What If The National Debt Isn't Really Debt?

We are currently engaged in a great national debate over fiscal and monetary policy, based in great part upon the rapid growth of the "national debt." What if it's not debt at all? In finance, debt is generally defined as a monetary obligation that a debtor is obligated repay, plus a return to the lender for the use of his money.

With one glaring exception (Andrew Jackson's repayment of the national debt in 1835), as a nation we have never repaid the national debt, and there is no indication that either the administration or Congress has any intention of doing so in the foreseeable future. In the modern era. the U.S. has rarely even paid down the debt (the heady days at the end of the Internet Boom being a much noted exception). Moreover, Mr. Bernanke has announced that, for the foreseeable future, there will be no meaningful yield on the national debt. In fact on a real dollar basis, short- and intermediate- term Treasury yields are actually negative.

So what if this stuff that we call the national debt is not debt? Investment in a Treasury bill or bond is actually an intermediate- or long-term investment in U.S. dollars. In some ways, it's more akin to a derivative security than a creditor's claim. Treasury's only obligation at the end of the term is to hand the bond holder another form of obligation in exchange for his bond, a dollar bill, which Treasury can manufacture out of thin air. Perhaps purchase of a Treasury security should be thought of as an equity investment in the concept of America.

How we think of the national debt and the deficits that are currently driving its growth has profound implications for such issues as the Fiscal Cliff. How Congress addresses that issue will dominate the equity markets from now to the end of 2012, and possibly well beyond.

We have struggled for some time with the question of how the United States has been able to run budget deficits in the range of 10% of GDP without creating far more inflation than has been apparent to date.

We've previously noted our belief that the U.S. has entered into a decade similar to the 1970s, during which the nation will see increased inflation and stagnant economic growth. One major difference between the current period and the 1970s is the amount of excess human capital that appears to be present in the economy today vs. the earlier period. After a severe recession early in the decade, unemployment peaked at 9% in 1975 and dropped rapidly to under 6% four years later.


In the current period, we are likely witnessing more rapid price inflation than wage growth to compensate for the extent to which American consumers overindulged during the boom years.

This implies that several years of real wage declines will be needed in the U. S. to adjust for the imbalance. In other words, the pain is not yet over.

By focusing on the national debt as if it were comparable to private debt, the parties have skewed the debate in ways that have the potential for tremendous economic harm. As outlined above, there are situations where deficits and debt are necessary, have a low cost in terms of real output, or may even have beneficial impacts. Alternatively, ongoing deficits may be quite pernicious if they result in political inaction and lack of a clear national will to make necessary and rational adjustments to budgetary and taxing policies.

Focusing on a balance sheet number that we call the national debt clouds the real issues and creates a strong likelihood that the nation will head down some very dangerous trails. In the short term, a focus on the debt rather than the real issues at hand could easily lead to a mishandling of the Fiscal Cliff impasse, precipitating a serious recession that ultimately results in more deficits and debt, not less.

In the longer term, a focus on the giant phantom of the "national debt" provides political cover for the national leaders to ignore the real decisions that must be made about the appropriate and affordable role of government, and the most effective mechanisms to fund it. Continuation of this "kick the can down the road" approach almost certainly assures continuation of high deficit levels that will ultimately spark inflationary forces that take us back to the worst days of the '70s -- or something even worse.

Link -
http://seekingalpha.com/article/905721-what-if-the-national-debt-isn-t-really-de...
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It seems there are those who believe that there is a world without limitations, a virtual reality where people (at least some people) can live without having to face the consequences of their actions.

That perception is flat out wrong!

There are consequences for all actions & inactions, although sometimes the consequences may delayed and sometimes the consequences may not be felt by those who initiated the original Action or those who should have taken actions, but did not.

I assure you, Money is simply an exchange mechanism and notwithstanding the US$ status of being the Global Reserve Currency, it is still subject to events in the real world.

In that respect, the US$ does enjoy "some" advantages that are not afforded to other currencies, but essentially the US$ still swings up & down on the perception of what it is worth.

There are many issues involved in what value is provided to the US$, but at any given point in time those issues will & do, affect the purchasing power of the US$ for goods purchased Globally, including vital Energy resources.

Inherent in the issues affect the value of the US$ is its position of being the Global Reserve Currency, but there are limits on how much even the FED could get away with in terms of Monetising Debt, before others start reacting by wanting more US$'s to pay for the same product/s.

In fact, IF the Crude Oil trade were to cease settlement in US$'s, as has already been suggested by some countries, then even the US rating as the Global Reserve Currency, could/would come under serious scrutiny!

