OT: Current Affairs and Politics

[Suitman]

Most punters out there actually think that the government having a budget surplus means that we are no longer in debt. Whereas really just means for the financial year receipts are greater than expenditure. So in effect we can start arresting debt.

Meanwhile debt has climbed significantly since the GFC. I am not against debt, but like the players vs the NRL right now, you'd like to know where all the cash has gone.

I can see a flattening of the curve.

 

[Poupou Escobar]

That was the first thing I thought, though those are projections from pre-COVID, and I dare say the reality will be significantly less flat.

 

[Gronk]

I can see a flattening of the curve.

Actually Australia raised its debt ceiling today to $850B. So I fixed it for you.

https://www.theguardian.com/world/l...085e564ad87b1b#block-5e745fa58f085e564ad87b1b

 

[Bandwagon]

You don't need a surplus, but it would've been better if we had one.

Would it though? All else being equal, the only real control the government has over whether or not we have a surplus is by reducing spending. Now given that it's increased government spending that's added those coupla points to GDP growth that has basically kept us out of recession, a surplus in the last few years would have meant we entered this crisis in a recession.

Would that put us in a better position?

Now is the time for Government spending, and more debt is going to hurt.

Agree on the need for spending, but how is more debt going to hurt us?

 

[hindy111]

You don't need a surplus, but it would've been better if we had one. Now is the time for Government spending, and more debt is going to hurt.

We can just print more money.

 

[Gronk]

We can just print more money.

They’ve (reserve bank) already thought of that. It started last week or so. It’s called quantitative easing. Google it.

 

[hindy111]

They’ve (reserve bank) already thought of that. It started last week or so. It’s called quantitative easing. Google it.

I was joking. But if it is that easy then get those machines running. I assume if print more money then it will start to lose its value

 

[I'm a loser baby...]

I was joking. But if it is that easy then get those machines running. I assume if print more money then it will start to lose its value

Then just spend the money you printed on more printers.

 

[Gary Gutful]

This is what @Avenger gave me after he lost his bet.

 

[Eelogical]

This is what @Avenger gave me after he lost his bet.

Always gamble responsibly.

 

[Gary Gutful]

Always gamble responsibly.

Lucky I didn't bet that you were at Redcliffe this morning.

 

[Eelogical]

Lucky I didn't bet that you were at Redcliffe this morning.

I walk a lot.

 

[Bandwagon]

I was joking. But if it is that easy then get those machines running. I assume if print more money then it will start to lose its value

That's dependent upon inflation. ( inflation is literally the loss of value of money )

The other thing inflation does, by lessening the value of money, is it lessens the value of debt, provided that debt is issued in the same currency that incurs inflation.

At this point in time, and for the last decade or so, our only problem with inflation has been that it has remained stubbornly low.

So a dozen years of deficits hasn't done f**k all to inflation, and whilst the entire f**king world heads towards recession, I can't see that changing any time soon.

 

[Poupou Escobar]

Would it though? All else being equal, the only real control the government has over whether or not we have a surplus is by reducing spending. Now given that it's increased government spending that's added those coupla points to GDP growth that has basically kept us out of recession, a surplus in the last few years would have meant we entered this crisis in a recession.

Would that put us in a better position?

It's presumptuous to state that government spending boosts consumer confidence enough to ward off recession. This current round certainly won't. It will just keep people alive and in their homes, and put the brakes on the expected rise in crime.

 

[Poupou Escobar]

Agree on the need for spending, but how is more debt going to hurt us?

A little thing called the miracle of compound interest

 

[Twizzle]

cuz the interest rates are so high atm

 

[Gronk]

I'm not following this. How is this a good thing ?

 

[Bandwagon]

It's presumptuous to state that government spending boosts consumer confidence enough to ward off recession. This current round certainly won't. It will just keep people alive and in their homes, and put the brakes on the expected rise in crime.

Um no, I'm not presuming anything there, I'm talking about the governments spending being actual activity in the economy, seeing as tax / GDP is around 24%, and we have a deficit, meaning the government spends more than it taxes, you can very safely attribute that money to economic activity.

A little thing called the miracle of compound interest

The interest the government pays on it's debt doesn't compound as a liability, it's paid out to bond holders at the intervals stated upon issuance of the bond. At the moment the ten year bond rate is more or less equal to our inflation rate, Which means that the cost of borrowing money is about the same as holding cash.

So the only "miracle" here is being worked by the time value of money.

I suppose you could make the argument that we are borrowing money to pay our interest bill, which would effectively mean that interest becomes compounding, but I think that's then an argument that's trying to quarantine revenue and expenditure to particular line items in the budget. Ie tax collected doesn't pay interest expense, only borrowings pay interest expense.

Anyhoo all of which ignores the benefit the government sees in revenue from greater economic activity, and that GDP growth as measured by a percentage is also compounding,

The literal fact of surpluses and deficits is that economists , governments and central banks around the world know that running a deficit is expansionary fiscal policy, and running a surplus is contractionary fiscal policy

Meaning that the only thing surpluses are really good for is slowing an economy to prevent it overheating. We haven't had that problem globally since well, prior to the GFC.

Although that does ignore that they are also apparently good for political gain when merkins don't understand that all a surplus is, is the government collecting more money from the taxpayer than it needs. But I've never really understood why merkins think that's a good thing.

 

[Twizzle]

I'm not following this. How is this a good thing ?

He has already shown he gives no f**ks about the environment and I thought him being short sighted was a given.

If the economy in Trumpville fails or slows it will no doubt affect his personal worth.

Adding to the pollution levels in a country where so many people are suffering respiratory problems just makes so much sense.

 

[Poupou Escobar]

Um no, I'm not presuming anything there, I'm talking about the governments spending being actual activity in the economy, seeing as tax / GDP is around 24%, and we have a deficit, meaning the government spends more than it taxes, you can very safely attribute that money to economic activity.



The interest the government pays on it's debt doesn't compound as a liability, it's paid out to bond holders at the intervals stated upon issuance of the bond. At the moment the ten year bond rate is more or less equal to our inflation rate, Which means that the cost of borrowing money is about the same as holding cash.

So the only "miracle" here is being worked by the time value of money.

I suppose you could make the argument that we are borrowing money to pay our interest bill, which would effectively mean that interest becomes compounding, but I think that's then an argument that's trying to quarantine revenue and expenditure to particular line items in the budget. Ie tax collected doesn't pay interest expense, only borrowings pay interest expense.

Anyhoo all of which ignores the benefit the government sees in revenue from greater economic activity, and that GDP growth as measured by a percentage is also compounding,

The literal fact of surpluses and deficits is that economists , governments and central banks around the world know that running a deficit is expansionary fiscal policy, and running a surplus is contractionary fiscal policy

Meaning that the only thing surpluses are really good for is slowing an economy to prevent it overheating. We haven't had that problem globally since well, prior to the GFC.

Although that does ignore that they are also apparently good for political gain when merkins don't understand that all a surplus is, is the government collecting more money from the taxpayer than it needs. But I've never really understood why merkins think that's a good thing.

Obviously it's a good thing because it reduces debt.