Let us now bask in the warmth of our own bullshit

For those who came in late:

Before we proceed any further, aficionado’s of ‘supply side’ economics and readers of The Economist should sharpen their pencils and their heads and try to keep up – there will be a test later!

Treasurers and Chancellors of the Exchequer who suffer from N.F.I. – yes, Australia’s Joe Hockey and UK’s George Osborne, I’m looking at you! Do try to pay attention. This for your benefit!

For liberal democracies to function efficiently and fulfill ‘the social contract’ while continuing to breath life into the rotting carcass of Capitalism, their governments almost always have to run a deficit.


The term ‘deficit’ is used by governments to describe how much money they outlay in order to keep their economies functioning.

This is capital ‘out-flow’, while taxes are capital ‘in-flow’ or monies returned to governments who, if they have sovereignty over  their own currency are the monopoly issuers of that currency. This includes nations such as the UK, US, and Australia.

The money flows into the economy, where it aids in creating aggregate demand, (the need for goods and services) and then flows back out again via the taxation system.

This is somewhat similar to a Hydro-electric scheme, where the water flows into the generator (the economy) where it does its work and then flows back out again.

Taxes fund nothing! Taxes simply serve to rein in inflation caused by overspending.

Got that Hockey? What about you Osborne?

This means that when the government is in deficit, the private sector is in surplus and therefore the economy remains robust. The private sector creates more jobs, people spend more money which in turn creates further aggregate demand, and government budgets remain sustainable.

Balancing the books’ or ‘the Joy of Surplus’, so beloved of Messers Hockey and Osborne means that the only way a nation’s Gross Domestic Product (goods manufactured, demand for those goods and services) can hold its ground is by the private sector making up the short-fall is through borrowing which quickly becomes unsustainable, and the end result is to put the private sector into recession.

Students of History may like to confirm this by referring to Australia’s Paul Keating’s, ‘recession we had to have’ in Australia during the early 90s or the Clinton Administration’s attempts to put the US economy into surplus in the late 1990s. In both cases the end result was the same – the economy of both countries slumped into recession and unemployment soared.

So let us now turn our attention to Master Hockey’s assertions that the budget for Medicare is ‘unsustainable’ and requires an up front fee in order to bring about ‘The Joy of Surplus.’

This is a classic example of ‘wood duck’ economic theory

Every working Australian pays a ‘levy’ to cover the cost of Medicare and this levy could be increased on those in the upper income brackets ($150.000 p.a and above).

The government can also easily fund the so-called shortfall through firstly, creating the necessary funds (which can be done at a key stroke) and secondly, through a reduction in the superannuation concessions afforded to those in the upper income brackets.

Other measures could, and should include the scrapping of the ‘negative gearing’ aspect of  home ownership that has put the median price of housing beyond the reach of most average Australians.

All of the above measures could easily fund any shortfall in health care budget allocations.

The Neo-liberal obsession with the pursuit of ‘The Joy of Surplus’ is simply the desire to advance the interests of capital at the expense of labour while its proponents lick-up the cream in the form of tax and superannuation concessions while low-income earners, pensioners and the disadvantaged shoulder the burden, or as Hockey and Osborne prefer to put it; ‘do the heavy lifting.’

The intelligent use of Budget deficit spending coupled with an equitable taxation system, create a strong economy and a fulfilling of the ‘social contract.’

The mania for Budget surplus at the expense of the private sector, destroys the economy through rising unemployment, and increased welfare payments. The greater the number of unemployed, the less money there is to bolster the economy and keep it strong. This is not only basic economic theory (demand creates supply) but also common sense!

Therefore, and without further ado, The Post bestows the ‘Wood Duck of the Week’ Award to Australian Treasurer ‘No Dough’ Joe Hockey, for his tireless efforts in trying to convince the electorate of the validity of his argument through his mantra of   ‘deficits – bad! -surplus-good!’

‘No Dough’, your Mugwump Wood Duck Award, lovingly hand carved from a petrified stool passed by Milton Friedman (certificate of authenticity provided) will be forwarded to you.

So grab your copy of Atlas Shrugged, slap on the factor +30, and bask in the warmth of your own bullshit!

But don’t expect anyone with a smattering of economic knowledge to join you!















      1. If you can be bothered M.R., go back to the WordPress Reader, select Aust. Politics and scroll down until you see the Kookaburra logo and you should see the re-blog icon there.

      2. I LOATHE the Reader, and I never ever visit it: I get my follow posts by email, and am taken to the sites that way.
        But yes, I do see it there.
        I don’t want to cancel my post which has already gone to those following me, and then reinsert it thereafter, so to speak. Next time I want to reblog from you, I shall go to the (ugh !) Reader, I promise, Edward.

  1. i have not been able to take any of the useless barstards including swanny seriously since reading bill mitchell’s work.the scales fell from my eyes as someone once said.
    this piece explains things very clearly and should be widely read in my humble opinion.


    1. Thanks sir plus fetish. Bill has been saying this for years, and I am a great admirer of his work. It’s good to see that MMT theory is growing and attracting more followers – and why not, it’s only common sense- something that ‘No Dough’ Joe and his fellow Neo -Libs seem to be sadly lacking. Thanks for the comment, always appreciated. Have an MMT day! 🙂 🙂


  2. Same here, spf.

    Some say MMT can be hard to get your head around but I think it depends on how much of the other bullshit you’ve had rammed into your skull.

    Bill Mitchell deserves an award for dragging MMT out of academia, where it’s been cloistered in one form or another for maybe 50 years, and getting it up on the net where ‘ordinary’ folk can learn about it.