And, without the Global Reserve Currency status, the cost of "printing money" would become a lot more obvious & transparent.

Finally, I assure everyone, there is no such thing as "the Exponential Economic or Monetary Growth Fairy" and that will be clearly demonstrated over the next couple of decades, as Professor Albert Bartlett will attest to!

Are The Middle East Wars Really About Forcing the World Into Dollars and Private Central Banking?

The Reason for the Wars in the Middle East and North Africa:  Dollars

The Middle Eastern and North African wars – planned 20 years ago – don’t necessarily have much to do with fighting terrorism. See this,  this and this.

They are, in reality, about oil.

And protecting Israel (and read the section entitled “Securing the Realm” here).

But as AFP reports today, there is another major motivation for the expanding wars:

The latest round of American sanctions are aimed at shutting down Iran’s central bank, a senior US official said Thursday, spelling out that intention directly for the first time.

“We do need to close down the Central Bank of Iran (CBI),” the official told reporters on condition of anonymity, while adding that the United States is moving quickly to implement the sanctions, signed into law last month.

Foreign central banks that deal with the Iranian central bank on oil transactions could also face similar restrictions under the new law, which has sparked fears of damage to US ties with nations like Russia and China.

“If a correspondent bank of a US bank wants to do business with us and they’re doing business with CBI or other designated Iranian banks… then they’re going to get in trouble with us,” the US official said.

Why is the U.S. targeting Iran’s central bank?

Well, multi-billionaire Hugo Salinas Price told King World News:

What happened to Mr. Gaddafi, many speculate the real reason he was ousted was that he was planning an all-African currency for conducting trade. The same thing happened to him that happened to Saddam because the US doesn’t want any solid competing currency out there vs the dollar. You know Gaddafi was talking about a gold dinar.

And as I noted in August:

Ellen Brown argues in the Asia Times that there were even deeper reasons for the war than gold, oil or middle eastern regime change.

Brown argues that Libya – like Iraq under Hussein – challenged the supremacy of the dollar and the Western banks:

Later, the same general said they planned to take out seven countries in five years: Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and Iran.

The most renegade of the lot could be Libya and Iraq, the two that have actually been attacked. Kenneth Schortgen Jr, writing on Examiner.com, noted that “[s]ix months before the US moved into Iraq to take down Saddam Hussein, the oil nation had made the move to accept euros instead of dollars for oil, and this became a threat to the global dominance of the dollar as the reserve currency, and its dominion as the petrodollar.”

According to a Russian article titled “Bombing of Libya – Punishment for Ghaddafi for His Attempt to Refuse US Dollar”, Gaddafi made a similarly bold move: he initiated a movement to refuse the dollar and the euro, and called on Arab and African nations to use a new currency instead, the gold dinar. Gaddafi suggested establishing a united African continent, with its 200 million people using this single currency.

Alex Newman argued in November:

According to more than a few observers, Gadhafi’s plan to quit selling Libyan oil in U.S. dollars — demanding payment instead in gold-backed “dinars” (a single African currency made from gold) — was the real cause [of the Libyan war and killing of Gadhafi]. The regime, sitting on massive amounts of gold, estimated at close to 150 tons, was also pushing other African and Middle Eastern governments to follow suit.

And it literally had the potential to bring down the dollar and the world monetary system by extension, according to analysts.

And a reader comments:

No one is paying attention to the petro-dollars and the current desperation of European and US banks. Even Iran prices oil in $$$s per the treaty after WWII, but no one wants $$$s any more because it has been such a poor investment vehicle. Gold has been much better. Iraq did not want $$$s, was invaded. Libya did not want $$$s, was invaded (I believe they wanted gold). Iran does not want $$$. The dollars are deposited in US and European banks. The dollars standing as the financial reserve currency of the world was / is being threatened, and thus the Federal Reserve Banks ability to print unlimited dollars!

Link -
http://www.washingtonsblog.com/2012/01/are-the-middle-east-wars-really-about-for...
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In my opinion, there are several major factors behind some actions, including Libya, Iraq, the Arab Spring & the ongoing Iran saga, those factors being -
1) An attempt by Western "Democracies", headed by the US, to stabilise their Energy Supply, for a little longer than would otherwise be the case.
2) An attempt by Western "Democracies" to stabilise their Economy, which is largely built on the perceived strength of the US Economy, which in turn is built on the strength of the US$, as THE Global Reserve Currency.

