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Bulls gone AWOL, a sign the game is up? They've seen the writing on the wall?
Topic Started: 7 May 2014, 11:25 AM (19,781 Views)
b_b
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Veritas
14 Oct 2014, 07:33 PM
Here we go.

B_B answer me one simple question: If the Australian Government cannot run out of money, what is the point in having fiscal targets at all?

By your logic, Governments can just print money anytime its budgeted expenditure exceeds its forecast revenue.

National debt? Who cares? The bond market? Fuck em, we will pay with newly minted dollars.

Crazy talk.

I have posted this Krugman critique of the MMT position before (quite recently actually) and neither you nor Peter Fraser bothered to even try and refute the points made. Care to have a go now?

All of the errors in krumans post was in the comments section of the same post form other very prominent mmters - I really don't care to repeat them here (I have already done so many time over). Maybe you should do more work than just type mmt critique into google....Or perhaps you can read krugmans more rect posts, where he has backtracked on most of his comments...

So we shouldnt print? Cool. Where did it all come from In the first place? Mars? Oh, I know, the private sector. And they got it from...oh it doesn't matter.

Or perhaps we are printing already? Omg. Hyperinflation... :lol

Meanwhile the bond vigilante is coming - soon - really soon - don't worry, they are coming....
Edited by b_b, 14 Oct 2014, 08:37 PM.
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Dr Watson
14 Oct 2014, 12:49 PM
The same could be said for you mate.
There's no comparison with America. They're not trying to herd the bulk of their population into just two cities (like we do with Sydney and Melbourne) are they? Leave aside New York and Los Angeles, and perhaps Chicago and Houston, which are BIG, there are at least 30 other cities in the US with a population over 500,000 people. You want to cram everyone in Melbourne and Sydney? I tell you what mate, you'll get distortions in your housing markets. Too many people and not enough dwellings. It's all about the spread of the population — something we're failing miserably at and something the USA has succeeded at:

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I've always accepted that borrowing to stimulate the economy is stealing demand from the future, and that such a strategy can't be used forever. I'm proposing that it might be workable for another 10 years, given our low public debt-to-GDP. Pretty reasonable, no?
Like I said, a recession in 2008 would have been a healthy, cleansing experience for the economy.
Then why aren't we seeing a spike in foreclosure rates?
Are you feeling OK Ted?
Come now, Ted. I still maintain Australia is on an unsustainable course. My foray into home ownership hasn't changed that. But my timing has changed. I see the endgame being pushed much farther in the future. The creativity of policymakers is not to be underestimated. They keep plucking rabbits out of hats. How long are you going to put your life on hold for, Ted? How long will you deny your wife her needs?
Yes doc, the same could be ' said ' for me, but many seem unable to see the bigger picture, although it appears you can to some extent just think it can continue for a while.

Regarding the population in the US and here, you claim no comparison. Remembering for a moment we are focusing on population supporting housing. Now yes the US population is more wide spread as opposed to here. But New York has a population of 8.5 million for example, there are many heavily populated areas, they still lost support. Still a similar land mass but they have 15 times more people than here. So the immigration and population one is a myth, if you don't have jobs for them.

Its not an argument, its a myth in a falling economy, shown clearly in all other western and euro economies that have populations that shit all over ours with land masses a mere fraction of the size.

You admit that things are bad , but think it can go on for another ten years. How come the US and euro and uk are still jammed at zero rates pumping massive stimulus yet its still not working with the GFC into its seventh year now, still held together by MASSIVE stimulus and zero rates. See doc it won't even work anymore using the most bullshit of extreme measures, what hope do you ever think it would have on its on. Like I said, its bbecause pay packets no longer support or sustain the levels of prices and debt OUR LEADERS have pushed them or us too.It can go no further, that's THE very reason the GFC surfaced in 2008, and made worse by the rise of China destroying our jobs at the same time through dirt cheap asian labour and now building eeverything we all used to make and sell to them, the tables have turned. They now build and sell to us, taking our jobs . You all cheered the rise of China, but you will see how its our downfall eventually.

So yes doc, it has gone on for long enough, ten more years. Wishing thinking , and words one may expect from a recent purchaser. But I'm sure everybody around the world hoped the exact same thing after purchase, just prior to the downfall.

Don't worry doc, no wife pestering me.Sounds like your misses pushed you into things as bearish as you are , you under the thumb doc , drinking cheap grape juice. ;)

You seem to see the bigger picture doc, which is always how I have seen you until the last six months or so, when ,as things have declined more than ever ,you have started sounding more bullish than ever . Perhaps you cannot see it, but its there, Sure others would say the same.

