Lure of ‘free money’
I HAVE been asked by some respondents (text to editor) to ‘prove’ that Labor and the Greens support Modern Monetary Theory. I have already given the name of a Greens Senator who was a vocal supporter, and any simple Google search will reveal more than this letter.
Modern Monetary Theory (MMT), arises out of the theories of New South Wales economist Bill Mitchell, that government money printing is a good thing, debt is meaningless. Money for nothing if you will. This madness has spread to the left across the world.
“In MMT, “vertical” money (money created by the government and spent in the private sector) enters circulation through government spending (contractors, purchases).
“Taxation and its legal tender enable power to discharge debt and establish the fiat money as currency, giving it value by creating demand for it in the form of a private tax obligation that must be met.”
This means government debt doesn’t matter, it’s government spending that counts. That includes employment of more government workers, creating more departments, and creating more legislative requirements to comply with, to keep the government workers employed.
“In addition, fines, fees and licences create demand for the currency. An ongoing tax obligation, in concert with private confidence and acceptance of the currency, maintains its value. Because the government can issue its own currency at will, MMT maintains that the level of taxation relative to government spending (the government’s deficit spending or budget surplus) is in reality a policy tool that regulates inflation and unemployment, and not a means of funding the government’s activities by itself.”
Queensland has, in recent times, seen a huge increase in the requirement for licences and permits. Be it a white card for this, a blue card for that, a government permit to try and earn a living, a ‘special’ licence to conduct your business, as well as enforcement and audits … all creating ‘employment’.
A perfect example would be the withdrawal of the vehicle registration labels (creating a demand for currency to pay fines). This money was used instead to purchase police automatic scanners (creating employment demand, as well as being part of the tax requirements). Add that to the fixed speed cameras as a revenue raiser (using dodgy statistics). This led to a huge increase in the return of funds to the government coffers (meeting the requirements to control the economy through taxation to remove funds, and presenting funds to create further ‘employment’).
The ever growing Labor public servant numbers also speak to this.
Even the legislation for Labor’s vegetation management, to prevent graziers using their fodder trees in the drought, or thinning vegetation, fits the MMT profile. It required more government employees, and contractors, to surveille farmers; there were fines to take money out of the community, and it exempted the real culprits who destroy the best land for building development, because they are already taxed to an acceptable level through compliance and inspections.
Government charges across the board have been rising for everything from car registration to power, even as the federal Labor Government (Julia Gillard) had been expanding its social payments to the NDIS scheme, single mothers, support for this and that. The Federal Government seems to have adopted this idea, without announcement, over many years (with Labor supporting, and the LNP pushing back).
Of course, to those at the bottom, receiving, it really is money for nothing. For business, especially small business, it is the slow grind of government burden, as they seek to keep going. For the worker this is shown as a lack of upward mobility of wages, because you cannot have rising government (or quasi government) charges on business, and rising wages at the same time. Something has to give.
It is financial charlatanism, an elaborate fraud that can, for a while, seem to ‘inflate’ the economy (a monetary injection), of course the inflation is controlled by tax and charges, that grind small business back down, and turn ‘big’ business into middling businesses.
What do you expect, when a politician is told free money, spending is good, just up the taxes and charges to control inflation ….? What I expect is a slow grinding crash, following the example of Venezuela, given we have no Federal ICAC to watch for corruption, and money printing, using either electronic money or bits of paper must be inflationary, or you tax and charge the population to a standstill, to stop it.
Always remember if it is a choice between a plan, and government incompetence, always go with government incompetence.