Any fully or even partially successful attempt to dethrone the US$ as THE Global Reserve Currency, would most likely precipitate a destabilising effect on US, Western & the entire Global Economy AND it would also see the end of "cheap Energy", particularly in the US!

Btw, I am also of the opinion, given certain Macro Economic factors now in play, that the US$ will be dethroned as THE Global Reserve Currency, irrespective of what it does in some of these conflicts and any Energy stability gained, will only be of a temporary nature.

Hyperinflation in 1 Year...NEW John Williams Interview Oct 2012

http://www.youtube.com/watch?feature=player_embedded&v=btiApeHpBWg#!

You can skip the first 50 seconds, as it's advert time!

That said & as I have been saying for some time, I agree that the US$ will come under some strong stress, somewhere over the next couple of years.

The exact timing, will depend on how successful the US Fed is in push on their string!

The case against the US$ is pretty pervasive, with US Debt going thru the roof and the US FED set to pick up the tab, out of thin air, with no backing in the real world.

But, that is in addition to the real world problems, which stem from -
1) Demographics - First causing Demand to level off, which is already in progress, then prompting it into a steady Decline, in the US & Globally.
2) Energy - Already putting the squeeze on the Disposable income of individuals, businesses & governments, in the US & Globally and that will increase after a small respite.
3) Debt - Already at historic highs in the US & set to go into the low orbit, shortly. The only current option for Debt on the scale being pushed the US, is the US Federal Reserve, but they do not have the pull needed in this world of new realities, where the old rules are now "null & void"!

It should also be clearly understood that the FED is in this for 2 major reasons -
1) The FED, like the Politicians, are in it primarily to Protect their major shareholders the BIG BANKS, not the Public.
2) The FED, like the Politicians, are in it for the short term, not the longer term..

So, with the old rules of Supply/Demand falling apart and Central Bank string pushing time running out, inflation in the US is likely, the extent of that rise will certainly act to feedback on US Debt and ensure that US, European & Japanese interest rates stay low well into the foreseeable future.

It should be noted that any US inflation spike may not necessarily flow over into other countries, but the low interest rates & a US Debt Default will affect the Global Economy!  

Certainly, IF the US$ ceases to be the Global Reserve currency, which is possible IF Oil settlements cease to be mandated in US$'s, then the purchasing power of the US$ would deflate considerably, thus exacerbating an already bad situation!

So, on that note, Good Luck & watch the Debt!

Can Perception Continue To Trump Fact?

Perception drives stock prices and the perception may be shifting for the moment. As I see it 2 scenarios could develop:

    We finally break free from the liquidity trap that has stifled growth since the recession and fundamentally change the course of the economy.
    We shift focus in the 4th quarter back to the underlying fundamentals and away from QE euphoria.

This analysis is relevant to investors as it is likely we are about to make a major move one way or the other. A look at the chart below is interesting in that it shows dramatic stock market shifts up and down even as GDP growth has remained virtually flat. In the last 5 years we have been range bound but that range has swung from plus 10% to minus 15% relative to the 1st quarter of 2007. There is little doubt we are going to move - the question is which way.


How Ben Bernanke sees it
The success of monetary and fiscal policy depends entirely on public perception. Policy initiatives attempt to manipulate economic conditions by shifting public perception. Flooding the economy with liquidity via "quantitative easing" only works if the public perceives that it will work.

Injecting massive amounts of liquidity into the banking system can spur dramatic economic growth if that liquidity is used. On the other hand, if public perception is negative and fearful, that liquidity remains untapped and no growth occurs. It is the classic Keynesian "liquidity trap".

Economic growth must come on the backs of the consumer. If the public refuses to buy into the premise that economic growth is occurring then it won't occur. It is as simple as that.

What the fundamentals tell us
The fundamentals present a much more pessimistic picture. Keep in mind they don't matter at all if scenario one above materializes as Bernanke and the Fed hope. The release of liquidity from the banking system and the reduction in savings to pre-recession levels will offset the fundamentals. The big question is again one of public perception.

As we all know, unemployment and GDP growth have been particularly troublesome problems for policy makers on the fiscal and monetary front. In an effort to stave off the terrible effects of record high unemployment the federal government has incurred massive debts.


Our national debt has risen by 80% from January of 2007 through September of 2012. Consider the magnitude of this massive increase in debt. In the last 5 years we have incurred new debt almost equal to the debt incurred by all other administrations combined.

Why have we chosen to undertake such massive borrowings? The answer is clear - someone had to spend money to support GDP and prevent an economic collapse that would have otherwise sent us into a depression.