It may have a little more to go doc, but ten years. We could drop rates to zero too, would not surprise me if we were to get there. But it would be through extreme job losses and economic decline, the likes of which, these pissy drops we have left would not do enough, hence our agreement they should of held off till later.

But if its any reassurance doc, as far as I remember you are in Brisbane. Not sure if you saw me post the other day, but I claimed that brisbane will be the most resilient market over the next few years.

OK doc, I know where you stand now , so our only real argument is, how long it can last for. I think your ten year is expecting way too much, given the run up in prices, levels of debt we have reached and taken from the overall economy and the level and speed of the economy declining and little room to move on rates. Just look at all this extra debt, and interest only loans, they have almost guaranteed failure by robbing the future economy of so much for such long periods of time. Its become unsustaible doc, could not be any clearer than what we are seeing all around. You will see investors start jumping out soon, no rocket science.

Bit I'm hardly arguing with a bull. More a bullish bear.

Well done doc and good luck. ;)
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Ned Flanders
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b_b
14 Oct 2014, 06:47 PM
There is no max on govt credit. The australian govt can not / will not nr out of aud.

There is no max on govt credit. The australian govt can not / will not nr out of aud.
Sure, like Zimbabwe. One thing Zimbabwe had in abundance was ZWD, problem was, nobody wanted to use it.
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Maybe the punishment for spouting MMT nonsense on the internet should be deportation to Zimbabwe. Print MOAR Mr. Mugabe, print MOAR, the Zimbabwe govt can not / will not nr out of ZWD.

Weren't you arguing a while back that Argentina couldn't print it's way out of it's debt obligations? Some nonsense about evil hedge funds or something.
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" ... which is that all-too-familiar dynamic in Irish life where people tell lies, cover them up and create all sorts of collateral damage, sometimes spread out over decades, and never take responsibility."
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miw
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Ned Flanders
14 Oct 2014, 10:04 PM
Sure, like Zimbabwe. One thing Zimbabwe had in abundance was ZWD, problem was, nobody wanted to use it.
Posted Image

Maybe the punishment for spouting MMT nonsense on the internet should be deportation to Zimbabwe. Print MOAR Mr. Mugabe, print MOAR, the Zimbabwe govt can not / will not nr out of ZWD.

Weren't you arguing a while back that Argentina couldn't print it's way out of it's debt obligations? Some nonsense about evil hedge funds or something.
The crucial point about Zimbabwe is that there was no production, nor did producing more ZWD cause any increase in production. So of course if you have more ZWD chasing the same production, the value of the ZWD wrt real goods will fall.

MMT, while it has some circularities in it, fully recognises it. In fact one of its strengths is that it stresses the fact that the only wealth is in production of real goods and services.

Of course Argentina could not print its way out of its debt obligations, simply because they were denominated in USD. I thought any idiot could have understood that point.
The truth will set you free. But first, it will piss you off.
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Veritas
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b_b
14 Oct 2014, 08:32 PM
All of the errors in krumans post was in the comments section of the same post form other very prominent mmters - I really don't care to repeat them here (I have already done so many time over). Maybe you should do more work than just type mmt critique into google....Or perhaps you can read krugmans more rect posts, where he has backtracked on most of his comments...

So we shouldnt print? Cool. Where did it all come from In the first place? Mars? Oh, I know, the private sector. And they got it from...oh it doesn't matter.

Or perhaps we are printing already? Omg. Hyperinflation... :lol

Meanwhile the bond vigilante is coming - soon - really soon - don't worry, they are coming....
You didn't answer either question.

Maybe you will answer the one that doesn't involve relying on MMT hacks ( with what credentials exactly?) commenting on Krugman's post.

Here it is again: Why would any Government that issues its own currency seek to maintain a balanced budget if, in the event that a deficit emerged, it could just print the difference?

If MMT was so elementary, how come not a single national government has adopted its teachings as policy?

Daft, doesnt even begin to describe this nonsense.
Edited by Veritas, 14 Oct 2014, 11:19 PM.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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miw
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Veritas
14 Oct 2014, 11:18 PM
If MMT was so elementary, how come not a single national government has adopted its teachings as policy?
Because it isn't a policy?

MMT is purely a description of how money works in a fiat money environment. A mostly accurate description as well.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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Veritas
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miw
14 Oct 2014, 11:26 PM
Because it isn't a policy?

MMT is purely a description of how money works in a fiat money environment. A mostly accurate description as well.
Nonsense.

If you were PM and believed the MMTers, you wouldn't bother trying to balance the budget.

Why bother? Any deficits can be printed out of existence.