    There’s no doubt MMT will be the end of the neo-liberal “reign of error” but it might take a bit more time.

    Still, one can see the insights of MMT influencing a lot of reader’s comments these days responding to articles in The Guardian, SMH etc.

    Satire and ridicule, as skillfully and entertainingly practised by our host, will help nail the lid on the neo-liberal coffin, provided of course Joe’s not in it.


    1. I couldn’t agree more John, – Bill certainly does deserve more recognition for his unflagging efforts to dispel the the miasma of utter bullshit wafting from ‘supply side’ economic theory. Yes, it is taking time for MMT theory to break through the dark clouds of Neo-liberal flannel and sooner or later (sooner as far as this writer is concerned) it will screw down (aye, there’s the term) the lid on the coffin of the ‘free marketeers’ or ‘free stooges’ as I prefer to call ’em.
      Then, if the good Lord is willing and the river don’t rise, both the Mad Monk and No Dough Joe will be well and truly ‘boxed’ as they say in the Dismal Trade.
      Might have to order an ‘oversize’ for No Dough though… I wonder if one of those double berth models that Evelyn Waugh wrote of in ‘The Loved One’ are available…?
      Thanks for the comment, always appreciated. 🙂


  3. j a
    yes i have been noticing an increasing amount of references to the principles of mmt of late.i don’t think it necessary to be across the whole theory to see the sense in it,i certainly get lost when it gets a bit complex but if a self educated old fella like me can appreciate the game changing potential of it then anyone willing to engage with it can.i am a bit perplexed as to why the parties of the left and so called left do not embrace and promote it as it offers them an alternative to the neo liberal nonsense and so a way to differentiate themselves,and to discredit the unfair and punishing tory way forever.


    1. spf,

      I often fantasize that if just 5 or 10% of the voting fence-sitters got basic MMT, we’d never have to endure the pain of another neo-liberal government.

      The neo-libs would be left, bare-arsed without a feather to fly with, a laughingstock.

      Conservative economists would be the victims of their own prescriptions, scrambling for jobs as casual shelf stackers in Woollies and Coles.

      I too am quite perplexed as to why the Left parties and the Left blogosphere hasn’t enthusiastically embraced MMT.

      I banged away on CafeWhispers for about 3 years whenever an opportunity arose, with barely a flicker of interest except from LNP trolls who (naturally) could never “get it” (congenital stupidity).

      In a perverse sort of way I’m hoping Hockey will stick to his guns, drive the economy into a short sharp recession and get the arse at the next election.

      That’s surely preferable to a lingering death from a thousand cuts.

      In that respect, perhaps this is the recession we had to have.


  4. Thanks for the comment Sir Plus, they’re always appreciated.
    As I was saying to drmarfi who commented on my article from last years budget ‘The Budget: We do the Voodoo very much better than you do’ (you’ll find it on the articles list at the top of the Mugwump Post page) the reason that none of the major parties – or the minor ones either haven’t embraced MMT is largely due to fear.
    Similarly to the theory of helio-centricity in the !7th century when the Church knew privately that the Earth moved around the Sun (this was known from the time of the ancient Greeks) they’d been saying the exact opposite. So when Copernicus and Galilleo came along, to admit to the truth would have shredded their credibility as the interceders for God – and they weren’t having any of that! Nonetheless, the truth eventually came out and so it is with MMT.
    At present, none of the so-called ‘economic experts’ in the MSM have the courage to stand up and say ‘the Emperor has no clothes!’ After years of pushing ‘supply side’ economic theory (which is utter bullshit by the way) it would make them look like the fools that they are.
    If you’re the old fella that you say you are, then you grew up in an Australia that had a commitment to full employment from 1941 until 1991 when Keating abandoned that commitment in favour of ‘supply side’ (Friedmanomics) economic theory with its demand of a permanent pool of unemployed of between 5-6% of the workforce in order to ‘stimulate’ the economy. The results of this ‘stimulation’ can be seen in the rising unemployment and social dislocation that you see around you today.
    Politically, the Greens would seem to be the ideal party to jump on the bandwagon but they seem either unwilling or unable to get their heads around it. This is most likely due to fear of ridicule by the MSM, most of which as I’m sure you know is controlled by very powerful interests and to whom any whiff of ‘Socialism’ is tantamount to treason.
    Despite this, the MMT movement is steadily growing thanks to the efforts of Bill Mitchell, Steve Keen, and many other enlightened economists as well as amateurs like myself.
    If you would like to know more about MMT, the following links may be useful.
    Bill Mitchell’s blog site is the grandaddy of them all and is pitched at tertiary level but don’t let this deter you. Nearly all of the answers to any questions that you may have can be found on Bill’s site.





  5. thanks for the links ee,
    it is encouraging to see this stuff being produced.what a shame that it cannot be shown in high schools, but that would have the conservatives frothing at the mouth.reality is not acceptable these days.
    i remember the excitement i felt when i stumbled on bill’s site a couple of years ago,my family thought the old fella was mad getting excited about an economic theory!


  6. “In a perverse sort of way I’m hoping Hockey will stick to his guns”
    i’m wondering if we are seeing the high water mark of conservatism in this country,this mob are the most viscious, arrogant but incompetent lot i have seen.the are trashing the brand daily and they have some pretty big issues coming their way.the biggest is global warming but they are such shameless liars that when it becomes completely undeniable we will be hearing how it was only the(insert focus tested descriptor here) of the left that prevented them from taking heroic self denying action.the next is the unsustainable and increasing inequality we have and then the rise of social media i believe will be something that they cannot harness to their use, but i may be wrong there.


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