Since the public - including individuals and corporations - refused to spend the federal government reasoned that they must do so to support GDP.

Clearly the federal government has succeeded in preventing a depression as the massive infusion of cash into the economy has propped up GDP. On the other hand the public has refused to jump on board and join in the spending spree. This has to be disconcerting to those who define and implement fiscal and monetary policy.


Time is running out though and there is no question we cannot continue to prop up an otherwise flat economy with additional debt. The next administration must take the initiative to reduce deficit spending. That means that we will reverse course in 2013. Rather than inject public money into the economy we will begin to pull it back out of the economy.

The problem is that the proposed spending cuts and tax increases that will go into effect without congressional action will result in a reduction of $600 billion in the deficit but that also equates to a contraction in GDP roughly equal to the same amount.

Predicting the public response going forward
So there you have it in simplistic terms. In the end, "we the people" control our own destiny. We are always quick to condemn our fiscal and monetary leaders but the truth is we drive the economy.

Personally, I am not going to be inclined to go on a spending binge until I am convinced that we are on the right path. We have a - "which come first, the chicken or the egg" - dilemma here.

QE has not worked to date. We have gone through 2 rounds of QE and are now embarking on a third. So far the public has failed to bite on the Fed's bait. Inflation has not occurred and in fact disinflation has been the reality for the last 12 months. GDP growth has remained flat. Unemployment numbers have improved slightly but some argue that the demographic make-up has shifted and the real unemployment situation is unchanged.

Furthermore, we are aware of the dependency we have on the other major economies around the world and the picture doesn't look to rosy on that front.

The truth is that the market will move in the direction that corresponds with the public's perception. If the public believes we are on the verge of economic recovery and begins to spend we will we go higher. If the public remains fearful and continues to save we move lower. It is just that simple.

We do tend to prefer the status quo even if the status quo is not so good. We have taken some comfort in our prudent nature since the recession and I suspect we will continue with that course. That suggests a market that is on the verge of moving lower.

As always, play it as you see it and good luck.

Link -
http://seekingalpha.com/article/928771-can-perception-continue-to-trump-fact?sou...
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I agree that Perceptions have historically provided some direction to Share Markets, particularly in the short to medium term.

However, in the medium to longer term, it is the Reality of Economic basics that are the real Drivers of the National & Global Economy!

The longer term Global Economic Realities are -
1) Demographics – The Baby Boomer Retirements & the subsequent passing on of this massive generation (some 2 Billion Globally), means that Demand Growth is easing and no matter what National Governments &/or Central Banks do they can not change that fact.
2) Energy - This is the 2nd great driver of Economic Growth in modern Economics, certainly since around 1800. The advent of Cheap, easily accessible & Abundant Supply of Energy from Oil & Coal, was one of 3 great assistants to Demographics, in setting the scene for massive increases in Productivity.
3) Technology - This is the 3rd great driver of Economic Growth and the 2nd great assistants to Demographics, in modern Economics and it has been the other great assistant to Energy, in setting the scene for massive increases in Productivity.
4) Global Climate – This is the 4th great driver of Economic Growth and the 2nd great assistants to Demographics, as the Global Climate has been largely benign over the last few century’s and that has greatly assisted the Population Growth, in terms of providing Food & fresh water, but that situation is now under threat going forward, due to Climate Change!

That said, both the Demographics & Energy Drive is now slowing and has been for some time.

The Population dividend saw Growth in Demand for "everything" spike, as the Global Population went from 1 Billion in 1800, too around 7 Billion now.

BUT, that Population Growth has been slowing for quite some time Globally and when seen in the context that Global Energy Supplies have also been slowing on a net Energy Supply to the Population/Demand curve.

I believe it is now apparent that Population & Net Energy Supply are both in the process of grinding to a halt, before going into reverse, over the next 20-30 years. That should see the Global Population fail to exceed 8 Billion at its Peak, then start a long Decline, which will further exacerbate the Demand situation. We are already well into this process AND THERE IS NOTHING THAT ANY GOVERNMENT OR CENTRAL BANK CAN DO TO STOP THIS PROCESS.

This Reality means that the old Economic fixes of Keynes, the Austrian solutions, nor MMT will work, as the old Economics are now "null & void"!

Joseph Stuber suggests that the US federal government has succeeded in preventing a depression due to the massive infusion of cash into the economy has propped up GDP and at almost any other time in modern Economics that may well have proved to be correct.

