government (or sovereign states) are no different to a household in that they have income (in the form of tax revenues) and expenses (public spending on items like schools, hospitals, welfare etc). In the long run, a government can only spend money it earns through taxes.

No wonder he is mystified as he has missed the key point of the blog post that the fiscal position of the government is fundamentally different from that of the household. Although he does later acknowledge that governments can by their own bonds. This is a crucial distinction that makes all the difference between governments and households, and yet he does not seem to see the conflict with the statement above.

As far as the fear of hyperinflation is concerned, there are a few further important characteristics of the Australian system that differentiate it from those such as the Weimar republic and Argentina in the late 1980s. First, Australia has a freely floating currency. When countries attempt to defend a currency peg to, say, the US dollar or gold, the surrender control of their own currency. Second, all Australian commonwealth government debt is denominated in Australian dollars. Where a country has foreign denominated debt (as in the example of the Russian crisis) or indeed a crippling burden of war reparations, again the control of local currency is lost. In either of these scenarios a country may be caught in a trap of uncontrolled money printing chasing supply of foreign currency reserves either to support a currency peg or to repay foreign denominated debt. This difference makes the Weimar and Argentina comparisons irrelevant to Australia’s current circumstance.

Likewise, the Zimbabwe comparison is misleading. As much as anything else there, their fiscal and monetary circumstances reflect a fundamentally dysfunctional regime. You may as well argue that, since the military and police in Zimbabwe have been instruments of oppression in the hands of the Mugabe regime, we should disband the police force and army in Australia because they are too dangerous. Like many tools of government, fiscal and monetary policy can be abused, but I take comfort that in Australia our democratic institutions are sufficiently robust that we are not on the same path as Zimbabwe.

As I said in the original article, while there is no structural ceiling on the amount of debt the government can issue, there is an economic constraint in that it can become inflationary once the economy becomes strong again. However, I am confident that by then, fiscal and monetary policy will adjust again.

In giving examples of countries which experienced hyperinflation, Adam was curiously quiet on the subject of Japan. If expanding government debt is so likely to generate hyperinflation, what happened in Japan? Their debt expansion was far great than ours, and yet inflation and interest rates remained very low.

Naxos is recording volumes of contemporary music - particularly American composers such as Ned Rorem, Elliott Carter, Carter Pann, John Adams, Phillip Glass etc Contemporary Finnish composer Einojuhani Rautavaara is also heavily recorded by Naxos - ironically often by the New Zealand SO.

Its catalogue at naxos.com has a large number of contemporary works listed on it. This has always been the case with Naxos.

As for the Sculthorpe NZSO recording I can highly recommend it. Naxos’ involvement with the NZSO has ensured that while it is not easy to buy Australian orchestras in overseas CD stories because of the poor distribution networks of ABC Classics, the NZSO can be found readily in New York and Moscow.