I'll get a team Craig again here, Stiffany and Cook and David, Brian, Kevin, Patrick Gillespie up there in the bloody Sunshine State with zinc all over him. He's just got out of the pool. He's left his missus in the bloody in the jacuzzi. She's just looking after herself there at Tip High. I don't know what. Do you know?
What I had in my head a banana lounge, but I couldn't think of the fucking name for it. You know, it's like my mouth and my brain, they're just in two different locate. Well that literally, but also they weren't SYNCD for that short moment.
And not in any way related to reality.
That is true. That is true. But you do live in the sun Sunshine State. How are you to?
Yeah? Good, I'm at the beach today, but it's not much fun because it's raining. Are you?
Are you without giving our way? You know stage secrets? Are you holidaying at the beach for a while or have you just gone to the beach today?
I no, No, just holidaying for the Christmas New Year's break.
Could you imagine him holidaying tiflate? What do you think he's doing when he's just kicking back research. Yeah, I can't. I'm a little bit like that though. It's like when people go, what are you wouldn't you just love to lie by a pool and do nothing? I go, nah, not at all. I'd like to swim in that pool or swim in the water and then dry off and then do something. But just lying around that doesn't do.
It for me. It works for about a minute for me.
I think I think all three of us. Have you ever been a sun baker?
Oh, back in the day when I was in tazzy hasty is anything. That's why I'll be in all sorts with my skin.
I feel like sun baking and tazzy are not kind of in the same sense.
Well probably probably really necessary actually to keep your vitamin d up.
I was starting from a severe deficit too. You would have been now, gillespo we yesterday we got together and we were going to chat about an article you wrote which was called Beyond the Budget, The Hidden Truth about Money. But Tiff steered us off the beaten track, as she always does. The conversation she left let us into the conversational wilderness, and as she does. But I'm here to get us back on the path today, so we can actually have the conversation that we intended to while I
intended to yesterday. So you wrote, you wrote a post. Now don't forget to follow David's on LinkedIn and don't follow him like literally that's creepy, but virtually you can follow him. And it starts with this. Ever, wonder why governments can always find money to buy submarines or bail out banks but struggle to fund social programs. I haven't wondered. How come there seems to be an endless supply of money for certain things? What can you tell us?
Okay, so what we're going to talk about today is something that I mean, you might have heard referred to by its initials MMT or maybe even modern monetary theory, or you may not have heard of it at all. But it's something that's been around, probably now for the better part of fifty years, and has become popular in the last probably twenty years, as more and more economists have piled into the argument. Now, normally when you start talking about this kind of stuff, most people's eyes glaze over.
I don't want to know about economics. I certainly don't know about currency or any of that sort of stuff. But it's an interesting theory because it kind of blows apart everything you've ever been told about how the national budget works or how we pay for things. And I think the easiest way to think about it is to
bring it back to your household. So if you imagine that you, you know, you run a household, and say you've got some kids and you want to motivate them to do things in the household, then you might create a currency, which in the article I call chore bucks, you know, and that might be your business card that you you get hundreds of them printed, and then you might hand out, you know, five of them for mowing the lawn and two of them for doing the washing
up and stuff like that. And you'd say to yourself, Okay, well that's all very well and good, but why on earth would the kids bother with that? They don't want five of your business cards. But if you said, okay, the only way you continue to live here is if you pay me rent, And the only currency I will
accept for rent is my chore bucks. And if you are the only supplier of the chore bucks, and the only way to get them is to do stuff around the home, then that starts to be a pretty effective mechanism for getting stuff done around the home, in that they have to earn chore bucks in order to continue living there.
Now, now we know how the Gillespie household works, Tiff. He's proposing this as some kind of metaphor or theorem.
Is describing it.
This is actually the Gillespie home one one.
So that within your own household, you've effectively invented a currency, the chore bucks currency, and it has value not because of its intrinsic value. I mean, you can't be exchanged for gold or anything, but because you need it to pay for something that you value. So and in doing that, what you've also done is imitate exactly what happens at a national level or any country that creates its own currency. So Australia can create Australian dollars whenever it likes. And
how what's the equivalent of making you pay your rent? Well, it's called tax. The only way you can pay tax in Australia is in Australian dollars. The only way you're going to have Australian dollars to pay tax is to do something to earn Australian dollars and so you might think, oh, yeah, but the whole economy is much more complicated than that. But at the end of the day, it really does boil down to us that which is Australian currency is
entirely made up. Now in economics speak, that's called the fiat currency, which is the Australian currency is not based on anything. There's not a big mountain of gold anywhere that you can exchange Australian dollars for. We don't have Fort Knox in Canberra somewhere. It's entirely made up, and it's made up at the stroke of a keyboard. Buy the government who says how much we need every day.
