[Steve_American]

For me this is just wonderful news. The Aust. Gov. and a former Aust. PM have seen the light of MMT (well so far, without the Job guarantee Program). The 'Guardian" also.

http://bilbo.economicoutlook.net/blog/? ... ment-70107

My emphasis added.

Bill Mitchell in his blog wrote,
The import of what the Treasurer is now saying:

1. Spending growth equals real output growth when there is idle capacity.

The IMF narratives of the ‘fiscal contraction expansion’ and ‘growth friendly austerity’ is categorically rejected by the Treasurer’s framing.

You cannot get growth without spending increasing.

2. When non-government spending is insufficient to maintain employment growth then there is only one game left in town – increased government spending.

3. The neoliberal lie that governments do not create jobs only markets do – is categorically rejected.

The Treasurer now admits that increasing the deficit is essential to “bring hundreds of thousands more Australians back to work”.

4. The mainstream economics claim that rising fiscal deficits drive up interest rates and ‘crowd out’ private investment is categorically rejected.

The Treasurer now admits the rising deficits are essential to “having profitable businesses hiring and investing”. In other words, rising deficits can crowd in private spending including business investment.

A far cry from the sort of rubbish that is taught in most undergraduate economics programs about loanable funds and crowding out.

Any time that you hear or read an economist say or write that fiscal deficits drive up interest rates and damage private investment you can conclude they are lying – deliberately or through ignorance.

5. The mainstream claims, characterised by the Ricardian equivalence proposition, that private firms and households undermine the expansionary impact of fiscal deficits by increasing saving to ensure they can pay for so-called future tax increases, is categorically rejected.

The Treasurer has acknowledged that one the positive impacts of abandoning the obsession with fiscal surpluses – “our revised fiscal strategy” – is to boost “business and consumer confidence”, which will promote jobs and private spending growth.

The exact opposite of what the mainstream try to claim is the reality.

6. The mainstream claims that you have to indulge in fiscal contraction/austerity first to provide for the conditions that improve the economic performance is categorically rejected.

The Treasurer notes that you get the economy right and the fiscal position will then take care of itself and withdrawing stimulus initiatives are appropriate.

The goal of fiscal policy is not to achieve some particular number but to support the non-government sector spending and saving decisions.

The Treasurer has finally conceded that context matters. The only way we can make sense of any particular fiscal position is to understand the strength of the non-government sector (including the external sector) and overall spending strength that is required to maintain full employment.

The fiscal position should be whatever is necessary in that context.

For me this is wonderful news. Now, we just need to get the Dems in the US to agree whole heartedly.
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