Australia's debt

[mmm....shiney!]

If you're an economics nerd and you have FB, then your feed has probably been inundated with pearl clutchers bemoaning the fact that Australia has reached the $1 trillion milestone in public sector debt.

Well, the simple way to look at it is that the public sector's debt is the private sector's asset.

This is the sectoral balance sheet for Australia (projected out to 2028), I won't vouch for it's accuracy, it just shows that when the government (GB) balances are negative, the private sector (PB) balances are in credit. There's also foreign balances (FB) represented but the two interesting parts of the chart are firstly the period where Costello was purportedly exercising rational economic policy in the period 1996 - 2007, and contrasting with that is the COVID spening measures of the early 2020's. When a government runs a fiscal deficit, the private sector benefits , when a government runs a fiscal surplus, it removes more money from the economy than is being circulated.

 

[mmm....shiney!]

Here's a simpler format, showing the symmetrical relationship between the level of public debt, and the level of private assets it's just not as current and the last year or two were projections.

 

[sammysilver]

I also believe that the combined state debt is also about a trillion dollars.

 

[mmm....shiney!]

I also believe that the combined state debt is also about a trillion dollars.

Yeh it's pretty substantial and unlike the feds they can't print their own money. So they have to raise revenue, borrow or beg off the federal government

 

[FlashInThePan]

Then in order for the Gov to cancel out the debt (that they have accrued as fiduciary's), they'd be eyeing off all of that private sector capital, to right the ship?

 

[mmm....shiney!]

Then in order for the Gov to cancel out the debt (that they have accrued as fiduciary's), they'd be eyeing off all of that private sector capital, to right the ship?

Are you referring to the Federal or State's debts?

If it's the Fed debt then no. It doesn't need private sector funds to meet any obligations when it comes to managing Treasury Securities because it creates its own money supply. Remember, the "debt" doesn't really exist. The government just exchanges promises on pieces of paper (bonds and notes) for money that is already in existence. And when it's time to pay the yield it just creates money out of thin air to meet its obligations and the matured bonds and notes aka "existing debt" is destroyed. So when it issues debt, it's exchanging one form of money (currency) for another (notes and bonds). It's not actually creating any new money. It creates new money when it spends on its suppliers, employees and welfare recipients.

If you're referring to the States then I don't know anything about that. Presumably the States do not have the power to seize the assets of the private sector en masse. Do you have a link to any policy discussions that may indicate that that is a possibility?

Fuck, I sound like google AI.

In the end, none of the States will go bankrupt because the Feds can bail them out.