The reason why that is not policy is because the MMTers are, it would appear, regarded as being totally wrong.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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peter fraser
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Veritas
14 Oct 2014, 11:18 PM
Here it is again: Why would any Government that issues its own currency seek to maintain a balanced budget if, in the event that a deficit emerged, it could just print the difference?

I'm not aware of any countries that issue their own currency that consistently have budget surpluses or balanced budgets. Most have deficits over time. Any government debt has to be in the currency of that nation, not in another currency. Modest deficits are well accepted by the financial community, but any wild printing would lead to a loss of confidence in the currency. It's a matter of how much is being added to the nations deficit, not whether they are.

Have a look at the history of defict/surplus in US budgets over the last 200 years or so. Note that the periods just before a severe depression like the decade before 1930 governments ran in surplus.

So tell me why didn't that surplus "save" them from financial ruin, or do you think that taxing money off the people actually caused the depression because they had nothing to fall back on when tough times came?

Serious questions.

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If MMT was so elementary, how come not a single national government has adopted its teachings as policy?

It's understanding the mechanics, which is knowledge but not policy.

Any expressed market opinion is my own and is not to be taken as financial advice
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Veritas
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peter fraser
14 Oct 2014, 11:39 PM
I'm not aware of any countries that issue their own currency that consistently have budget surpluses or balanced budgets. Most have deficits over time. Any government debt has to be in the currency of that nation, not in another currency. Modest deficits are well accepted by the financial community, but any wild printing would lead to a loss of confidence in the currency. It's a matter of how much is being added to the nations deficit, not whether they are.

Have a look at the history of defict/surplus in US budgets over the last 200 years or so. Note that the periods just before a severe depression like the decade before 1930 governments ran in surplus.

So tell me why didn't that surplus "save" them from financial ruin, or do you think that taxing money off the people actually caused the depression because they had nothing to fall back on when tough times came?

Serious questions.



It's understanding the mechanics, which is knowledge but not policy.
So your position is different to B_B's far more absolutist " the state that issues its own currency cant go bankrupt" then?

I dont understand your question about surpluses. Its obvious what happened; the tax base collapsed as a result of the recession. And much of that tax base was illusory e.g. Irish and Spanish taxes derived from property bubble.

B_B is arguing, essentially, that Ireland and Spain wouldnt have had a care in the world in 2009 if they had their own currency' they could just magic away the defecit by printing the difference between revenue and expenditure.

Like I said, daft.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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peter fraser
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Veritas
14 Oct 2014, 11:49 PM
So your position is different to B_B's far more absolutist " the state that issues its own currency cant go bankrupt" then?

I dont understand your question about surpluses. Its obvious what happened; the tax base collapsed as a result of the recession. And much of that tax base was illusory e.g. Irish and Spanish taxes derived from property bubble.

B_B is arguing, essentially, that Ireland and Spain wouldnt have had a care in the world in 2009 if they had their own currency' they could just magic away the defecit by printing the difference between revenue and expenditure.

Like I said, daft.
b_b is clearly correct. A country that issues it's own currency cannot run out of the money that it prints itself. Seriously anyone can understand that.

If a government has a surplus budget that means it has taxed more from it's people than it needed to run the country, so the people have less money in their pockets and bank accounts.

Imagine that your a farmer in the mid west USA just before the depression. You have $10,000 in your bank account so you're confident that you can get through some hard times if they come.

Then your government taxes $5000 off you more than they need, but they want to have a surplus, and now you only have $5000 in your bank account. Then you have three disastrous seasons and your crops fail. You look for that backup money but now it's not enough to get you through.

How did the government surplus help you get through the depression/ Can you tell me how the governments surplus helped you?

Or if it hurt your chances of getting through, why does that fly in the face of your current beliefs about the wonder of government surplus budgets??? What would happen if the government had a surplus every year without fail - would you and the rest of the tax payers run out of money?

If not why not?

.............................................................................................................................

What caused the problem in Ireland (and Spain) was bailing out their banks. Ireland nationalised their banks as I recall - but that meant they had to guarantee the bank debts in Euros and also borrow in Euros to fund the banks operational needs.. They couldn't just print the money. They had to borrow it.

Investors were naturally reluctant to lend to the Irish Government, so the government had to offer high interest rates to offset that higher perceived risk. that was a real cost for Ireland.

Had the government been able to print the extra that they needed then they would also have been able to set the interest rate that they paid, and the investment would have been from within Ireland and the interest paid would have remained within Ireland.

Can you not see those benefits?
Edited by peter fraser, 15 Oct 2014, 12:58 AM.
Any expressed market opinion is my own and is not to be taken as financial advice
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