Oh, Happy Days of Debt and Distraction

From reckless spending, to futile renewable energy, to grotesque lockdowns, to woke. End of the road? Perdition.

Loosed from fiscal rectitude, the governments continue to spend big. The Reserve Bank compliantly finances deficit spending by buying up government bonds. Buying up bonds keeps interest rates very low. Very low interest rates mean that servicing government debt is a bagatelle. And while the money supply surges; nonetheless, inflation remains, more or less, moribund. Could this go on forever?

Leaving aside the length of forever, the fly in the ointment is the possibility that inflation might take off. Perhaps there are signs of this beginning; perhaps not at this stage. It’s hard to say. Is the recent rise in prices in the US, for example, a temporary post-COVID bounce, as Jerome Powell of the Fed guesses, or is it more sinister? Governments and central banks better be ready for the worse case, as so should we vassals.

Bear in mind that curbing inflation is painful. Money supply growth is reined in. Interest rates are driven up. Many marginal and leveraged businesses go under. Unemployment rises. Government revenue falls as, correspondingly, does the capacity to undertake discretionary government spending.

And, as the Irishman might or might not have said, having fiscal deficits and bloated debt is not the best place to start reining in inflation. Servicing new and maturing government debt will become more costly as interest rates are driven higher. This will add to the widening fiscal deficit which, in turn, will require financing, this time by selling more bonds into the market, not to servile central bankers.

Where will it end? It will end when interest rates have risen high enough to subdue inflation. The legacy will be even higher levels of deficits and debt and increased unemployment.

Now superimpose climate change alarmism. Fighting inflation and climate change at the one time is not a happy prospect. All that money to be spent propping up intermittent and unreliable renewable energy with one hand, while curbing spending and raising interest rates with the other. I’m not at all sure where that ends. But nowhere good. Probably, blackouts, increased power prices, the loss of most of our remaining manufacturing industries and, the aforementioned, unemployment.

And there’s more. Now superimpose COVID hysteria. Assume, first of all, that this hysteria will never end. A safe assumption. Vaccinations will not be enough. That’s clear already. Quarantine facilities are being planned as we speak for a fully vaccinated population; for a fully vaccinated set of people allowed to fly in.

Having given governments license to lock us up to keep us safe, there will be no end of pestilences from which we need protection. And people will yearn for it. The Stockholm Syndrome writ large.

I am just listening to Sky News on Friday evening. Not to the COVID pimps at ABC, you understand. And, I should make it clear, not to the commonsensical Alan Jones. Basically, the view is that Gladys Berejiklian is acting judiciously in grossly and wretchedly overreacting to a relatively few Covid cases, only one, so far, as I understand, requiring hospitalisation.

My club informed me that my visit to the gym in the city was off and will be for more than a week at least. I will be masked and muted at church. My eldest daughter, her husband and children have been ordered to stay locked inside their house having come into passing contact with a ‘case’.

Now it’s next day, Saturday morning. I’m walking to my local café. Lots of eager-to-comply dimwits wearing masks outside. Ah, early afternoon, just heard, we are all in lockdown in Sydney now. Whatever that means. Must look up the complex new rules to find out what Gladys allows me to do. Truly, in the kingdom of the crazies the least crazy premier is lauded for her sanity.

Where then does that leave us? It leaves us with loss of freedoms to add to blackouts, increased power prices, the loss of most of our remaining manufacturing industries, and unemployment.

OK, assume, that inflation does not take off and that Powell is right. What then? Then it’s much better. We have just the loss of freedoms, blackouts, increased power prices, and the loss of most of our remaining manufacturing industries to deal with.

But lest you feel more sanguine, the ABC is still being fully funded to continue its spread of Marxist propaganda. Louise Milligan. her Four Corners chums and Twitter posse are still on the prowl. Diversity, equity and inclusion is subverting our military while, unashamedly macho, China rattles its sabres. And schoolkids, when not being scared by tall tales of the imminent climate Armageddon, are being taught the Australian version of critical race theory, gender bending and Bruce Pascoe’s fake Aboriginal history. Happy days!

  • STD

    Reminds me of an NRMA commercial- one happy Joe happy,- he wasn’t happy unless he was unhappy- which meant or now means he’s happy.
    To be sure all premiums will rise- HAPPY DAYS.

  • Stephen Due

    Purpose-built quarantine facilities are a good idea. If not needed now they are likely to be needed in the future. They are a long-standing component of a rational, prudent strategy for dealing with incoming infectious diseases. There was a purpose-built quarantine facility at North Head (Sydney) from 1832 and another at Point Nepean (Port Phillip) from 1852.