However, due to 3 of the 4 major Economic Drivers now being set on an irrevocable course of Demand Decline, all that has been achieved by recent US Governments, the US FED & other National Governments & Central Banks, has been to temporarily postpone the inevitable. This Postponement has come, at the cost of a massive increase in Debt, but make no mistake going the other way will not solve the basic problems AND that line of action, at this stage will also result in massive Debt overhangs, as Demand dives, Expenditure on an Aging Population explodes & Revenues continue to Shrink, because there is no bounce back, as was often the case from past Austerity programs.

So, Good Luck & watch the Debt!

U.S. Debt: An Enormous Problem With Simple Solutions

We, as a nation, have become addicted to spending by the Federal Government and that addiction has gotten more severe in recent years as our dealer (Washington D.C.) has successfully tried to ensnare us further in order to solidify their positions as our overlords. Despite prominent Nobel Laureates claiming otherwise, our current path, if maintained, leads us to the very end of our Republic as we know it, or want to know it. In this paper, we will use the Federal Government's own statistics where possible. We will refrain from siding with any one party's or candidates proposals because we view this as something completely separate from politics. This is an American issue that can be solved with simple logic and the quaint science of mathematics. The problems and their repercussions are vast, the solutions are easy.



Solutions to the biggest financial problems in order:

1. Medicare/Medicaid - Just like private insurance companies must do, increase premiums and deductibles. Since somewhere along the line it's been decided that a progressive tax system is fair, increase the premiums and deductibles more for higher income folks and a little less for low income folks. All participants must pay premiums and deductibles to make sure proper market signals or incentives are conveyed. Remove all these payments from the general Federal Budget.

2. Interest - Immediately extend the average maturity of the Treasuries issued to take advantage of the current low rates for as long as possible. This must be done in conjunction with both a Medicare and a SS fix or else the inevitable is just delayed.

3. SS - For those in or fast approaching retirement change nothing except increase the amount of SS taxed for high income folks. For those fortunate enough to be young, raise the age of retirement (remember when SS came about the age or retirement was 65 while the life expectancy was 66). Such a change still achieves the aim of the program which is to prevent our seniors from dropping into poverty. Oh, and don't say, "I paid-in and so I deserve it." In reality, ever since the program's inception, no one has "paid-in" to SS. Every dollar you've "paid-in" was immediately transferred to the Federal Budget as are all tax receipts in order to be spent as the government went along (salaries, roads, etc.). Remove all SS tax receipts from the general Federal Budget to prevent them from being spent on other stuff.

4. Defense - Continue to spend more than any other nation on the planet on defense in order to prevent war. Then demand with a real, bipartisan threat of impeachment that no president start a war without a Congressional declaration. Forcing a president to follow the Constitution in this case saves mountains of "unexpected" expenditures from efforts as diverse as Vietnam, Iraq II, Libya, and, God-forbid, Iran or Syria or North Korea. If small amounts of troops or treasure must be sent hither and yon periodically, precise, short term exceptions can be made.

That's it. Making these small changes or something like them, alter all the forecasts for the better. The world and rating agencies such as S&P and Moody's see that we are serious about our finances. Therefore, the world lends to us at continued average or cheap rates. We honor our promises to seniors and take care of the less fortunate. We defend ourselves and preserve the ability to project power to keep foes away from our shores. Once these changes are made, we can return to bickering about smaller fiscal issues with a clear conscious and ample breathing room as growth resumes.

Link -
http://seekingalpha.com/article/933001-u-s-debt-an-enormous-problem-with-simple-...
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Well, I suggest that there are a few things, which are likely -
1) The Global & US Economies are more linked now, than at any other time, in the modern era.

2) The Global & US Economies are set for another relapse over the next couple of years, due to the following major Economic Drivers, as the massive Public sector bailouts of the Private sector fades out.
Demographics
Energy
Global Climate Change

3) With Debt already at historic levels, there is no chance of a new series of Public bailouts & the FED can not continue to Monetise Debt, without there being Consequences involving the Depreciation of the US$ &/or rising inflation.

4) As a Consequence of past decisions, some things are now locked in and that includes a rise in Expenditure due to an Aging Population (Baby Boomers).
This issue means that Medical Expenses, Pension &/or costs relative to the Aging Population will increase over the next 20-30 years and that process is already under way. It also means that the worker to non worker ratio, which has already been in Decline for quite some time, will continue to significantly Decline thru to 2050, with the result that there will be less workers supporting more non workers.

