From the SMH Blog:
Billionaire parliamentarian Clive Palmer said the economy urgently needs a $6 billion-a-month stimulus boost on par with the one delivered in the US by the Federal Reserve’s controversial $US85 billion bond-buying program.
Mr Palmer said he was opposed to European-style “austerity” and said it was vital more money was injected into the economy. “At the moment it’s at rock bottom”.
In a letter sent to federal members of parliament ahead of their return to Canberra on Tuesday, Mr Palmer said the best example to follow was the one shown by the US.
“Following the financial crisis in the United States, President Obama moved decisively to stimulate the US economy. Every month over 85 billion were injected into the US economy for more than two years.
“This is the equivalent to an injection of over six billion dollars a month into the Australian economy”…
He said unless action was taken, the economy could revert back to the state it was in after World War Two.
I obviously disagree strongly with Palmer’s request for Federal Reserve-style quantitative easing (QE). Leaving aside the fact that the Australian dollar is not a global currency, it’s difficult to see how QE has benefited Americans beyond inflating asset prices.
Ultimately, the key to boosting living standards is through raising productivity, not by creating short-term artificial demand. This is why a widespread program of structural reform targeted at boosting competition and innovation is so important.
Australia undertook reform in the mid-1980s and early-1990s to great effect. If it wants to enjoy ongoing rising living standards, it must do so again.
