It is business-to-business spending that first soars when the banks cash-pyramiding rort is running along at high steam. And it is business-to-business spending that first crashes when these bank ponzi-schemes start to come unstuck. It is business-to-business spending that is the only category of spending that can pull us out of a recession once we have fallen into it.
The ultimate authority on matters economic in this country is Gerrard Jackson. Only Gerrard has the Encyclopaedic knowledge of the history of the British Classical and Austrian schools and the history of economic thought preceding way before that. Only he has the necessary background in this country to be able to sift out the poor doctrine from the valid economic science. And in Gerry’s second-latest column its pretty clear that he understands that it is neither consumer nor government spending that drives the economy.
“……Nevertheless, its most basic (mistake) — in my opinion — is that it is staffed by people who adhere to the orthodox view that GDP is a fairly accurate measure of economic activity. Although I realise I am in danger of being accused of beating a dead horse here, allow me to once again stress that with consumption at about 70 per cent of GDP total economic activity comes in at more than twice the GDP figure.
This is because the national accounts ignore all intermediate spending. Therefore we conclude that it is business spending, i.e. Investment and savings, that needs to be stimulated, not consumption. The thoroughly sensible view that consumption springs from production and that it is the latter that needs encouragement if living standards are to be maintained let alone increase was a basic tenet of classical economics, ………..”
Now Gerry has been pointing this out for a very long time. No economist working in this country ought to have missed him pointing this out. And I have been pointing this out also for two years. And so I don’t see much excuse for any economist not to have got this picture, internalised it and worked through its implications.
Whenever an allegedly libertarian economist comes up against a leftist economist in this country, it reminds me of the horror of watching your lawyer getting chummy and telling jokes, to the enemy lawyer at half time during a court case. This is an attack on both adversarial clients and just a disgrace. And though you are paying this clown it becomes clear that he is not working for you in the normal sense.
It might be that the two of them have stitched up the deal already as a sort of compromise. In any case we call this “professional courtesy” or some other phrase that means “the spiritual betrayal of the client” and it feels as though your lawyer, is the enemy lawyers, loyal-opposition.
After ruthlessly lying his way out of a corner, hopefully Cambria now agrees that the way to deal with the recession is to cut government spending in half like Harding did.
Now in order to advocate this fundamental truth, you need to show that consumer and government spending are not a big part of econmic activity in total. That is to say you need to show the audience the concept of GROSS DOMESTIC REVENUE.
And you also need to convince the audience that when the thieves increase government spending the money is taken OUT OF THE ONE CATEGORY OF SPENDING THAT CAN REPAIR THE ECONOMY. That is to say their stimulus packages don’t create new spending. All they do is shift spending out of business-to-business-spending where this spending is now visible to the national accounts. Its the ultimate Keynesian bullshitartistry of pulling the spending rabbit out of the business-to-business hat and acting like he created the rabbit anew.
That key category of spending is known by me as “business-to-business spending” but elsewhere it is known variously as “productive expenditure” “intermediate spending” or even alternatively “gross investment.”
Now Sinclair ought to know this. I alerted him to the economist who most clearly synthesised this analysis two years ago. And yet when he gets in front of the Senate there is no mention of this gear. In fact from Sinclairs notes on the subject, he appears to have been expecting the Senate to take his assertions on the basis of his marvellous authority or perhaps his beloved persona.
Worst of all Sinclair did not attack the Keynesian multiplier root and branch. He did not call for mass-sackings in the public sector, nor for fiscal triage, nor for the GDR and business-to-business figures to be compiled each month and retrospectively so, so we can judge monetary policy from here on in. Nor did he call for government departments to be closed down by the bakers dozen.
BLOOD-SUCKER-CENTRALS LOYAL OPPOSITION
So in reality Sinclair distinguished himself as bloodsucker-centrals loyal opposition.
Nick Gruen is going to go into that same Senate. He will have charts. He got hauled over the coals last time for spending 10 billions without a running a computer model. He got hauled over the coals by Senators and by Sinclair as well? What the fuck for would you hassle him, for not running a computer program, when he’s just splurged someone elses dollar ten billion times?
