Oh Judith.

Far be it for TAFKAS to criticise the writings of Judith Sloan, but …

In today’s Australian, Judith wrote (in TAFKAS’ opinion) a mostly good piece:

Former PMs should ride into the sunset … and stay there

TAFKAS agrees with the destination, but not the route.

Absolutely positively Judith is correct in her assessment that former Prime Ministers should surrender their microphones when they leave (or are pushed off) the stage.  But when they say silly things, they should be criticised for their content of their comments and not their qualifications or credentials.

On Paul Keating’s recent ramblings on the RBA, Judith writes:

It is worth noting that Keating has no economics qualifications, in contrast to the RBA governor and deputy governor who have doctorates in economics. And Keating’s years as treasurer were in a different era with very different economic challenges from today.

The absence of economic qualifications does not disqualify someone from the debate.  Stupid arguments disqualify, as were Keating’s.  Referencing the PhD in economics for the RBA’s Debelle and Lowe from the Central Bank Seminary, MIT, the place where too many central bankers received their PhDs, does not given them an intellectual halo.  Especially given the economic carnage caused by all the MIT PhD central bankers around the world.

This is the same reason we should not unquestioningly accept the positions of government health advisors in managing complex social systems just because they have medical degrees.

Judith also writes:

While the RBA has been doing its bit to support the economy, it has stopped short of effectively printing money, the course of ­action that Keating advocates.

Ding ding ding.  The RBA has been printing money.  Heaps of it.  Just have a look at the RBA’s balance sheet:

Graph 4: Reserve Bank Balance Sheet (line)

From where does the RBA get the resources to increase the size of its balance sheet if not by printing money.  And the RBA money printing did not start with COVID.  COVID just caused an unusually large print.

The difference between quantitative easing (and what other used contemporary metaphors for central bank money printing) and MMT is who controls the presses.  The RBA, not surprisingly, wants to decide what assets it buys with the money it prints (mostly financial assets of which mostly are bonds).  The MMTers want the politicians to decided what assets to buy with printed money.  And they like to buy ribbon cutting infrastructure assets where plaques and naming ceremonies can memorialise the project.

The quantitative easing theory is, at least, that financial assets can be sold to reduce the RBA balance sheet at some time in the future.  But that almost never happens.  Printing money is a bad idea no matter who controls the presses.

Judith also adds:

It’s not just monetary policy on which Keating is claiming expertise. Evidently, he’s also a gun on superannuation policy and how any increase in the contribution rate is paid.

To repeat.  ITHO – in TAFKAS’ humble opinion – one does not need expertise to get into the debate.  Either the argument is good or not good.  TAFKAS also notes that, despite the views of some, journalists and opinion writers aren’t licenced to journalise or write opinions;  they don’t need to demonstrate expertise to write or speak.

As for Kevin Rudd.  Well.  It is Kevin Rudd brings the spirit of Leo Tolstoy to Australian public life:

I sit on a man’s back, choking him and making him carry me, and yet assure myself and others that I am very sorry for him and wish to ease his lot by all possible means – except by getting off his back.

On Rudd, Judith writes:

He says the idea that an increase in the superannuation contribution rate would come at the expense of wages is “the biggest bullshit argument I have ever heard”. (He might want to talk to some of the best-qualified economists in Australia who overwhelmingly agree with this statement: increases in compulsory super contributions are likely to be largely paid for via slower growth than otherwise in workers’ wages.)

One does not need to speak to economists to prove the self evident.  And the best-qualified economists in Australia?  Are these the economists who successfully predicted 8 out of the last 3 recessions?

Rudd does not need to speak to economists, best qualified or otherwise.  He can ask his wife who established a successful private sector business.  Perhaps Mrs Rudd could advise from where come superannuation contributions.  This assumes that Mrs Rudd can get a word in edgewise, but still.

TAFKAS agrees with Judith’s conclusion, but not the path she used to get there.

Both John Howard and Julia Gillard have been circumspect about weighing into political debates, mainly reserving their measured comments to their areas of interest and steering clear of stirring up unnecessary controversy. There is a clear lesson there.

Mind you, Australia’s last 7 Prime Minister were not, how do you say, the best of breed to start with anyway.

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35 Responses to Oh Judith.

  1. Snoopy

    Rudd does not need to speak to economists, best qualified or otherwise. He can ask his wife who established a successful private sector business.

    Give Kevin his dues. He had as much to do with the establishment of Thérèse’s successful ‘private sector’ business as she did. Possibly more.

  2. Bruce of Newcastle

    There’re ex PMs and there are ex PMs.
    Keating should be booted back to his piggery and his French clocks.
    We should keep Abbott though. He does useful things like fight bushfires and make international trade agreements.

