I'm a real estate valuer who worked in the Australian Taxation Office (ATO) and Commonwealth Bank of Australia (CBA) before co-founding Westlink Consulting, a real estate valuation practice. I discovered, by leaving publicly-generated land rents to be privately capitalised by banks and individuals into escalating land price bubbles, this generates repetitive recessions and financial depressions. We need a tax-switch: from wages, profits and commodities onto economic rents/unearned incomes, if we are to create prosperity and minimise excessive private debt.
When will central banks stop throwing billions–trillions in the USA–into the debt deflation’s voracious black hole?
It doesn’t seem possible, but it’s actually adults playing this stupid game.
Feeding an infinite debt black hole is quite useless, of course, and crushingly so in a deflation.
Time to face the music, get real, and write off impossible bank debt, guys! The Big 4 are technically insolvent.
Hey, Scomo, Frydo! Get fiscal. Introduce the sorely-needed universal basic income to help pull Australians–not their debt–out of the financial quagmire.
From its very beginning, the government of Gough Whitlam was destined to fail in economic terms. It was elected on 5 December 1972, during the world’s then greatest bubble in land prices. Once the Australian bubble topped out in the 1973 financial year, the Labor government was inextricably fixed Ahab-like to a sharply-diving Moby-Dick.
Many Australians had bought homes, or borrowed against their
skyrocketing property values, from 1970 to 1973, so they were financially exposed
in extremis when land values tumbled precipitously into recession in
1974. They weren’t happy.
Despite tradition that the Senate shouldn’t block supply, Malcolm
Fraser seized the opportunity of an extremely disenchanted public to do so.
There had been ministerial scandals relating to Cairns, Connor and Cameron, so as the reformative Whitlam government seemed to be spending like there was no tomorrow at the same time as the Australian public was suffering, the die was cast, both for ‘The Dismissal’ on 11 November 1975 and the subsequent election of Malcolm Fraser to the Prime Ministership.
Curiously, whilst scandals and ‘financial mismanagement’ came to characterise the Whitlam government, the role of the burst property bubble was disregarded by mainstream media and in biographical and TV accounts of Gough Whitlam. Not a word of the real estate bubble is to be found, the recession commonly being blamed worldwide on the substantial but far lesser OPEC oil crisis.
It’s as though the gigantic real estate bubble didn’t occur.
Fortunately, we have the special supplement to TIME magazine dated 1 October 1973, entitled “The New American Land Rush” to confirm its existence. It commented that Land fever is not confined to the US. In England, the average price of a lot has doubled in two years ….
We also have the bubble documented here in Oz:
Maybe COVID-19’s terrible arrival will also make this property bubble disappear?
How about the federal govt injecting a little hope and security with a universal basic income: not QE for the big end of town.
Then, reform the tax regime which has directed many Australians away from productive pursuits and into rent-seeking in asset values: shares and real estate.
OK. People matter most. Not banking nor other monopolies.
So, a universal basic income must be introduced – now!
The federal government has to realise (at long last) it may spend to assist people and the nation without causing the slightest harm. Any counter argument is nothing but unadulterated neoliberal bullshit.
If the federal government provides capital to any listed company, it must obtain equivalent equity in that company.
Then (not yet): When real estate prices tank (well, land prices actually), distressed mortgagors who wish to do so should be able to sell the federal government the current market value of their land.
All this should be conducted preparatory to the introduction of the excellent 2010 recommendations of the Henry Tax Review – which will help get the economy back into (more equitable) motion again.