  • nfw

    If the Wuhan Sniffles is so bad, then why are there so many flights from China into Australia every day? All vistiors and migrants from China, India, the Muddle East and Africa must be quarantined on arrival at their own cost for at least 40 days to ensure they are not bringing TB into the country. Remember TB? It’s a real disease which killed 1..5m in 2018, 1.42m in 2019 and is projected to have killed 1.66m on the 2020 figures still be confirmed. But it gets a free pass while the reasonably non-deadly Wuhan Sniffles is still killing grandmas by the zillions while the curves are being flattened.

  • DG

    Inflation has started, but more a price pressure, I guess. A client of mine is doing a small property development. Pre the huge government injections of infrastructure spending and their inevitable crowding of supply (elevating prices) the development was estimated by our friend the Quantity Surveyor, in the low $1.n millions. Now, while builders are keen to price, and we’ve got good well presented detailed tenders, the price looks like coming in at almost $2m, after dealing with the usualy local council obstructionism, with delays in materials and other suppliers predicted. Too many projects all of a sudden flooding the market.
    If the government would just bugger off and let the market do the work, instead of playing to the media clamour for a nice headline, ordinary investors might be able to do more, more cheaply, and more in line with the market’s (that is, the ordinary person’s) real interest.

  • ianl

    The ABC pimps for Covid because they enjoy beating up the 90% of Australians who never pay them any attention or respect. Revenge of the Vanities, with a fake moral tinge.

    Covid is following the predictable evolutionary path that all such pathogens have. Each successive mutated strain of any achieved dominance is simultaneously somewhat more infectious and somewhat less virulent. For a virus, that’s success – “unlimited and mostly undamaged” hosts. Eventually our own immune system beats it back (herd immunity) and it fades into biological obscurity. This opportunistic path is an iron law of evolution, irrespective of any lab origin. The real dangers: 1) further careless releases of genetic engineering (how many research labs are sneakily laying low right now ?); 2) herd panic carefully fanned by the powerlustful – which is where we are now.

    The end game of Climate Porn is unpredictable to me. Best guess is the Asian Century combined with continued decline of the West. Hydrocarbon/nuclear energy generation is increasing in Asia and spasmodically decreasing in the West.

    The Reserve cashing its’ own dud cheques ? Golly gosh, say it isn’t so …

  • Harry Lee

    Yes, useful progress in this piece by Peter Smith.
    Couple items:
    1. China will not be an actual military threat to any country, including Taiwan, until and unless the dominant view within the CCP becomes:
    “It’s fine to reduce the population of China to 50% perhaps even 30% of its current levels.”
    Those who do not comprehend this point would be wise to study geography, which includes assessments of a country’s resources, including the quality and scale of its agricultural assets. And also the study of military power and how military force can and cannot be projected to achieve what aims, over what geographical reach, over what period of time, against what countervailing forces.
    Note that the clear and present threat from China is by infiltration of all of our institutions by agents of the CCP -which is expanded and enabled by the idiocy/malignity of bringing in millions of Chinese “students”.
    2. Australia is not constituted to survive as a viable, productive member of the Western Alliance.
    Those observers who do not comprehend this fact would benefit by studying the key factors pertaining. Many of these severe weaknesses arise from the inadequacies in the Australian Constitution. The consequences of these Constitutional weaknesses are now evident:
    -in Australia’s highly-vulnerable, narrowly-based, marxist-constrained economy, in which entrepreneurism and business innovation are heavily constrained by the tax system, by union control of labour markets and much else, and by freelance anti-free enterprise activities conducted by public servants at all levels of administration
    -in the ALP/marxist-greenist prohibition of a nuclear power industry
    -in the anti-empirical/hysterical belief that the burning of fossil fuels is changing the climate in bad ways, and by the consequent policies that are killing the supply of reliable electricity at reasonable prices
    -in our very dumbed-down, anti-Westernist education systems which produce more ALP and Green voters than Lib or Nat voters
    -in the immigration/refugee inflow that produces more parasites than high-margin producers and which, thereby, produce more ALP voters than Lib or Nat voters
    -in the criminal (non-) justice system that puts violent murderers, evil child rapists and anti-Westernist terrorists back on the streets and back into Centrelink and/or community grant-funded homes, asap
    -and the Constitution enables and protects a Senate set-up that is not designed to ensure the long-term defence and development of an Australia that could be a useful member of the Western Alliance, nor as being a viable nation that provides for human flourishing along the lines of individual responsibility for one’s life, and contributory citizenship -what could be clearer than that.
    -and note that the Australian Constitution permits the use of tax-payer funds to be used by ABC, SBS, the state education systems, and the universities, to channel anti-Westernist, marxist, and anti-empirical greenist propaganda.
    Oh, and the marxist-greenist people now dominate the entire legal system, including the non-prospects for proper pro-Western Constitutional reform -so that’s that eh.