So this time when Nick, or some facsimile of the picture of Dorian Grey, shows up in front of the Senate, there will be computer models and beautiful pictures, and they will follow the logic of the Keynesian multiplier which Sinclair has verified by default. Worse then by default. Explicitly as we shall see.
Nick will not, like Sinclair, be relying on his fabulous authority or sex appeal. He won’t just be making assertions. He’ll be using every rort in the Keynesian playbook to swindle the Senators, many of them lifelong bloodsuckers, into thinking they’ve got to splurge NOW and pray that its not too late.
Lets go through Sinclairs lame effort:
Look at this. Absolutely no calls for spending cuts from Sinclair:
“I gave evidence to the Senate inquiry into the fiscal stimulus today. Some of the important bits.
In summary, it is my view that the Senate should reject the fiscal stimulus package in its current format.
WELL YES OBVIOUSLY. BUT LOOK AT HOW HE IS EXPLICITLY ENDORSING SOME SORT OF FISCAL “STIMULUS”. EVEN THOUGH THERE IS NO SUCH THING AS FISCAL STIMULUS. THE EXTRA SPENDING IS MERELY TRANSFERRED FROM BUSINESS-TO-BUSINESS SPENDING.
The package contains a lot of spending and little actual stimulus.
DO YOU SEE THE THAT SINCLAIR IS AGAIN ENDORSING THE KEYNESIAN CONCEPT OF A STIMULUS PACKAGE???!!!•
The proposed spending is poor quality expenditure of Federal funding.
RIGHT, BUT WHAT ABOUT MASSIVE SPENDING CUTS SINCLAIR? HOW COULD YOU FORGET ABOUT THE NEED FOR MASSIVE SPENDING CUTS?
Discretionary fiscal policy has a poor track record of success.
BUT WHY RELY ON THE EMPIRICAL RECORD ALONE WHEN THE VERY IDEA IS IDIOTIC IN THEORY?
While the government needs to respond to the current economic down turn in a timely manner,…… WHAT WITH A FISCAL STIMULUS PACKAGE??? CLEARLY SINCLAIR IS ENDORSING THE ANTI-ECONOMICS OF KEYNESIANISM RIGHT THERE……
there is no immediate urgent need to rush the package, rather a better quality package should be designed and implemented.
ON WHAT REASONING IS THERE NO URGENCY? OF COURSE THERE IS URGENCY. WE NEED THE MASSIVE SPENDING CUTS NOW SO THAT THE SPENDING WILL WIND UP IN BUSINESS TO BUSINESS SPENDING AND QUICKLY CATAPULT US OUT OF RECESSION AND INTO GROWTH-DEFLATION.
And to finish off:
It also needs to be pointed out that Australia has just experienced a catastrophic failure in economic policy making. While the root causes of the current economic crises are non-Australian, nonetheless both the Treasury and the Reserve Bank of Australia failed to anticipate the impact of the crisis which commenced in mid-2007. The government has already spent $10.4 billion in a previous stimulus package and now proposes to spend an additional $42 billion. An inquiry into how and why the official economic government agencies failed to warn or forecast the local impact of the crisis needs to be undertaken.”
WELL THEY ARE IDIOTS. BUT EVIL LEFTIE POINTED OUT THIS WAS A BIT UNFAIR. ITS NOT LIKE SINCLAIR PREDICTED EVERYTHING.
NOW I ALERTED SINCLAIR TO THE THEORETICAL STORY OF GROSS DOMESTIC REVENUE MAYBE TWO YEARS AGO. AT THE VERY LEAST I ALERTED HIM TO THE ECONOMIST GEORGE REISMAN.
NOT GOOD ENOUGH SINCLAIR. YOU HAVE TO LEARN ECONOMICS OR YOU OUGHT NOT BE TESTIFYING IN FRONT OF THE SENATE.
IF YOU ARE NOT WILLING TO MASTER THE SUBJECT YOU OUGHT TO PERHAPS RETRAIN AS A PLUMBER.
To be fair Sinclair is a pretty righteous live performer. So hopefully the disdain for this economic vandalism came out in his intonation, body language, and turn of phrase. Hopefully he expressed the sheer idiocy of what was being proposed by way of performance, to make up for what was lacking in the implied theory of what his notes on the matter had to say.