The Politics Thread 2021

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greeneyed
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Re: The Politics Thread 2021

Post by greeneyed »

What the RBA is doing is not "fiscal spending". Fiscal spending happens via the budget of the Commonwealth of Australia. Fiscal policy involves spending on real goods and services or transfers to the public. The spending is either financed by taxation or borrowing (by issuing bonds). As I've said before, if Governments keep racking up public debt, and the market is no longer confident that future taxpayers can stand behind it, you're in for a very hard landing.

I do understand how the Reserve Bank of Australia operates monetary policy. The RBA uses its market operations (buying and selling bonds and other things on its balance sheet) to affect official interest rates (the price of money)... which flows through to the cost of borrowing, by business and consumers from the banking sector. That is not the Government "spending money", the RBA operates monetary policy independently.
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Re: The Politics Thread 2021

Post by Mickey_Raider »

https://www.google.com.au/amp/s/amp.new ... 44528f13ec


Asked to explain where the RBA got its money from, Dr Lowe explained he could create it “out of thin air.”

“This is the beauty of central banking. Central banks are unique entities and they can create money,’’ he said.

“We are the one entity in the country that can create money just out of nothing.

“So, that’s why it’s very important the governance around the process is very strong. Obviously, that could be abused if you just created money out of thin air to finance government expenditure without checks and balances.”

How do you respond to the above GE?

Looks like an admission from Mr Lowe himself that the central bank has the power of the purse, notwithstanding the obvious need to ensure that such power is not abused (as public spending is not infinite, it is constrained by its inflationary impacts such as they are and whether the resources actually exist.)
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greeneyed
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Re: The Politics Thread 2021

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Yes, central banks can effectively “print money”... though they don’t actually do that. They impact the liquidity of the financial system through their market operations, so as to establish the basic price of money (the official interest rate). They can do that through leveraging their balance sheet. These days, they have the sole target of inflation between a band of 2-3 per cent. That target has agreement of the Government, but they operate independently of government to achieve it.

That is not fiscal policy, nor do those transactions involve the government spending money. It is monetary policy. They are not transactions in the “real” economy, they are financial/financing transactions. They can influence economic activity through the price of money and the availability of credit to the private sector. But activity and unemployment are not the targets, it is inflation.

Governments can run deficits through issuing bonds (borrow from the private sector) and the RBA facilitates that. That is, they can spend more than they raise in taxes in any year. But unless Governments maintain good fiscal credibility... they first start to be penalised by higher interest costs... as the lenders treat them as risky. If the market believes fiscal policy is so unsustainable that there’s a risk Governments might default on their own bonds, then they’re basically up the creek. That’s why prudent governments aim to run surpluses in the good times, so as to keep public debt in check and create flexibility to run deficits in times like we have now.

In addition, if fiscal policy is too loose, that can create issues for monetary policy... because governments borrowing too much, could make the task of the central bank in controlling inflation more difficult.
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Mickey_Raider
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Re: The Politics Thread 2021

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greeneyed wrote: February 5, 2021, 6:42 pm Yes, central banks can effectively “print money”... though they don’t actually do that. They impact the liquidity of the financial system through their market operations, so as to establish the basic price of money (the official interest rate). They can do that through leveraging their balance sheet. These days, they have the sole target of inflation between a band of 2-3 per cent. That target has agreement of the Government, but they operate independently of government to achieve it.

That is not fiscal policy, nor do those transactions involve the government spending money. It is monetary policy. They are not transactions in the “real” economy, they are financial/financing transactions. They can influence economic activity through the price of money and the availability of credit to the private sector. But activity and unemployment are not the targets, it is inflation.

Governments can run deficits through issuing bonds (borrow from the private sector) and the RBA facilitates that. That is, they can spend more than they raise in taxes in any year. But unless Governments maintain good fiscal credibility... they first start to be penalised by higher interest costs... as the lenders treat them as risky. If the market believes fiscal policy is so unsustainable that there’s a risk Governments might default on their own bonds, then they’re basically up the creek. That’s why prudent governments aim to run surpluses in the good times, so as to keep public debt in check and create flexibility to run deficits in times like we have now.
Right, a few things.

1. Australia can and will never involuntarily default on its bonds. Never ever. Not unless it decided to for some reason take out loans in a currency it does not control. It can pay any liability when it becomes due and payable, because the RBA is nothing more than an arm of the government. Yes, a statutorily independent arm, but still an arm of the government. And that arm has the power of the purse.

2. The private sector does not have the government over a barrel in regards to interest rates. The government controls the interest rates. We have already established that this occurs by setting of the cash rate and by purchasing bonds at above the face value of the bond which in turn pushes down the market rate of interest on that bond.