  3. Tim Neilson

    He can ask his wife who established a successful private sector business

    … in Australia’s no 1 extractive industry sector – extracting taxpayer funding.

  4. Craig Mc

    Former PMs should ride into the sunset … and stay there

    Some should be shot into the sun instead.

  5. harrys on the boat

    Can no longer take Sloan seriously after she vehemently endorsed the economic and social destruction of this country, because it might give her a couple more years.

    Her blind faith of the COVID over reaction was a fucking disgrace and she needs to be reminded of it.

  6. Pyrmonter

    Waiting with baited breath for TAFKAS’s defence of the 8th, 9th, 10th, 11th and 12th last PMs – by my reckoning Fraser, Whitlam, McMahon, Gorton and McEwan – not the best stories to relate.

    TAFKAS raises the interesting question of ‘who advised Keating’? Was it Barry Hughes? He may have been acting, but for much of the 80s, especially as Treasurer, it was reasonably good act. Who was writing the script?

  7. feelthebern

    Keating is 1000% correct re the RBA.
    I have been saying this for the past 18 months.

  8. Pyrmonter

    @ Tim N

    But in a competitive market. There were others who played in that market who failed. It would be wrong to underestimate Mrs Rudd’s acumen. We could but wish it had been brought to bear on the policies her husband enunciated; or that she had used it to steer him into more productive activity. I mean, surely someone needs to write a comprehensive history of the ALP, or something else that would keep him away from Zoom cameras.

  9. stackja

    Gough legacy lives on with the hospital crisis he created.
    And his Lionel helped destroy families.

  10. Karabar

    The phrase “argumentum ad vercundium” comes to mind.

  11. Taylor

    The RBA published its latest Reconciliation Plan yesterday. As I read it they are now basically running the Martin Place Department of Anthropology. They’ve even committed to learning the principles of Aboriginal economics.

    All virtue-signalling of course. Their job is to achieve their mandate.

    But if central bankers are going to be experts on anthropology I don’t see why the rest of us need to be shy.

  12. Pyrmonter

    @ TAFKAS

    Yet, where is the inflation? I’m hardly an exponent of Modern Money, but … printing money was essentially what Friedman proposed (steadily, in accordance with a rule) and by some measures money has been ‘tight’, whatever we might interpret from interest rates (Scott Sumner, David Beckwith et al refer)

  13. @pyrmonter. Where is the inflation. In the financial assets markets. In the property market.

    Not to mention how can the following statements be reconciled…

    Cost of living pressures and no inflation.

    Don’t believe the abs stats. Google hedonic adjustments.

  14. Pyrmonter

    @ TAFKAS

    My iMac plays Civ VI much better than. Could my Amiga 500. And the iPhone 11 on which I’m typing as I walk down George St works a lot better than my Nokia 3320 did: hedonic adjustments aren’t a fiction.

    You might have a case on real asset prices as a hedge against inflation, but if so, why are nominal assets with a capped return (bonds) so expensive? I never thought I’d see the day, but over the last decade UK bond returns sank so far below historical norms that it was worth the Exchequer redeem in my the ancient Consols with no repayment date – issued with once laughable coupons of 2 and 3%

    I predicted inflation back in March. I reminded Cats that national emergency and suspension of production was how the Weimar republic’s hyperinflation started; but there’s no inflation anywhere.

  15. @pyrmonter

    There’s no hyperinflation before there is….

  16. John Bayley

    Where is the inflation. In the financial assets markets. In the property market.

    Exactly. As has been pointed out numerous times before.

    Just because the ‘modern’ central bankers have changed the definition of inflation from the increase in money supply to an increase in prices does not mean ‘inflation’ now does not exist.

    Especially considering that the ‘CPI index’ is smoke and mirrors along the lines of the ‘global average temperature’.

    The former comprises of whatever the central banks want it to comprise of, while the latter uses ‘smoothing’ to cover up the ~75% of the planet’s surface that has never had any measuring stations.

    Both are pure BS.

  17. You could get a nice meal for a silver coin in 1820, 1920 and 2020.

    You could get an entry level off the rack suit for about the same as a gold coin in those same years.

    Fiat is a joke. Precious metals hold their value in real terms and they’re aesthetic, bois.

    The aversion to both digital assets and hard currency is just part of the batshittery of fiat dupes.

    If they oppose private reserve banking, asset backed or not, AND oppose hard currency and digital assets, then they just love government theft.

  18. Tim Neilson

    It would be wrong to underestimate Mrs Rudd’s acumen. We could but wish it had been brought to bear on the policies her husband enunciated; or that she had used it to steer him into more productive activity.

