funny thing though, as you can see by the rise of bitcoin etc..
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Mickey_Raider
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Re: The Politics Thread 2021

Post by Mickey_Raider »

papabear wrote: November 23, 2021, 9:04 am You guys are speaking at cross purposes.

Yes governments can print money and pay for stuff without taxation.

Equally, doing so with no fiscal responsibility (ie taxation of money being pulled from the system broadly similar to the amount they are putting into the system) or hold ever will only lead to inflation and if left unfettered likely very large damaging inflation potentially rendering a currency worthless.

The value of something is a funny thing though, as you can see by the rise of bitcoin etc..
You’re spot on with your second sentence papa.

But we are not actually speaking at cross purposes.

I fully understand what GEs position is. He believes that our money system in Australia is exogenous and that government spending is ultimately constrained in a purely financial sense.

On the other hand I am saying that of course government spending is constrained - but by inflationary and resource factors rather financial constraints.

Unfortunately the instant retort to the above seems to always ( not necessarily by GE, but many so called “orthodox” economists generally) be some iteration of a hyperbolic and frankly unsophisticated refrain about magic money trees or something like that - as if outlining a descriptive framework is somehow tantamount to prescribing and advocating spending with reckless abandon.

On the contrary, fiscal responsibility is a deadly serious task and no economist of any stripe that I am aware of advocates any such prescription.

It’s just that many of these economists are looking at “fiscal responsibility” through the incorrect lens.
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greeneyed
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Re: The Politics Thread 2021

Post by greeneyed »

Not at all at cross purposes at all. Mickey is advocating "modern monetary theory": https://en.wikipedia.org/wiki/Modern_Monetary_Theory

It's not modern, and it is fundamentally flawed. It is widely discredited by most economists. Countries like the USA and Japan can get away with it for quite a while as they are so big (that is their real economies and future tax bases are so large) but countries like Australia will be pretty rapidly brought into line by financial markets. The idea that taxes aren’t required to fund public goods… well, you just have to take that to the logical conclusion (abandoning taxes) and you have a recipe for a collapse of the economy due to the poor fiscal policy settings. Fundamentally, your currency is left worthless by these sorts of policies. You just have to look at what happened and why in the banana republics of the past to know that they’re very dangerous theories.
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Mickey_Raider
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Re: The Politics Thread 2021

Post by Mickey_Raider »

Aside from instantly validating my point “Abandon all taxes!….financial ruin!….banana republic!”, as I keep trying to emphasise, I am not advocating or espousing anything, merely trying to inform.

Also with respect GE your analysis re: the US and Japan is threadbare and naive.

You’re pretty much being empirically contradicted day after day on your QTM doctrine, and your answer seems to be that one day - never mind that I don’t know which day and can’t articulate what will be the trigger point - disaster will occur.
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greeneyed
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Re: The Politics Thread 2021

Post by greeneyed »

I’ve explained it in great detail before. No point going through it all again.
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