Modern economics is so incompetent to deal with the problems of our economy that it is simply breathtaking. This is the headline at The Oz: “Reserve Bank paves way for further cuts in official interest rates”.
His comments come against a backdrop of deteriorating economic data: house prices and building approvals are falling, while the national economic growth rate dropped from 3.4 per cent to 2.8 per cent, it emerged this week, surprising economists.
Speaking at the Australian Business Economists annual dinner, Dr Debelle said the federal government had room borrow and spend to stimulate the economy, if needed.
These people do not, of course, have any idea why the economy is floundering. They have kept rates low since the GFC and public spending has never been higher. Of course, a major part of the problem is that rates have been too low and public spending has been too high, but they would be the last people to know. Look at what he even said:
“Fiscal space is really important; we still have that in Australia,” he said, backing former Treasurer Wayne Swan’s controversial $52bn fiscal stimulus of late 2008 and early 2009, which saw $900 payments to households, help for first home buyers, discount roof insulation and a school hall building boom.
“Fiscal stimulus in Australia in my view was absolutely necessary and was a critical factor behind Australia’s good economic outcomes,” he said.
Unbelievable. No idea how an economy works but they will bludgeon it again until it finally responds to treatment. And there is not much doubt we are heading into an economic sinkhole that Treasury and the RBA have between them created.
The GFC is now a decade past and we, along with pretty much everyone else, have never had even an inkling of a robust recovery. Amazing.