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Post by andymyers on Jul 27, 2016 23:39:08 GMT
Okay I'll admit that even though I'm hanging around here, it was mainly the social policies that drew me to this forum and I'm still trying to get my head around MMT and work out if I buy it or not (please don't think I'm trolling - I genuinely wish to learn and discover what this is all about - think of me as the dumb idiot who is going to take you to task when the party goes mainstream) Listening to the podcast titled "Bernardi, #Brexit, Bunkum Credit Ratings" there was talk of the fact the British government cannot borrow British pounds. And it brought to mind this claim that the Aus govt pays $1bn per month in interest. mobile.abc.net.au/news/2014-06-12/joe-hockey-one-billion-a-month-interest-fact-check/5478480So what I can't understand is this - who "buys" the bonds, and if tax money isn't actually "collected" as described in another podcast I listened to (the terminology was that taxes destroy money I think?), how do you describe was is going on here in terms of MMT? (Edit: fully happy for you to use this as a future podcast discussion if you prefer rather than respond here) |
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Senexx
Junior Member
Posts: 81 
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Post by Senexx on Jul 28, 2016 0:31:50 GMT
Check out the latest podcast I think it only came out today. It should help you get part way there.
Bonds = Borrowing
We issue Bonds just like we do with Cash but bonds pay interest
Also the thread on Australian Office of Financial Management (AOFM) should help you.
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Post by andymyers on Jul 28, 2016 4:23:27 GMT
I think I'm starting to understand a bit, however there's a few pieces of the puzzle that I feel need to be explained that I haven't heard explained yet.
For example, if Taxes don't pay for things, let's imagine a situation where *no* taxes were collected. Do we still have roads, hospitals, etc? I don't feel that's been explained in anything I've come across yet, so I'm thinking "unicorns" in my head, and possibly others listening or reading will too.
If currency is just like a tick on the iPad chart you still need a limit to the number of ticks you can give right, to prevent hyperinflation? Even though the Aus gov issues Aussie dollars isn't the reality that we trade with other countries so that would devalue our currency?
Maybe I'm missing the point, but I'm just a pleb (one of Tim's zombies if you like :-))
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rod
New Member
Posts: 25
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Post by rod on Jul 28, 2016 6:02:37 GMT
Taxation is used to provide the space in the economy for the Govt to spend, if money wasn't removed via taxation then you would get inflation. The Govt can only spend up to the limit of resources available ie goods/labour if it goes above that then there is more money available to purchase limited resources which is inflationary. We have plenty of unused resources around, 2 million under/unemployed people ie Labour If all those people were paid with money created by the govt to do productive work eg building roads, improving the environment etc why would other countries devalue our currency? The newly employed people are producing new goods and services, being paid with newly created money. If you look at the graph you can see the money supply has been growing quite dramatically mostly created by bank lending but hasn't caused an problems with our FX although house prices have inflated. Attachments:
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Post by andymyers on Jul 28, 2016 8:04:37 GMT
Great thanks for the explanation. I'm a complete n00b on this stuff, so I'll probably ask some stupid questions while I try and get my head around it all.
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Post by Iain Dooley on Jul 28, 2016 11:50:11 GMT
Hey Andy, check out this short explainer video about why we have taxes youtu.be/VV3lT2JNH2MAll the explainers are here: www.youtube.com/playlist?list=PLT4Jth7jJj8Z9FyAycR_WWuVmiP2Ou0gmLet me know if that's not clear happy to discuss further. Also in the AOFM thread someone brought up the fact that the OPA operated by the RBA on behalf of treasury is a self executing consolidated fund which basically just means that the RBA can choose to operate it with a negative balance if it wants. It's an account that can't run out of money. |
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Post by andymyers on Jul 28, 2016 13:17:34 GMT
Great video - I really found that one helpful. Thank you |
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