Monday, May 15, 2006

Budget surplus extracted from our teeth

Costello and Howard can gloat about their huge budget surpluses, but isn't it bleedin' obvious that all they've done is privatised debt? We used to have private savings and public health and dentistry. Now the middle classes are eating up their credit cards and cannibalising their mortgages, while the poor can't even chew, thanks to the lowest act of all by the Liberals, their ruthless decision to cut funding to dental services. And so much for interest rates not going up! Though DH is delighted - one of the advantages of not having a mortgage, is that now instead of earning 2 cents a year interest on her Commonwealth Savings account, she'll earn 2.0003 cents.

1 comment:

Glen said...

Dear DH
You are exactly right that the budget surpluses have increased private debt. As all private transactions in fiat money net to zero (an asset creates an equal liabilty), government spending is necessary to create money. What a budget surplus means is that if households wish to retain the same spending levels, they will have to create private debt to cover the government budget surplus, dollar for dollar. If only more economists understood this, we would be so much better off. If you have any inclination to learn more about this, go to the Centre of Full Employment and Equity site at http://e1.newcastle.edu.au/coffee/