‘Economists believe the federal government can ditch its much promised budget surplus without damaging its triple-A credit rating.‘Treasury reportedly has advised the government to dump its commitment to a surplus, warning a slump in nominal economic growth poses a threat to revenue.’ – AAP
Don’t say we didn’t warn you.
Get ready for Australian government debt to take off…whoever wins next year’s federal election.
It already stands at $259 billion. That’s about 65% of Aussie government spending. That’s right, 65%. Most people still think the Australian economy is different to every other economy.
But look, don’t get us wrong. We’re not in favour of surpluses either. We look at government budget deficits and surpluses this way…
A surplus means the government is taxing too much.
A deficit means the government is spending too much.
And a balanced budget means the government is doing both.
As far as we’re concerned, the best government is no government. But we’ll leave that theme for our twice weekly eletter, Pursuit of Happiness.
But it’s not just the rising debt levels to look out for.
The economists in the AAP report clearly believe that government stokes the economy.
But that’s not true.
As we explained yesterday, it’s private enterprise that makes the economy tick. Yet the more the government borrows and spends, the less money there is for private enterprise to invest in their businesses.
Cheers,
Kris
From the Port Phillip Publishing Library
Special Report: The Fuse is Lit
Daily Reckoning:
Why the Australian Dollar is Not as Strong as You Think
Money Morning:
Central Bank Prints More Money – No One Cares
Pursuit of Happiness:
The One Industry Where the State and Government Excels