Politics Who would have thought a Liberal government would employ MMT?

[Seeds]

How come Australia suddenly has billions of dollars to pay for welfare? - triple j

"We've been told there's no magic money tree," one expert says. "Well there is and they've just used it."

www.abc.net.au

MMT is terrific way to deal with a complete crash of aggregate demand. potentially a way to send stagnation to the history books (although not stagflation). However its an idea that can truly only work if we are willing to be very flexible with government welfare or taxes when the snap back in demand comes. Otherwise it will lead to mass inflation. Unfortunately most of MMT's supporters completely underestimate the magnitude of the snap back. Probably cos we havent seen high inflation for nearly 30 years.

This may mean all the policy supports we have just introduced must disapear quickly when demand comes back (and possibly even ones we already had before the crisis). Will the Liberals be able to achieve this or will labour and independents convince them to keep them dooming us to an inflation outbreak that will force the central bank to shoot up interest rates?

ofcourse there is one other outlet. Massive increases in taxes. As implied in the article. Will low income workers be willing to tolerate higher taxes? Or will we significantly increase taxes on high income earners including doctors and get them to pay for it. Oh the irony if the way we decide to say thanks to doctors is by massively increasing their taxes.

interesting times. Quite giddy thinking about all the permutations.

what outcome do you think will occur once social distancing is gone?

1) significant cut back in government welfare and subsidies?
2) mass increases in taxes; or
3) return of inflation.

 

[Bleeeeeeeeep]

Mining tax levy?

 

[Johnny Bananas]

Taxes.

 

[Seeds]

Bank of england last night announced its directly funding the government.

This is extroadinary.

made sure to let me people know that they are not going to become a Zimbabwe. They promised they will do it better than Zimbabwe.

Later day 20th century central banking is dying.

 

[Johnny Bananas]

Bank of england last night announced its directly funding the government.

This is extroadinary.

made sure to let me people know that they are not going to become a Zimbabwe. They promised they will do it better than Zimbabwe.

Later day 20th century central banking is dying.

Inflation is hardly going to be a big worry right now, given the price of practically everything except food and hand sanitiser has gone through the floor.

 

[Seeds]

Inflation is hardly going to be a big worry right now, given the price of practically everything except food and hand sanitiser has gone through the floor.

inflation is not a worry when aggregate demand is weak. I think this is a great way to prevent demand side recessions. it wont prevent this recession given it also has a major supply side component (i.e. workers arent allowed to work regardless of demand) but it does help reduce its magnitude. The question is what happens when demand returns to normal.

 

[Pessimistic]

How come Australia suddenly has billions of dollars to pay for welfare? - triple j

"We've been told there's no magic money tree," one expert says. "Well there is and they've just used it."

www.abc.net.au

MMT is terrific way to deal with a complete crash of aggregate demand. potentially a way to send stagnation to the history books (although not stagflation). However its an idea that can truly only work if we are willing to be very flexible with government welfare or taxes when the snap back in demand comes. Otherwise it will lead to mass inflation. Unfortunately most of MMT's supporters completely underestimate the magnitude of the snap back. Probably cos we havent seen high inflation for nearly 30 years.

This may mean all the policy supports we have just introduced must disapear quickly when demand comes back (and possibly even ones we already had before the crisis). Will the Liberals be able to achieve this or will labour and independents convince them to keep them dooming us to an inflation outbreak that will force the central bank to shoot up interest rates?

ofcourse there is one other outlet. Massive increases in taxes. As implied in the article. Will low income workers be willing to tolerate higher taxes? Or will we significantly increase taxes on high income earners including doctors and get them to pay for it. Oh the irony if the way we decide to say thanks to doctors is by massively increasing their taxes.

interesting times. Quite giddy thinking about all the permutations.

what outcome do you think will occur once social distancing is gone?

1) significant cut back in government welfare and subsidies?
2) mass increases in taxes; or
3) return of inflation.

real inflation or the dodgy figures govt uses to say there’s no inflation. Cmon guy you’re the one always going on about the housing bubble

 

[Seeds]

real inflation or the dodgy figures govt uses to say there’s no inflation. Cmon guy you’re the one always going on about the housing bubble

consumer price inflation is accurate for what it measures. It does however leave out housing which probably should be included if we want to look at cost of living properly.

there is a chance that this feeds to further housing and equity bubbles far above and beyond what has already been seen. Maybe this is why the stock market is surging despite the economic forecasts being dramatically revised downwards each week.

 

[Cash is King]

Interest rate rises yes please

 

[Seeds]

If you have a home loan fix it. Inflation is coming and it will bring interest rate rises.