  • pgang

    People look to the government and media for the truth, because they don’t know where else to find it. The philosophical idea that we decide truth for ourselves is not correct. We look to authority for truth, and truth becomes group-think.
    So as post-Christians we are doomed to a socialist authoritarianism, because therein lies our servitude towards truth. As all good authoritarians know, Christianity has to be removed first. We did this willingly.
    As for vaccinations, there is now a stark choice. Either we ignore the vaccination as an ‘advantage’ or we have a vaccination passport which includes all domestic activities. Just another corner that we’ve painted ourselves into.

  • Stephen

    I remember when this Covid thing first struck I discussed it with my GP when I ran into him at Coles. I asked him when he thought it would be back to normal and he said at least six months. Now eighteen months later there seems no end in sight. I’ve had both AZ vaccinations now. Why don’t they give us a tee shirt and a badge to wear and let us all just go about our business? It seems that being vaccinated doesn’t make any difference at all. Covid and all the other things raised in this issue makes me sad and apprehensive about the state of the world and the future. Not angry yet. I’ll reserve that emotion for the hopefully unlikely event of Dictator Dan winning the next Vic. election!

  • Tricone

    I’m based in Europe and work for a small but international, private engineering company,

    I can tell you that prices and shortages of materials are rising rapidly and all my industry colleagues report the same, in USA, in various European and Asian countries.
    The media now are more ignorant of grassroots business than ever before and Australian media is probably the worst in that respect. So they don’t appear to have cottoned on at all. But it’s happening.

    Prices aren’t rising by trivial amounts – 20% to 50% is the order of things.

    This is an international phenomenon, I repeat -it’s already happening.

    The only question is how long it will last.

  • Harry Lee

    Tricone, my view is this:
    The media -here it’s the ABC, SBC and 90% of the commercial outlets- are not simply technically incompetent.
    Far more destructive than incompetent, they are malign actors, working consciously to destroy the essentials of Western Civ.
    And the malign, evil people who control the education systems, Kindie to Uni, and the malign, evil people in the legal system, and the malign, evil people associated with the ALP and the Greens -all are working with all their might, with the media forces, to enslave the striving prodcutive classes.
    The key disagreement within that malign, evil alliance is whether to turn us into a slave province of China or turn us over to a UN-style global marxist-inspired global government.
    Won’t matter -because China now dominates the UN and all its apparatus.
    And yes, the closing down of essential supply lines -food, construction materials, healthcare outside the Covid industry, and key items in communications/computing/manufacturing fields, by clueless/evil politicians who are advised by malign, evil public servants, is all part of the malign, evil mix.
    But the people slumber.

  • Alice Thermopolis

    Thanks PS. Happy days indeed.
    Your post revived fond memories of a two-act play by Samuel Beckett with the same name.
    Someone should have a shot at a satirical version, where Winnie is buried in a mountain of national debt.
    “Winnie, buried to her waist, follows her daily routine and prattles to her husband, Willie, who is largely hidden and taciturn. Her frequent refrain is “Oh this is a happy day.” Later, in Act II, she is buried up to her neck, but continues to talk and remember happier days.”
    Winnie would be recast as the Treasurer, especially after his inter-generational speech today.
    Remember the days when there was no negative impact on the birthrate from OTT gender politics and folk spoke about love and romance? Who can deny a spoonful of sugar helps the medicine go down”?
    Treasurer tells us only immigration will boost the birthrate/economy. Good luck with that exercise.
    Is it too late to learn Mandarin?
    As for Willie, perhaps the RBA head, prattling on about how good times are just around the corner.
    On”inflation,” as folk smarter than I sometimes say: “it depends how one measure it……..”.
    For me, intriguing – but not surprising – that asset price inflation driven by the bank’s ultra-loose monetary policy, is excluded from the “inflation” calculation. How convenient.

  • Harry Lee

    It is good to apprehend that:
    -the ABC is still funded to channel marxist propaganda.
    -the state school systems and the universities are dominated/controlled by marxist-greenist commissars.
    -the legal system is dominated/controlled by marxist-inspired anti-Westernists.
    -that the public services, at Fed, State/Territory, and Council levels, are dominated/controlled by anti-free enterprise Big Statists.
    -that the immigration/refugee systems are bringing in more anti-Westernist parasites (and therefore more ALP voters) than nett wealth-creators.
    Now, where is the critical mass -say two million- of proper Australian who will volunteer their own time and their own money- to go to the Front, and fight back, indeed fight to defeat these enemies, in detail, for as long as it takes -that is, in perpetuity?

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