3. You are probably aware that the RBA has an overdraft facility for the Treasury account there. This exists for when spending has occurred but has not been offset by the issuance of securities. Where exactly does that overdraft come from? Thin air perhaps?
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Re: The Politics Thread 2021

Post by Mickey_Raider »

I think in general there is a divergence between us in that you believe that our money system is controlled exogenously, when I have to stress that it simply isn't. It may have been way back when; before our dollar was floated in 1983.
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greeneyed
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Re: The Politics Thread 2021

Post by greeneyed »

You seem to be conflating the Reserve Bank with Government. In economic terms they are different entities. The RBA is a financial institution, engaging in financing transactions.

The Government doesn’t determine the official cash rate, the RBA does (effectively through its market operations).

If governments issue bonds in a tender, to finance a deficit, the private sector has a choice as to whether they buy them (lend to the government). Governments that are seen as more risky by the market have to pay more in terms of interest rates. It’s also why governments have to pay higher interest rates for longer term bonds... the market demands it because long term loans are riskier. Governments with higher public debt pay higher public debt interest charges.

What you seem to be thinking about is the secondary trading in bonds and notes, which what the RBA engages in in its market operations.

The RBA has its own balance sheet, separate from government, and it leverages it. That’s how it can operate as the banker of the government, and can ensure the government has enough cash on a daily basis. It’s why the RBA can also operate as lender of last resort for the private sector. The RBA website explains it pretty well.
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Re: The Politics Thread 2021

Post by Mickey_Raider »

greeneyed wrote: February 5, 2021, 8:11 pm You seem to be conflating the Reserve Bank with Government. In economic terms they are different entities. The RBA is a financial institution, engaging in financing transactions.

The Government doesn’t determine the official cash rate, the RBA does (effectively through its market operations).

If governments issue bonds in a tender, to finance a deficit, the private sector has a choice as to whether they buy them (lend to the government). Governments that are seen as more risky by the market have to pay more in terms of interest rates. It’s also why governments have to pay higher interest rates for longer term bonds... the market demands it because long term loans are riskier. Governments with higher public debt pay higher public debt interest charges.

What you seem to be thinking about is the secondary trading in bonds and notes, which what the RBA engages in in its market operations.

The RBA has its own balance sheet, separate from government, and it leverages it. That’s how it can operate as the banker of the government, and can ensure the government has enough cash on a daily basis. It’s why the RBA can also operate as lender of last resort for the private sector. The RBA website explains it pretty well.
GE, the RBA is a public, central bank. It is not a private bank founded by oligarchs where all the AUD's are kept and the government goes, hat in hand begging for cash. It is, despite its statutory independence, for intents and purposes is nothing more or less than the "scorekeeper" for the government of the day.

So essentially it boils down to this very simple scenario and associated question:

Imagine a day comes where the government is in deficit; bond auctions have been held, but no one is keen for those Treasury securities.

You are saying that at this point the Australian government would need to come out and say "Sorry, we haven't raised enough taxes and no one in the private sector wants our bonds. We have run out of money, we are broke".

Is that what you are ultimately suggesting is possible?
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greeneyed
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Re: The Politics Thread 2021

Post by greeneyed »

There are cases in history where that has happened, where government spending was out of control, butget deficits were exploding, inflation was rampant, there were perpetual devalutations, and that country's monetary and governmental system has collapsed, along with living standards.

I'm not suggesting that is going to happen in Australia, because we have, in recent years, had good fiscal and monetary policy settings. But if you have poor fiscal policy settings, and run up very large public debt levels, you're well on your way to trouble.
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Re: The Politics Thread 2021

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greeneyed wrote: February 5, 2021, 8:50 pm There are cases in history where that has happened, where government spending was out of control, butget deficits were exploding, inflation was rampant, there were perpetual devalutations, and that country's monetary and governmental system has collapsed, along with living standards.

I'm not suggesting that is going to happen in Australia, because we have, in recent years, had good fiscal and monetary policy settings. But if you have poor fiscal policy settings, and run up very large public debt levels, you're well on your way to trouble.
I am not talking about inflation or devaluation though. They may be undesirable but they aren't tantamount to a stone cold DEFAULT, whereby a government literally does not have the means to settle a liability at any given time.

Have a look at sovereign debt crises in recent history. Greece, Argentina, Lebanon, Venezuela. They all involve foreign debt obligations they couldn't honour. The countries had ceded their monetary sovereignty. Their defaults didn't involve running out of the currency which only they issue and control.
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Re: The Politics Thread 2021

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Incredible.