5) As a Consequence, actions will need to be taken, not only to reduce Expenditure, hopefully in areas that are not essential, but also to increase Revenue, both of which should be relative to the GDP.

As I have said previously, there are Consequences for all Actions & Inactions. This can be highlighted by requiring the Public to carry a higher burden of health costs, which may assist in one way by directly reducing government Expenditure, but that benefit may be offset as the Disposable income of those affected is reduced and thus their input into the Economy is reduced, which in turn shows up in lower Government Revenues.

The thing is, nothing stands alone and everything is inter-connected!

That said, I suggest that the Tax System & Expenditures both need comprehensive reviews and that same comment applies not only to the US, but in almost every country.

The Tax system is in need of life saving surgery, so that the Tax burden is spread evenly & fairly. IMO Tax systems require a complete overhaul, with most Tax rates actually being reduced, but a great many Tax Deductions & Tax dodges eliminated, so the urge to cheat on taxes is severely reduced or in fact becomes irrelevant.

Expenditures also need to be reviewed, from top to bottom and whilst some unpopular decisions will be needed, they must be taken, notwithstanding whether whose constituency they may affect.

In respect of both Revenue & Expenditure, it needs to be understood and accepted that everyone needs to carry their fair share of the load, at all levels, including the top earners & Business. This process needs to be engaged by both sides of the Political divide & by TPTB, as failure will absolutely result in a situation where no one is a winner!

So, Good Luck & watch the Debt!

Cuts to private health rebates, baby bonus to deliver $1b mid-year budget surplus

THE Government will raid private health insurance, the baby bonus, company tax payments and even lost bank accounts to plug a $16.4 billion hole in its spending plans.

Treasurer Wayne Swan today released a progress report on the Budget delivered in May which revealed a huge fall in tax receipts.

This meant the Government would have to find $4 billion in savings over the remaining eight months of 2012-13, and further spending cuts for the following three years.

Even with the outlined cuts contained in a mini-budget released by Mr Swan, the forecast 2012-13 Budget surplus of $1.5 billion was reduced to a slender $1 billion.

The last Budget projected the surplus would rise to $7.5 billion over four years, but this has been lopped to $6 billion.

Mr Swan said the fallout from economic "storm clouds'' in Europe, Asia and the United States has made returning the budget to surplus much harder.

Mr Swan said anyone who suggested Australia is immune from the global fallout is "kidding themselves''.



Company tax receipts are down some $13.5 billion, largely because of the slump in commodity income - particularly a 30 per cent dive in iron ore prices, now partially recovered - following the end of the mining price boom.

State governments will this financial year have to endure a $765 million reduction in specific grants which Mr Swan said was part of an agreed indexation scheme rather than a distinct cut.

The Treasurer said the indexation scheme meant payments to states fell as Commonwealth tax revenue fell.

''This is plainly another instance of fiscal fiddling to get the Government out of a jam,'' he said.

But the Opposition has held off declaring its support or rejection for legislation which would be needed to implement the mini-budget measures.

''This is a Government that will never ever deliver an honest Budget surplus,'' Mr Abbott told reporters.

Link -
http://www.heraldsun.com.au/news/myefo-wayne-swan-tweets-hell-deliver-mid-year-b...
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As I have said previously, there are Consequences for all Actions & Inactions.

The thing is, nothing stands alone and everything is inter-connected!

That said, the Global Economy & therefore the OZ Economy are set to continue to Decline, for reasons I have elaborated on previously, with old fixes "null & void" and therefore the measures outlined in this Mid Year review are only the start of what will be a painful process.

As a measure to get ahead of the curve, I suggest that the Tax & Expenditures Systems both need comprehensive reviews.

The Tax system is in need of life saving surgery, so that the Tax burden is spread evenly & fairly. IMO the Tax system require a complete overhaul, with most Tax rates actually being reduced, but a great many Tax Deductions & Tax dodges eliminated, so the urge to cheat on taxes is severely reduced or in fact becomes irrelevant.

Expenditures also need to be reviewed, from top to bottom and whilst some unpopular decisions will be needed, they must be taken, notwithstanding whose constituency they may affect.

In respect of both Revenue & Expenditure, it needs to be understood and accepted that everyone needs to carry their fair share of the load, at all levels, including the top earners & Business. This process needs to be engaged by both sides of the Political divide & by TPTB, as failure will absolutely result in a situation where no one is a winner!

aquascoot wrote on Oct 22^nd, 2012 at 6:17pm:


No problem Aqua, the aim is to inform!

It's then up to everyone to make their own informed (Not Politically biased) decisions.