Thread by @Dan_Nahum

Thread!

@TheAusInstitute’s #RevenueSummit A post-Keynesian/#MMT perspective – questioning the premise of the Summit. In short, a washout – putatively sensible people nodding sagely at the repetition of neoliberal talking points.

#auspol #ausecon 1/12

Contra *every single speaker* at the #RevenueSummit, fiat money is not a scarce commodity that the government needs from us, it’s a tool that the government creates ex nihilo and *we, the populace, need it*. 2/12

Don’t take my word for it, take that of noted socialist Alan Greenspan’s:

Or Ben Bernanke’s. Or the Bank of England’s. Bankers know this stuff. 3/12

(Speaking of England, when Britain came out of WW2 with a 250% debt-to-GDP ratio, what did they do? Implement the NHS. And *Australia in 2018* is too poor to have nice things?) 4/12

Anyway, when taxes are collected, they’re not put into a ‘vault’ to be spent later by the government; rather, a double entry in a ledger is extinguished. The money was spent into existence by the government, now it’s been taxed out of existence. 5/12

The Commonwealth doesn’t have a revenue limit (unless they impose one for political – not economic – reasons, but limits like that can be de-imposed. In fact there's one right around the – arbitrary – 23.9% mark that should go out the window right after the next election). 6/12

A polity would, however, probably want to self-impose an inflation limit, or target band – which we do – because inflation has real-world impacts. But the nominal deficit figure is just a scoreboard. 7/12

Don’t get me wrong; taxes *are* important, for equalising the income/wealth distribution, and for anti-inflationary reasons. (But not for raising revenue!) And likewise, there are real opportunity costs, and scarcity, but they are around real resources, not ‘revenue’. 8/12

Another way of saying what I said in tweet 8 is that I readily accept that monetarily sovereign governments can indeed spend wisely, or less wisely. But they don’t have to go scrabbling around for cash. 9/12

So my question is: given that the Commonwealth of Australia has been in deficit for 80% of its 100+ year history, why is it an article of faith even amongst progressives that there’ll be some sort of fiscal ‘day of reckoning’? (Numerous speakers today talked like this.) 10/12

It seems rather Chicken Little this late in the piece. Another question: why is it that, even though we have underutilised resources throughout the real economy, including labour, we can’t ‘afford’ to use the public purse to glue them together? Are we out of keystrokes? 11/12

Or are we, as a polity, so afraid of inflation that we’ll forever do the neoliberals’ work for them, running a fiscal policy of rolling, low-level austerity even when the Left is in power, hiding behind the fig leaf that we can't afford better? 12/12

Ping @ak_pennington @RDNS_TAI @CPSUnion @Michtull @CntrFutureWork @Asher_Wolf

Ping @Trev_Murray - here's the thread I threatened to write... 😉

Ping @StevenHailAus @billy_blog

(I really, genuinely expected at least *someone* to say: 'huh. well this is all very interesting. but - here's an idea - what if we ran bigger deficits?' Not a single person said this. Not a one.)

Ping @BenOquist – thanks for putting the event on, my position outlined above notwithstanding. I just think there’s a bigger debate than the one that was had today. Cheers.

Robert M. Hanes, president of the American Bankers Association:

“. . . unless an end is put to deficit financing, to profligate spending and to indifference as to the nature and extent of governmental borrowing, the nation will surely take the road to dictatorship...” 1/2

”...insolvency is the time-bomb which can eventually destroy the American system... the Federal debt... threatens the solvency of the entire economy.”

This comment dates from 1940, when the US federal debt was only $40 billion. (It’s $15 trillion today.) 2/2