Now.
A lot of people might find this a pretty bizarre idea because mostly of things the government says, which is they constantly talk about keeping their budget in balance, like they're talking about a household checkbook that they've got to keep balanced. They're constantly talking about not being able to afford things, which isn't a nonsense when you can print
your own money. So that would be like me with my cholbucks when my kids say, well, you know, we want you to purchase something within the house and me saying, oh, I don't have enough choll bucks. That's rubbish. I can create as many as I want. The problem comes if I have to go to Bunnings and buy something to do in the house. They're not going to accept chore bucks. I'm going to need to have some other form of currency that they will accept. And that's what happens on
a world stage too. If Australian wants to go and buy something from someone who doesn't accept Australian dollars, then we might have to buy exchange some of our Australian dollars for US dollars or something like that. And so outside the country it becomes problematic. But inside the country, there is no limit to how much Australian currency we
can create. The only problem is, of course, just like with the chore bucks thing, I could devalue chore bucks by creating too many of them, you know, and then there'd be chore bucks inflation. I could say, well, I'm giving ten for mowing the lawn instead of five like it was last week, and then the purchasing power of those things drops, yes, and I would probably have to increase the rent in chore bucks to increase the purchasing power.
So well, that's really really complicated, But I guess the message I'm trying to get across is there is no limit to the amount of Australian currency available in Australia.
It's a limit determined entirely by our government. And the only thing potentially limiting it is if you print too much money and put it into circulation, the end result will be the price of everything goes up, Yes, because you need a wheelbarrow full of chore bucks to buy anything, or you need a real barrow full of Australian dollars to buy anything, because there's so many of them in circulation that the price goes up. So that's the only
real limiting factor. And we've seen that actually happen recently with the COVID nineteen epidemic. When the government printed money. Now they called it quantitative easing, which is fancy economics speak for printing money, and.
What did they call it? What they call it? Quantitative dative easing? The fuck it's like it to get to explain it to you later, Craig, Can you explain it to me when we get off.
So anyway, they printed money, and the reason they printed money. Is that they had to hand out billions and billions of dollars in social welfare payments that they previously hadn't been prepared to because everybody was suddenly unemployed because of the COVID restrictions. So they created job Keeper and all those sorts of things. They double the amount of unemployment benefits being paid. They massively increased the amount of social welfare being paid across the board, both to companies and
to employees. All that, where did the money come from that? For from that, was there a warehouse full of trillions of dollars that they had forgot to mention before when they were doing the budget. No, they printed it. And the end result is that we got a massive rise in inflation. Last year. You might remember, inflation went to about seven percent when it had historically been you know, less than two percent. So that's the price you pay when you pump a whole lot of new money into
the economy, is if inflation goes up. And what we're doing now is, you know, earn that back down again. So I guess the takeaway from all of that is that if the money can create, if the government can create money anytime, it wants to do whatever it wants. Why don't they talk that way? You know, why why
do we not hear this explanation? Why do we always hear when someone wants to do something like, say increase social welfare or or you know, increase the availability of say Medicare to the population, or maybe put dentistry on medicare or something like that, any of those things, any of the community benefits. Why is the answer always we can't afford it. And then they point to the budget and say, look see we're in deficit. We can't afford it,
like it's a household checkbook. Now, if you're a state government, this is true. A state government cannot print its own currency. The only place it can get chore bucks from is from Dad, I eat. The federal government, so they must run a balanced budget, even though they don't manage to.
Most of the time.
And it is like a household checkbook. They have to keep balance. They only have as much money coming in as the government gives them.
But for the.
Federal government, who can print their own currency, there are no such limitations, and you see them every now and then expose that. They pull back the curtain anytime they need to spend big, say something like buying some submarines, or in the COVID nineteen epidemic they find the money. Now they don't have it stored in a warehouse, they just make it. The big question is why can't we have an open conversation about that. Why can't we talk about the fact that, yes, there are limits on this.
You put too much money into the economy and you will get inflation. But why can't we have an open conversation based on what we all want to afford, or what we think the community they should afford for the of the community, rather than pretending we have no choice because we can't afford it, and then suddenly magically being able to buy things when the government wants to buy them.
And what I'm sure you have an answer to that question. Good question. What's the answer? What's the answer? The answer is fear.