And it took a global pandemic, the death of hundreds and thousands of American citizens and widespread racial inequality protests for him to lose the election.

It's an indictment on both him and tens of millions of Americans that this can happen.
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Re: The Politics Thread 2021

Post by Dr Zaius »

Only what, 6 Republicans voted that it was constitutional to proceed with the hearing. No way are enough going to cross to prosecute., and mind blowing indictment on the GOP.
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Re: The Politics Thread 2021

Post by Seiffert82 »

They really do live on another planet.
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gangrenous
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Re: The Politics Thread 2021

Post by gangrenous »

It boggles the mind. Biden should just say that the Republicans are effectively voting that he could execute their half of the house in the January at the end of his term and be free from prosecution.

I just can’t understand... pure idiocy or pure corruption. It’s disgusting.
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Re: The Politics Thread 2021

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I have a feeling the conviction will fall about half a dozen votes short...I think a few more Republicans will come to the table.

For the 40-50 Republicans who will vote to acquit, could you be any more of a Trump cuck?

Like imagine you're cowering in the Senate chamber, fearing for your life, with hundreds of Low IQ domestic terrorists 50 feet away chanting that they want to lynch the VP, and meanwhile Trump is calling your colleagues while this is happening asking them about delaying the certification without enquiring whether you're OK...and your response is to stay loyal to this man?

Holy moly.
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Dr Zaius
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Re: The Politics Thread 2021

Post by Dr Zaius »

Am I correct to say that a sitting president cannot be charged with a criminal offence?

Does anyone know if a president can be charged with a criminal offence that they committed whilst in office, once they have left office?
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Re: The Politics Thread 2021

Post by -TW- »

They can unless they grant themselves a pardon

A sitting president can't be indicted whilst in power, hence the impeachment path

https://www.reuters.com/article/us-usa- ... SKCN1QF1D3

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Re: The Politics Thread 2021

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So then, can he be charged once the impeachment fails?
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Re: The Politics Thread 2021

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Not if they remain in office, if it's serious enough ie. They murdered someone you would think the impeachment would be voted through, they'd be removed then they'd be charged

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Re: The Politics Thread 2021

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Victoria on statewide stage 4 lockdown.
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Re: The Politics Thread 2021

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Uh oh.

Detective Peta Credlin has already begun production on her next groundbreaking documentary into this outbreak. Keen to find out whether she uncovers some more Labor incompetence.
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Re: The Politics Thread 2021

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-TW- wrote:Not if they remain in office, if it's serious enough ie. They murdered someone you would think the impeachment would be voted through, they'd be removed then they'd be charged

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That does not make sense. Just say they murder someone as president, however it's not until after their term has ended that the crime is solved. Can they not be charged because they were never impeached?
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Re: The Politics Thread 2021

Post by -TW- »

It's murica not much makes sense

Basically it's believed it's unconstitutional to indict a sitting president whilst in office, so the constitutional way of dealing with it is voting to impeach, having an impeachment trial, voting to remove them from office and then they can be criminally charged.

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greeneyed
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Re: The Politics Thread 2021

Post by greeneyed »

So just seven Republicans had the fortitude to vote Trump guilty. So Trump not sanctioned.
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Re: The Politics Thread 2021

Post by gangrenous »

What an utter disgrace. No backbone or morals on display from 43 cowards.
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greeneyed
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Re: The Politics Thread 2021

Post by greeneyed »

McConnell even had the hide to say afterwards Trump was responsible etc, but hid behind the constitutional doubt over whether he could be found guilty once he’s left office.
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gangrenous
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Re: The Politics Thread 2021

Post by gangrenous »

Which he himself enabled by refusing to recall the senate.

What a **** that guy is.
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Re: The Politics Thread 2021

Post by Dr Zaius »

What a sad, shambolic joke of a country the US has become.

A President spends months stirring up the masses, unleashing them in an escapade bordering on a coup, and the only means of holding him to account is reliant on a bunch of corrupt, self serving politicians voting against partisan lines.
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Re: The Politics Thread 2021

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greeneyed wrote: February 14, 2021, 10:10 am McConnell even had the hide to say afterwards Trump was responsible etc, but hid behind the constitutional doubt over whether he could be found guilty once he’s left office.
McConnell is gutless, and a microcosm of the current GOP.
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Re: The Politics Thread 2021

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The Trump is untouchable..
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Re: The Politics Thread 2021

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McConnell blames Trump but voted not guilty anyway: https://edition.cnn.com/2021/02/13/poli ... index.html



McConnell was absolutely damning of Trump's behaviour. But talk about mental gymnastics involved to avoid voting guilty. The appropriate thing for the Senate to do would be to operate on the basis that it was constitutional to vote guilty (once it voted to do so) and then let the courts decide if it was not constitutional (which it has long been considered to be - up to now).
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Re: The Politics Thread 2021

Post by Seiffert82 »

He's having a bob each way. Classic political move. They all do it.

