We complain about the extent of our State and Federal government debt levels. Those on the left blame the Liberal Party, those on the right blame the Labour Party. Both are at fault, so are the two ‘second tier’ parties, The Greens and One Nation, and so are the trade unions, the communists and big business. Why, because all prefer Keynesian economics under which government manipulates the economy by, for example, borrowing and printing money to stimulate it.
Every financial crisis in the world since the adoption of Keynesian economics in the early 20th century, including the GFC, has been caused by government, and all prior financial crisis going all the way back to Roman times, were caused by government. The earlier examples were government debasing gold coins (their currency) to fund war. Governments today digitally print money to fund budget shortfalls and stimulate the economy. That has adverse consequences in the longer term – as it causes inflation and so reduces the buying power of our money.
Consider this: You work damn hard and make plenty of sacrifices to support and provide for yourself and your family. Government then takes most of that in taxes – income tax, GST, fuel tax, alcohol and tobacco tax, et al. You pay the household expenses, mortgage and so on, and are left with a bit, but not enough to do much with. So, you leave it in your bank account. Over the year you continued doing so, hoping to be able to accumulate enough savings to buy something worthwhile or enough to invest – only to find that it now doesn’t buy as much as it did at the start of the year. The cost of everything has increased over the year. What has caused that increase in prices – it is government stimulating the economy and not overspending, spending more than it receives in taxes. So, government in effect taxes you heavily, then taxes you even more by reducing the value of the money you’ve saved. That behaviour by government needs to be stopped. If we allow it to continue, government debt will continue increasing, government will be paying more interest on it and so will increase taxes to cover it and government not living within its means will cause more inflation – further reducing the value your money.
Do any of our current political parties plan to turn the ship around – overcome the problem? None do. Why not – because it will require making some tough decisions that would generally be unpopular and so threaten their re-election prospects.
Unlike our current lot, Classic Liberals Australia (Classic Liberals Australia) is not focussed on winning elections but is focused on doing what it best for us as a nation. To that end, Classic Liberals Australia will replace Keynesian economics with Austrian economics – essentially separating state and the economy, leaving money (like any other asset) to market forces. This will curtail government’s ability to reduce the value of our money, reduce of capacity of our career politicians to ‘buy votes’ by promising more and more handouts, while encouraging them to be fiscally responsible and to ensure public infrastructure projects are economically sound and completed within budget.