I think a lot of people in power don't think that. Well, they think that if they explained it that way to the rest of us, hoypolloy, we'd start wanting all sorts of things. You know, you know, we'd probably want free healthcare or you know, things like that. We'd probably education, would probably want all these things for the community, and then they wouldn't have enough money to spend on submarines
and whatever they want. They prefer the conversation to be in terms that all of us understand in our own economic terms, which is, there's a budget and we have to stick to it, and we can't make money. I think we have to have a more mature conversation about what we can afford on the basis of an understanding because we see this and it's not just in Australia, like all fiat currencies do this. The United States for example. You know, did it find a stockpile of trillions of
dollars before it decided to invade a rack? No it didn't. It just printed money. And then we can have a sensible conversation in this nation about what we want to afford and what the limits of affording it are. Not some nonsense about whether or not the checkbook is balanced, but what should we be affording?
MM when you okay, a couple of things. One so just specific to COVID, for example, like there was billions of dollars handed out, you know, for good and perhaps not so good reasons that and that money just came from wherever they're not literally printing the money, right because when people are getting the money, it's they're just electronic deposits. So yeah, so they're not literally but like where is that? Like, so there is no more necessarily, no more dollars per
se in circulation in terms of physical money. But they're just like how do I like? That messes with my head? Like they're just the film.
The money is a very very small part of the money, you know, the currency. Yeah, yeah, I mean, and it's just a mechanism available for transacting. There's lots of mechanisms available for transacting. Most of the transacting most of us do isn't with physical money. Most of us, you know, put things on credit cards or buy things with our debit card. We've never that, we've never seen the money. Our employer changed a balance in our bank account and
then it got changed again by our credit card. You know, it's all it's all just a journal entry. None of it is actual real you know, a dollar bill or something not that there is such a thing, or one hundred dollars bill. None of that ever went anywhere near any of that system. So you know, you've got to divorce yourself from the thought of it being physical money, and in my chour bucks example, rather than it being my business cards, it might just be a ledger that I maintained.
Yeah, yeah, yeah, And I guess also, I mean, as you said, within the within a national context, like within the walls of Australia from one of the better term or the borders of Australia, we can kind of just print money, if not literally, but when it comes to trading with other countries or buying submarines from, well, all this.
Money ultimately has to come back to something we're capable of producing. I mean, you can be a micro island nation with no resources and nothing that anyone wants to buy, and you can bring as much money as you like, but if there's no value standing behind it, then that's kind of irrelevant. And the value that Australia has standing behind its money is the resources that it's digging out of the ground all of the time.
That's kind of what happened with Zimbabwe, right. I think it was Zimbabwe a while ago where maybe five years ago, where they're dollar like it was like a million dollars to buy a loaf of bread or something.
Yeah, it is, and it's exactly the same as what happened in Germany just before the Second World War, where inflation went into the thousands of percent. You needed a wheel You literally needed a wheelbarrow full of marks to buy a loaf of bread. Yes, and so yeah, that can be the consequence, but that's not a real risk where it's being managed properly and discussed properly.
So it becomes it becomes a real problem. Though, when you live in Zimbabwe, for this example, and you're a millionaire, which literally makes you rich, then all of a sudden, your dollar is now worth one cent of what it was. If that yeah, and were.
We to have a situation where a government decided to quadruple or you know, or multiply by one hundred the size of the money pool, then the value of each dollar drops to the value of a cent, and you do need one hundred dollars to spend a dollar. But that's not what we're talking about here. We're talking about readjusting the priorities for expenditure based on an adult conversation about what we as a community want to spend our money on, rather than simply talking about whether or not
we can afford it. As if there's some sort of limit on what we can afford.
Welza.
Well, now the other part of this, by the way, is that you can use this as a mechanism for managing unemployment. So if you go back to our little household example, say there's something where say you've got one kid who has some time on his hands, and you've got a project that you want done in the house, then you might offer you a job guarantee where you
give him extra money to get that thing done. So in the real world economy, this is called the job guarantee, where you're essentially saying the government, the maker of the money, will employ anyone who wants a job, remembering there's no limit on how much money they can print to pay that person. Then they can use that that additional labor
pool to create things of value in the economy. So this was last done in the depression, where things like bridges and so on were created by government's employed workforces, where they created a workforce just as a way of putting money into the hands of workers, and the same thing could happen as part of our economy. There need not be unemployment. We have unemployment because the government chooses to have unemployment. There's nothing to stop them simply saying.
What we will do is anyone who wants a job can have one working for the government on this infrastructure project or this thing that adds value to the nation.
