Government books only $3.2 billion in the red, as New Zealanders spend more and require less support via the wage subsidy than expected

There is a hugely significant psychological component to spending. In the markets they refer to animal spirits and sentiments or whatever, but it's also impactful on a nationwide every day spending level. It is well known in warfare, that morale and troop sentiment can make or break a battle. If you have ever been a manager, you will know that morale can make or break a team and impacts productivity.

Trust in leadership, effective relationships and governance are essential for economies to function. If citizens feel safe, have faith in their governments, they are more likely to spend, to invest and to plan for future spending. In a pandemic, the argument can also be made, that anxiety, uncertainty and fear is introduced, influencing the economic psyche. I suspect that some (but by no means all) of the difference in economic conditions between countries where the citizens are more satisfied and trusting of their governments, and countries where there is civil unrest, division and inconsistent communication from their leaders is partly related to the psychological component. Behavioural economics.

I think we see this in the cash hoarding in NZ. People are still scared, so they have more cash under the mattress or highly liquid than they ordinarily would have. However, people are still spending, so potentially, it more just a safety buffer and people still have some optimism.

National borrowed about $70 billion during their tenure. So yeah it's relatively small in comparison.

I hope they do increase interest rates again. We're blowing some truly fantastic bubbles.

I know times have changed but at some point this money has to be paid back by somebody.

That has never stopped us pumping house prices and household debt.

The answer is likely the same: high volume immigration coming in future.

3.2 billion is less than the profit the 'big four' banks make from NZ each year.

Seeing as we're fine with them sucking ~5 billion out of the country annually, I don't know why you're getting so upset about 3.2 billion in response to a pandemic.

And buy a lunch for all the poor kids

Treasury does the maths.

A land tax would solve both the government deficit and land value issues simultaneously. And have the added effect of reducing rents and household debt. https://np.reddit.com/r/newzealand/comments/6b6qy5/landlords_threaten_r…

Why do we even bother with taxation at all?
If the answer to all of our problems is just a figure on a spreadsheet, then does it matter what that figure is; be it $100 billion or a trillion or ten?

As the Levy Economics Institute tells us here, the governments borrowing doesn't finance anything. http://www.levyinstitute.org/publications/can-taxes-and-bonds-finance-g…
The government is the currency issuer and as such its deficit spending becomes the private sectors surplus, it represents our savings held in the banking system as bank reserves.

Don't you mean Churches BW? Not communities. It's called a "Tithe", and not too long ago I heard a 'Christian' inform one of her parish members that if they didn't tithe then they were stealing from God. That really pissed me off!

But yes it has got somewhat out of control.

bw your general point is correct but some of your deets are not ;-)

The first "taxes" (that we have record of) were paid with labour, not currency and this was Egypt 5000 years ago. I think, if we look at the huge infrastructure building projects that we see across the fertile crescent thousands of years before that even, we can hypothesise that labour had been long established as something you gave for the greater good. So if we look at Gobeklie Tepe (at least 12000 years old) and the kind of community and generational labour commitment that would have required from human beings (that were still predominantly nomadic, hunter gatherers), then it might even be valid to suggest that sacrificing something of ourselves as individuals for some sense of civic duty, it part of what it means to be a homo sapien and has always been part of who we are. Certainly, when the first corvée was recorded (as forced labour in Egypt) there was also a religious foundation. The poor provided forced labour for the Pharoah because he performed the rites that ensured a good harvest, appeased the gods and ensured the overall wellbeing of the people (gotsta avoid those famines and plagues yo).

And later, when taxes were paid in harvest, it was a heckuva lot more than 1/10th, more like a 5th. But equally, without a Pharoah (or similar) to provide defensive walls and armies, you'd be f&%ked as a farmer, because horse mounted pasturalists would see you as a sitting duck and you would would be constantly raided by fighty dudes on horses. Later they were also fighty dudes in ships. Either way, the people that were still semi-nomadic, preyed on those who had become settled agriculturalists, so this necessitated centralised protection and taxes. The first currencies were to pay for armies and propelled the existence and use of state minted coinage. However, if you didn't live in an area with a centralised state authority, even in antiquity, then your "taxes" were just a commitment to fight for your liege overlord or tribal leader if asked to and it was a matter of honour and family reputation to not do so. Furthermore, if you were a citizen of a conquering empire then you might not pay any taxes either, because the conquered people paid taxes and the conquerors just enjoyed the economic boost. And hence why imperialism is almost as consistently popular and common as every other aspect of human civilisation.

Taxes have been very inconsistent over history! For vast periods of most nations, the only taxes were just that you went to war when asked, along with "gifting" various people.

Also, some countries still have citizens who store lots away (savings). One persons deficit always has to be someone else's surplus.

How do the large distributions to foreign owners of NZ assets such as the banks effect this balance? Does it mean our Government borrowed to fund these distributions?

MMT does not say that the government can spend without limit but that the limit is the availability of unused productive resources within the economy that can be put to work. Banks create new money every time that they issue a new loan and this mostly goes into non productive house speculation.

Inflation expectations remain subdued both short and long run because 1. QE doesn't print money, it creates inert bank reserves 2. the unemployment rate is once again being abused by the participation problem.

We've seen this all before - no inflation. Link