When you think of an authoritarian governing regime, what countries spring to mind? Does Australia? It should now.
Take a closer look at this graphic to see the company we Australians are keeping. I included Japan to show where a more liberal country sits on this index. As the note explains, for sub-regions within a country, the most stringent sub-region is used. It is Victoria that is driving the Australian figure.
Continuing this critique of Modern Monetary Theory, I now come to the standard explanation of the MMTers as to why inflation will not break out when the Government prints money – they refer to the excess capacity in the economy. According to the theory, if an economy is suffering unemployment, then there is not enough demand to fully use the resources. Printing money is a costless way to increase demand, get the unemployed into work and increase wealth. Inflation will be a risk only if there is no excess capacity, no underutilized resources in the economy.
The State of Disaster declared by Premier Andrews will not have any effect on the COVID19 virus. Severity of lockdowns do not affect mortality outcomes, as many emerging studies of the northern hemisphere experience show. But Andrews’ suspension of democracy, the instant political disenfranchisement of the people, the social and economic catastrophe he has unleashed under the stamp of the heavy handed police state is not going unnoticed outside Victoria.
In Part 1 of my criticism of Modern Monetary Theory, I explained currency debasement was a fundamental part of it. In this Part 2, I will explain why the whataboutery that is used by the MMTers can be dismissed.
Whataboutery. A useful noun. It is frequently heard coming from MMTers when a critic of MMT says printing money will lead to inflation – but what about Japan? they say. Over the last 25 years, Japan’s money supply has more than doubled. Yet inflation has not broken out much at all. See?
MMT advocates currency debasement. Proof of this is given by the MMT proponents (the ‘MMTers’) themselves by their proposing the use of taxation to then control inflation.
That is the very first point about MMT that should be grasped. Currency debasement occurs by ‘printing money’. The MMTers say that the Government monopoly on the currency issue means it can print money to finance its own expenditure. Then tax can be used to control inflation.
You may have seen this written as the breakthrough idea – that Governments actually are not bound by the need to finance expenditure via borrowing and/or taxation. The deficit doesn’t matter, they say. This is meant to be the whole new (hence ‘modern’ nomenclature) understanding. I hate to pour cold water on the naming of the theory, but currency debasement is not new or modern. It is as old as currency itself. From shaving off the outer thin layer of the coinage in Roman times to melt down the silver while the coin retained its face value, to printing counterfeit bank notes, to quantitative easing – currency debasement has been a problem ever since day 1.
Much as it pains me, it is clear that I will have to post about MMT. Walk into any pet shop and the resident galah is talking about it. (Apologies to PJK). It will be unpleasant but someone will have to disabuse these cranks. Give me space to build the stomach for it.
Reliable energy generation from renewable sources (solar, wind and hydro) has proven unattainable. Despite decades of trying, decades of subsidizing renewable energy projects using other peoples’ money, they can never work. Australia has one of the world’s largest supplies of cheap reliable proven energy: coal. Yet Government action is actively killing the coal industry to give a leg up to renewable projects. It may well end up killing the coal industry and smashing the standard of living of Australians. But we can say with certainty, that reliable energy cannot be generated by solar, wind or hydro facilities.
In case things were not bad enough already in China, there is a serious situation rapidly turning into the risk of a catastrophe with the Three Gorges Dam. In brief, its structural integrity appears to be compromised. Combined with very high rainfall in the catchment area of the Yangtze River, the Dam is buckling and the authorities are releasing as much water as is possible to take the pressure off. But it might not be enough. Should the dam fail, it would cause a catastrophe in China.
The first impact would be humanitarian. Millions of people live and work downstream of the dam. Casualties would be large in number. The second impact would be local economic wipe out. The third would be international economic consequences. The fourth impact would be political reprisal. This is not looking good.
It’s time to get back to the business of life, if only our political masters would permit us. There is nothing to see anymore. The media fascination with counting each new COVID-19 case ought to be over.
What is notable from the next two charts is the shape of the curves. First, some larger countries and secondly smaller, (just to make the data easier to see).
Conclusion: the daily deaths have been falling everywhere, even bad boy Sweden, since the peak in late April. This is despite the rapidly growing number of reported cases globally for the last month.
Next, look at the excess deaths from the continuous mortality study, Euromomo, with 24 participating countries:
Conclusion: the spike in deaths, relative to normal, was 4 months ago. Also notable is that there is a spike in deaths every European winter. In 2017, the excess deaths reached 70,000 per week. In 2018 and 2019, they reached 60,000-65,000 per week. In 2020, there were two spikes: the ‘normal’ winter spike around 60,000 per week and then the COVID-19 spike reaching 90,000 per week.
Time to get back to living, working, schooling, business, socialising and recreation.