The UK Guardian have recently set up shop in Australia. I’m not sure why. They’ve just reported that Australia is running out of money.
Lenore Taylor has just written:
Treasurer Joe Hockey warns we’re “running out of money’ to pay for health, welfare and education”. Health minister Peter Dutton says he wants a “frank, fearless and far reaching discussion on our health system.”
Lenore presumably believes Hockey and Dutton writing “They’re right about the long term budgetary problem.”
Are they really? When any politician or economist tells you we are running out of money, that the piggy bank is empty, that is just not true. All economists know that’s not true so the question is why do they lie to you? (Acknowledgements to Prof Randall Wray on that one)
Australia can run out of resources, though, and resources would include human resources. So it is possible that at some time in the future everyone will be flat out doing other things and there just won’t be enough people available to look after the elderly, teach kids in schools, or work as doctors and nurses in hospitals looking after the sick.
Is that the case now? I don’t think so. Australia has just lost its car industry and of course its unrealistic to retrain all unemployed car workers to work as doctors, nurses and teachers. It may be possible to retrain some of the younger workers though. And it should be possible to retrain the children of the car workers who may, at one time, have had ideas of working in the car industry themselves.
But who’s going to pay for it? That’s always the killer question and one hardly anyone gets right. That’s because they think the Australian government is a user of the currency rather than an issuer of the currency. Just on a point of information it is an issuer. No one else is allowed to make Australian dollars except the government in Canberra. The Australian dollar doesn’t have to be borrowed back from China or anywhere else.
Of course if the government issue too many $$ it can generate inflation. But if they don’t issue enough there won’t be enough $$ in the economy to prevent recession. If they were only allowed to issue what they received in taxes there wouldn’t be any dollars at all in the economy. So, just on a point of logic, they have to issue more than they receive back.
Of course, if the government issue too many $$ it can generate inflation Oh I’ve already said that. But it might be worth just saying it more than once in case anyone is thinking of mentioning Zimbabwe or the Weimar Republic.