    Happy to agree with that.

  19. Roger

    PM is an office, not a title.

    Once you’re no longer in the office you’re just another citizen, albeit with a better CV than most.

  20. miltonf

    So they print money by buying government bonds? Same as O’Bumma? How does that work in practice? An entry in a ledger?

  21. DaveR

    The RBA’s note printing continues with increased fervour. So does that of the US, UK, Germany, France, Japan…… China is doing something slightly different. Are global assets in deflation already? And the RBA is buying bonds with its newly printed money, linked to western asset prices?

    Get a good Weimar WheelbarrowTM for your notes before the price goes up!

  22. miltonf

    Her blind faith of the COVID over reaction was a fucking disgrace and she needs to be reminded of it.

    Didn’t know that. I would have expected JS to have more sense.

  23. Squirrel

    Keating being Keating he presumably just wants the RBA to be a bit less coy about what it is doing – and to get on with its almost complete job of destroying all incentives for private savings in this nation.

    Keating and his bureaucratic and academic groupies treated private savings – outside of the sacred realm of superannuation – as an annoying anomaly and a hollow log to be quietly raided. That toxic, arrogant, effwit mentality lives on, and goes a long way to explaining the levels of private debt we now face.

  24. Frank

    Saw Keating describe Angel Merkel as being intellectually limited once. She has a phd in mathematics/physics and he never finished high school.

    While it is wrong to discount Keating for his lack of qualifications one suspects he would be sensitive about never getting any so… have at it. I for one will discretely look the other way as it goes down.

  25. Entropy

    Pyrmonter

    TAFKAS raises the interesting question of ‘who advised Keating’? Was it Barry Hughes? He may have been acting, but for much of the 80s, especially as Treasurer, it was reasonably good act. Who was writing the script?

    Peter Walsh.

  26. Chris M

    Saw Keating describe Angel Merkel as being intellectually limited once. She has a phd in mathematics/physics and he never finished high school.

    Whilst I despise Keating ones extent of schooling has zero to do with intellect or IQ. And Merkel is either incredibly stupid or utterly evil – hellbent on destroying the very culture and future of Germany with her mass imports of violent hoards and EU manipulations.

  27. mundi

    For those who don’t know, the RBA have been rigging the bond market price, the super funds have been buying the bonds at absurd low prices.

    So basically this will be paid for by low investment returns on super that will go back to achieving below a savings account, like they did for the first 15 years of super.

  28. miltonf

    Why do they buy them Mundi? Seems like a bad proposition for fund members.

  29. Don’t worry mundi. The banks have to hold this stuff too thanks to apra capital adequacy rules. Don’t worry though. This like the Austrac penalties is just another bank tax. But don’t fret. Josh thatcher Reagan will make it all better with an infrastructure stimulus program. School halls anyone. Pink batt. National electricity network.

  30. Former PMs should ride into the sunset … and stay there

    TAFKAS agrees with the destination, but not the route.

    Just because they are ‘former’ doesn’t mean they are not citizens and individuals with every one of the rights that a TAFKAS or a Humbug has.
    Don’t like what they are saying or their intent? Don’t listen to them.

    I’m for one sick of the cancel culture. Shutting up former PM’s or former anybody is no different to shutting up anyone else.
    How’s that working out for us?

  31. Texas Jack

    I’ve been waging a mostly losing attempt at questioning Alan Kohler over his obvious love of MMT from the tricky confines of the comments section in the Oz. He LOVES Bill Mitchell’s money printing schemes so much he’s thrown the kitchen sink into it – writing about it almost non-stop during the wider state lockdowns.
    Team, can it be said that MMT has worked anywhere??

  32. Clam Chowdah

    As soon as you refer to yourself in the third person I stop reading. A stupid stylistic peccadillo.

  33. Noddy

    Team, can it be said that MMT has worked anywhere??
    You can be sure if MMT was better for the individual person than the existing debt ridden system, it will never be tried! For the record … what is the basic cause of inflation? If you answer with “too much money chasing too few goods” then please name the goods in short supply. The ‘free-enterprise’ system will soon take care of the shortage! I hear five cent coins are to be withdrawn from circulation – they haven’t been accepted in parking meters for years. How long before the ten cent coin is made redundant? Oh yes, by the time you collect your superannuation it will not buy so much either. Wasn’t Keating named the first ‘Worlds greatest treasurer”? SICK!

  34. Up The Workers!

    MIT – they’ve ejimikated a whole wunch of bankers!

  35. bollux

    ‘ He can ask his wife who established a successful private sector business. ”
    Rudd learned how to privatise the public purse quicker than most.

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