The final results are in for the fiscal year 2018/19. The government’s May Budget prediction of a $4 billion deficit has come in officially at a $641 million deficit.
Well, ring the bells, set off the firecrackers, send a telegram to the Queen. We almost made it. It’s as near to a surplus as you could hope for. All our worries are over. God is in his Heaven and all’s well with Australia.
Except it isn’t!
You can lead a horse to water, but you can’t make it drink. How apt is this simple proverb in today’s economic environment where we have a treasurer and his government obsessed with the idea of producing a surplus in the face of a declining economy?
What fools these people are!
These idiot politicians who have presented themselves as the masters of good economic management, who have convinced a majority of Australians that surpluses are good, that deficits are bad, that debt denominated in our own currency is somehow a burden on the nation.
Never mind what that debt has done to improve the wealth of the private sector; never mind the added value reflected in a GDP number that would otherwise have been negative but for deficit spending.
What is it about these people that they can’t understand a simple economic imperative?
Who is advising them and is the advice being accepted?
If one is foolish enough to believe the government is doing a good job in managing the economy, seek counselling. Rather, one should be directing their admiration and heaping thanks and praise on China and in a perverted sense, Brazil, not Canberra.
It is Brazil’s misfortune and China’s continued growth that has made our terms of trade look rosy. But for that, the real state of the domestic economy would be exposed for even the least competent observer to see.
Nero fiddled while Rome burned. Morrison and Frydenberg are doing the same. They are patting themselves on the back while unemployment rises, production levels are being revised downwards, private debt is driving record numbers of bankruptcies.
Soon, very soon, it will be apparent to all that monetary policy (interest rate reductions) have little or no impact on those who are already struggling to put food on the table. The only means by which our economy can improve at this time, is an injection of government spending, sufficiently large enough to kick-start consumer spending.
Striving to produce a budget surplus is counter-productive to that need.
A surplus is contractionary. It reduces the money in circulation. Our economy needs more money in circulation, not less. The Reserve Bank governor, Philip Lowe, has been dropping hints as big as footballs for months. Yet still, Josh Frydenberg doesn’t get it.
He will soon, however. Our iron-ore sales to China are the only reason he hasn’t already. Soon Brazil will be back in the exporting game. Then, we will see the first negative GDP quarter come in and the penny, hopefully, will drop. I hope, when it does, that he will be wearing steel-plated boots.
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