Throw the Trump supporters a bone in the hope they vote Republican again in the next election, while telling the moderate Republicans that he doesn't condone Trump's behaviour. He also doesn't want the stench of leading the party who backed the first ever president to be successfully impeached.

It's all entirely calculated and self-serving.

A president would have to murder an innocent person in cold blood, or be busted for treason red-handed for either party to send their own leader to gaol.
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Re: The Politics Thread 2021

Post by greeneyed »

Facebook news ban stops Australians from sharing or viewing Australian and international news content: https://www.abc.net.au/news/2021-02-18/ ... a/13166208

I don't blame Facebook, at the risk of siding with so called "big tech". The Australian news media benefits massively from being able to share their material, for free, on platforms like this. If it wasn't beneficial to them, they wouldn't have joined into the platform. Facebook makes the entirely fair point that they never explicitly sought the participation of these companies on their platform... and all of the companies joined and shared material extensively without any payment... to date.

All the old media rugby league news pages are down.
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Re: The Politics Thread 2021

Post by The Nickman »

I'm surprised it's taken this long for this discussion to hit the GH.

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Re: The Politics Thread 2021

Post by Fuifui Bradbrad »

I’m not on Facebook, so I didn’t notice. But I agree with GE. Don’t understand the logic for team News
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greeneyed
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Re: The Politics Thread 2021

Post by greeneyed »

You have a mandatory code where there is some significant market imperfection being caused by a major imbalance of bargaining power. There is no major imbalance of bargaining power between Facebook and News Limited. Sure, you could argue there is an imbalance of power between "big tech" and regional media companies and small business media.

But what are the markets concerned and the services being exchanged? What is the market imperfection? The markets are being poorly defined here, and I can't see the market imperfection involved in this particular issue. What is happening is the emergence of new markets, facilitated by technological change.

One market is “old media” companies selling news stories to customers. They are under intense competition from new media supply of information, on social media platforms, for free. There’s an issue there as to whether copyright is adequately protected... but that’s not being debated here.

What the old media news media is doing, is promoting their digital product (which they now charge for), and advertise for free on Facebook. Facebook do not compel any of those companies to do so. There isn’t even a market transaction.

Forcing Facebook to give the old news media companies money so the companies can advertise their product for free makes no economic sense. Sure Facebook sells advertising itself for placements on its platform, but they are free to do that... and the old news media companies are free to participate in the Facebook platform or not. They do so, knowing that Facebook itself advertises and raises revenue on the back of any content generated by users. All Facebook users know it. What News Limited is asking for, makes as much sense as me asking Facebook for money for posting birthday messages and family pictures on their platform.

Facebook is operating in a distinct market to the market in which the old news media organisations are operating. Facebook is in the business of operating a social media platform, allowing for users to share all sorts of information... and they advertise to generate profits. The old news media is selling access to their service of reports and journalism... and they charge for access and also advertise. A new service and market has emerged with new technology. That is impacting the business model and structure of the old media companies. But that's actually opening up new services... and that's a good thing.

It is the same with streaming services challenging the old FTA and pay TV networks. On line sales and department stores.

Search engines are a bit different... as they share information published on the internet, without the owners of the web site explicitly choosing to. But the market for search engines is different to the market for "news". The search engine market allows people to find things on the web for free... and they do profit from it, by selling advertising around it. Google "takes" a news headline and the first line of the content (maybe less). If the concern is that too much is shared, that's a copyright issue. At present, copyright laws allow much more to be shared than what is shared via the search engine... and the media companies themselves regularly reproduce more content from their competitors than that.

There is not much case, apart from generating good will, for Google to pay for "news content", as limited as it is (a link to a story behind a pay wall). The news media companies (along with most other companies selling their product on the net) have no doubt spent a lot of effort making sure that their website content features highly in seach engine results. The idea that old news media companies should be paid by search engines makes about as much sense as film studios being paid for previews of their movies... or musicians being paid for links to their videos on YouTube... or plumbers being paid for tips on their sites on how to change a washer.

Facebook has done itself no favours today by blocking government departments providing services and community organisations. But this should be seen for what it is... a grab for money from News Limited, and somehow they have convinced a government to intervene on their behalf. As I understand it, the code is also only going to benefit big media businesses. Sadly, few people seem to be pointing out the basic economics... and all the old media companies are doing is pushing their self interest.
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