Tag: economic policy

Interest rates and the deficit

What can you do if Australia has the most incompetent central bank in the world? That they have raised interest rates in the midst of an election is the second time it has thrown in its lot with Labor, as it did in 2007.

Of course, the problem really is that it has waited this long to do what has been an essential for quite some time. Let me remind you of this which is in no sense at all unrelated to rising rates of interest: Victorian state budget: Daniel Andrews government spending splurge as debt heads to $167.5bn. Labor steals from every constituency it gets to govern. The article is mostly about how Labor blames the Federal Coalition government, but I blame it on the phenomenal level of economic ignorance, which begins with the economics profession and continues from there across the entire community who are so grateful to see the level of demand being maintained. The level of supply, not so much, but who really cares anyway?

Keynesian stupidity is now so embedded that it would be very rare economist in May who has any sense of the devastation of governments indulging in one unproductive and loss-making project after another.

There was a time when a community would understand that with a more or less fixed resource base, the more the government spends the less available for the rest of us. They would also have understood, perhaps only dimly, that governments cannot manage productive forms of enterprise. This at the very end of the article really sums up what is going on:

Mr Pallas attributed most of this sum to the West Gate Tunnel project, which the government recently revealed would cost an extra $4.1bn and open three years late, in 2025.

Among the responsibilities of the 500 new cops will be helping to raise millions more in speed camera and on-the-spot fine revenue, which is expected to jump 16.4 per cent next financial year alone, from $615m in 2021-22 to $716m in 2022-23, and $829m over the forward estimates.

The government is desperate for money to cover the massive debts it has wracked up. Until they are permitted to sell the State to the Chinese via China’s Road and Belt “initiative” they are going to have to cover their debt from the only source available, from the people who live within the State. However, once we have a Labor government federally, the competition for your money will intensify exponentially. And this, I remind you, is the pre-election budget. Just wait till you see the one next year when they have four years till the next election.

As for the increase in rates of interest, a mere pin prick in the midst of all the rest but it will be the only issue that anyone will pay attention to.

Just because it never ever worked before is no reason not to try it again

Both of these are about public spending as the road to economic growth, as in there is no such thing.

GREAT MOMENTS IN CENTRAL PLANNING: Watch: Insane footage shows China blowing up 15 skyscrapers that had sat vacant for nearly a decade.

Flashback: 34 Unforgettable Photos Of China’s Massive, Uninhabited Ghost Cities.

Plus this.

Amity Shlaes on Biden As the New FDR: It’s the same old bad deal for jobs.

Not until World War II did joblessness finally begin to subside, in good measure because of military mobilization — important, but not the same as peacetime employment.

As often discussed, errors in monetary policy contributed to the misfortune that was the 1930s. The cause of the duration of the Depression, though, was Washington’s persistent intervention. The chief economist at Chase, Benjamin Anderson, noted that after failing by playing God, the government chose not to retire but simply “to play God more vigorously.”

The first lesson of this sorry account is that an arbitrary national economic campaign from atop generates damaging uncertainty in the economy. However charmingly it reverberates, the very phrase “bold persistent experimentation” stifles growth.

The second point is that what helps the union hurts the worker. President Biden’s proposal to end “Right to Work,” if it becomes law, will dramatically stifle employment.

Flashback: FDR’s policies prolonged Depression by 7 years, UCLA economists calculate.

Both from Instapundit.

“Transitory” inflation is on its way

I don’t know what I would do without Paul Krugman and his unerring ability to get things wrong, but bless him, there he is again.

Krugman doesn’t get quite understand any of this, but he does come close. The issue between the classics and the Keynesians over why recessions occur was over whether they were due to structural imbalances or demand deficiency. We live in a world where lack of demand is now the accepted truth which Krugman

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