economy

What a farce this last week has been.

It’s proven yet again that the mainstream economists in Australia haven’t got a clue about real economics.

But that’s not surprising, since every last one of them has been brought up on the comic book economics of Keynesianism.

We call it comic book because it’s as though they believe the government is some sort of artist that can draw a bag of money and voila! Problem solved.

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“Future Fund backs financial hub tax breaks” – Australian Financial Review

We love newspaper headlines that talk of tax breaks. We love how the journalist, the special interest group and the government talk of the need to provide incentives to businesses by reducing taxes.

But it’s usually a flash in the pan. Before long the same journalists, special interests and governments then put forward their ideas about how everyone should be taxed so the government can give money out to their favourites.

But if a tax break will help with the growth of the financial sector isn’t it logical to not levy taxes in the first place? And not just the financial sector, but everywhere.

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It seems that not only is our friend Michael Pascoe unable to see the value of gold, but he is obviously quite incapable of working out a basic sum – that 1 + 1 = 2.

And his unwavering faith in the ability of the Reserve Bank of Australia is commendable, yet completely mad. After all, the RBA is the same crowd that’s overseen the destruction in the value of your money over the last fifty years.

And here’s the proof courtesy of the RBA’s website:

They don’t even hide the fact that they’ve singularly failed in one of their main aims, to provide a stable currency.

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As each day passes your editor becomes more baffled.

Things which appear to be common sense to us are deemed to be extreme views by others.

When we argue against government intervention or government stimulus programmes we do so because it seems obvious they can’t work.

Without covering old ground, a government stimulus package can only ever provide a short term boost to one area of an economy. It can never be long lasting. And it will always involve robbing from one part of the economy to feed another.

And furthermore, the boost will inevitably be made in the wrong areas of the economy. It always leads to a misallocation of resources.

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