How do we I don't know if you know the answer to this, but in a global sense, how do we go as a country in terms of managing our economy, managing our money in the like are we good? Are we good at this compared to other countries? Are we terrible?
I don't know. I don't know how you'd measure that. I mean, people don't tend to measure internal things within countries across countries, so they tend to measure there's sort of a fairly raw measurement called a GDP or gross domestic product, which is the full financial total financial output
of the economy. And Australia that's above its way for that, mostly because we dig out a lot of stuff and sell it, whereas other countries actually have to take stuff that they've bought from someone else and add value to it, you know, like Germany has a heavy manufacturing, heavy engineering economy where they're taking in raw materials and turning it into something that's more valuable like the MW's and Mercedes. So we have a relatively simple task, which is dig
stuff out of the ground and sell it. But there are limits to that in that when the people who are buying it no longer want to pay as much for it, then we are going to have trouble.
I don't know why I thought of this, but just around this conversation seems to me like Singapore would be batting way above its class, if you know what I mean in terms of like minimal resources. But aren't they world leaders in tech? Yeah?
But see a lot of country they developed their specialization, you know, So countries developed specializations in the provision of services, for example. And one of the big things that Australia exports is not something we dig out of the ground. It's our education system. So we sell overseas students places in our universities and that's a very valuable export to Australia. It's one that didn't exist forty years ago. So you know what country specialize in. You know, it's a market
dynamic thing. But that's as between countries, and I guess I want to steer the conversation back to rethinking the way we think about internal to our country, which is, don't fall for this story about we can't afford this, because the message is we don't want to afford this. That's what you've got to hear. Every time a government says we can't afford this, what they are actually saying
is we don't want to afford this. There's no such thing as can't when you can make as many chore bucks as you want.
So what is the average? I mean, but there's nothing that me and Tiff can do about this. Right when you say don't fall for it? Yeah? Cool? But then what it's like. I guess the.
More people that understand this about our economy, the less people are going to be snowed by it, the less people are going to accept explanations that simply don't make sense. And at the moment, to the extent any of us think about it.
We probably buy that line.
You know. Oh well, yeah, I guess we we can't have decent health care or or decent education just as we can't afford it. Well, I guess we'll just have to work harder. When that's not entirely true.
It's really it's really just I mean, not just, but it's it's about being informed and aware and understanding what actually is versus the story.
Yeah, if the if the general conversation among the population, If most of us have an understanding of how this really works, and we can't be bullshitted about.
It, yeah, wow, less both swears, Well, we can't.
And it makes me angry. Every time I hear a politician say we can't afford something, it makes me angry because that's not the discussion we should be having. The discussion we should be having is we don't want to afford that, and we'd rather spend the money on this.
Yeah, and we're telling you we can't afford it because that's a good piece move. Yeah.
And the less of a school for that, the more likely it is that we'll be able to have an intelligent conversation about it. It's particularly when it comes to voting for people.
Yeah, yeah, no, it makes sense. I've never thought at all. Have you ever thought about that, tiff?
Nah? It makes my brain hurt. The economy it is shouldn't because it's really simple, that bit of it is. But all your explanations they give us are not simple. They're very, very complicated.
But you know, like what you're saying it makes me quite a lot of things make me feel dumb, but makes well. It doesn't make me feel dumb. It makes me feel very unaware because I'm like, yeah, well, everyone is affected. I mean this is relevant, Like this conversation and the use of money, allocation of money, and the reality of the economy and the reality of what can and can't be spent and how and where and when.
This affects every person in Australia. Yeah. Absolutely, But we just don't know this, and so yeah, this is you as you do, pulling back the curtain yet again.
Well, it's keeping us in the dark and feeding as bullshit, right, it's saying it's saying to us, be good little mushrooms. Sit over there and believe me when I say that I'd love to do this thing. I'd love to fund our health system properly. I'd love to find our education system properly. But oh dear me, I just can't because we can't afford it.
I think we're going to call it good little mushrooms tip. I'm just writing it down, good little mushrooms glasspo as always, I'm just finishing that mushrooms informative. Make sure you're slipping slapping and slapping up there in the Sunshine State, and I don't want you to have to get all the shit cut off your skin that I've had cut off over the last.
Few years of well you're healing, well, thanks.
Have you had any any cutoff?
Yeah? Yeah, and I've had I had one cut off my forehead that was borderline, but I just you know, went in doubt. Chop it off, is my view.
I agree, we'll say goodbye fair but mate, thank you yet again.
Yeah, absolute pleasure. Good to see you by.
Thanks, Thanks buddy,