Depression economics arrives Downunder. Only nobody noticed.

In the annals of economic history the key change in the past two decades has been the return of depression economics worldwide. What does this mean?

Through the post-WWII period to around the end of the 1980s, Keynesian economists had concluded that contemporary economics had licked the business cycle to such an extent that depression scenarios in which enduring economic slumps with high and intractable unemployment was no longer an issue.

As the millennium drew to a close, the best of global economists realised that this was no longer the case as rolling crises took hold in emerging markets. Paul Krugman was out front, at Foreign Affairs:

In the spring of 1931 Austria’s largest bank, the Credit Anstalt, was on the verge of collapse. The Austrian government could not simply stand by and let it fail, but when it came to the bank’s rescue with large sums of freshly printed domestic currency, the resulting capital flight rapidly depleted Austria’s gold and foreign exchange reserves. The obvious answer would have been to abandon the gold standard and let the currency float. But this solution was unacceptable — not just because a drop in the schilling’s value would magnify the burden of foreign-currency-denominated debt, but because a currency devaluation would deal a devastating blow to the confidence of a country whose memories of post-World War I hyperinflation were still fresh. Austria pleaded for help from its neighbors and the then-new Bank for International Settlements, but the offered assistance was too little, too late. In the end, the desperate government resorted to capital controls.

It is a familiar story to economic historians. It is also astonishingly modern-sounding: if the plot does not exactly fit any one of today’s crisis-ridden economies around the world, it does sound very much like a pastiche of recent events in Indonesia, Malaysia, and Brazil. The main difference now is that financial rescue attempts from the international community have become routine. When a country gets in trouble today a swat team from the International Monetary Fund and the U.S. Treasury quickly arrives on the scene. Suppose, however, that the IMF could use a time machine to send its best money doctors back to that Vienna spring of 1931, but without the ability to offer a huge, no-questions-asked credit line on the spot. What would today’s experts say? What could they tell the Austrians that they did not already know?1

Most modern economists — to the extent that they think about it at all — regard the Great Depression as a gratuitous, unnecessary tragedy. They believe that what might have been an ordinary, forgettable recession became a nightmarish slump thanks to the stupidity (or at least the ignorance) of policymakers. If only the Federal Reserve had not been preoccupied with defending the gold standard instead of the real economy; if only Herbert Hoover had followed an expansionary fiscal policy instead of trying to balance the budget; if only policy in general had not been governed by a “liquidationist” philosophy that saw short-run economic pain as a necessary purgative for previous excesses — then the catastrophe could easily have been avoided. And since we know better now, it cannot happen again.

Or can it? As little as two years ago I and most of my colleagues were quite confident that although the world would continue to suffer economic difficulties, those problems would not bear much resemblance to the crisis of the 1930s — because economists and policymakers had learned the lessons of that decade and would never again perversely tighten monetary and fiscal policy in the face of recession. True, Mexico suffered a severe slump in 1995 and Japan’s economy had stagnated since 1991, but these appeared to be special cases, easily rationalized as the result of exceptionally misguided policy.

Perhaps we should have known better and realized, for example, that the dilemma Austria faced in 1931 could just as easily arise in the modern world, and that now as then there are no good answers. In any case, there is no mistaking the lesson of the terrifying economic and financial events of the last two years: the economic crisis in Asia, its spread to Latin America, the deepening slump in Japan, and the brief but ominous panic that swept bond markets last autumn. The truth is that the world economy poses more dangers than we had imagined. Problems we thought we knew how to cure have once again become intractable, like temporarily suppressed bacteria that eventually evolve a resistance to antibiotics. More specifically, the problem of aggregate demand — of getting people to spend enough to employ the economy’s productive capacity — is not, as we might have thought, always a problem with an easy solution. While it may often be possible for countries, especially large, stable, self-sufficient economies like the United States, to handle recessions simply by printing more money, we are finding an increasing number of cases in which countries find either that they cannot apply that same medicine or that the medicine is ineffectual. There is, in short, a definite whiff of the 1930s in the air.

This was written 1999. We know that since both developed and emerging markets have seen accelerating and deepening shocks including the world’s first global financial crisis since the 1930s. So what’s gone wrong? And how is it fixed?

There are three fundamental drivers to the demand deficit now experienced in developed economies:

  • a diminishing demographic tailwind as Baby Boomers die off;
  • de-industrialisation and the failure of productivity growth;
  • financial deregulation leading to enormous debt stocks and rising economic inequality.

All of these forces sap demand and sustain supply leading global inflation into a permanent funk.

Not all developed economies have suffered the same three curses at once. Some have managed them much better than others. But the trends are roughly the same everywhere.

In Europe, northern economies have not de-industrialised, have remained competitive and prevented or contained debt explosions as interest rates fell globally. Inequality has spread but less so than elsewhere. But southern economies have all been devoured by the depressionary forces, not least because the policy responses of the dominant north has been to refuse the south fiscal relief even as their private sectors deleveraged. Combined with the straight jacket of a common currency with no separate budgets or interest rates, their adjustment has been forced inwards onto labour markets with huge unemployment and wage deflation.

Within the Anglosphere countries the same depressionary processes transpired basically uninterrupted by corrective policy-making until reaching the point of financial crisis in 2008. Since then, they have used strong cyclical fiscal pulses and unconventional monetary policy to support aggregate demand while private sectors deleveraged which, crucially, also sank their currencies boosting tradable sectors. These economies have thus largely forced the adjustment external, a much better idea for their respective polities. Where this policy prescription has come undone is in the failure of governments to correct inequality, which the remedy of external adjustment can make worse via rising asset prices at home.

Australia has faced exactly the same set of depressionary forces but has been fortunate to have a Chinese tailwind to aid its struggle. This delayed the full reckoning by one business cycle, with high terms of trade and booming mining investment supporting higher interest rates and less finaincialisation up to 2011. But that ended with China’s slowdown and, stupidly, rather than learn the lessons of the rest of the world we mistook ourselves for different and exhausted our advantage by allowing one final giant asset bubble to blow off in housing. Even so, we’ve been unable to fix a weak labour market with persistently high underemployment. Now we too face the great private sector deleveraging and the choice of what to do about it, internal or external deflation.

That is where we come to the main point of this post. There is so little acknowledgement of this broader context in the wider Australian economic debate that if we don’t wake up to it soon then we are almost certain to again repeat the mistakes of other nations. To wit, John Kehoe at the AFR last week, a recently appointed guardian of contemporary economic thinking:

When Reserve Bank of Australia governor Philip Lowe hosts an annual lunch with his predecessors at the central bank’s Sydney headquarters, he is met with bemused looks from former RBA heads when he talks of his determination to lift wages and inflation higher.

…Warren Hogan, economics professor at UTS Business School…argues the RBA’s 2 to 3 per cent inflation target, set up in the higher-inflation 1990s, is too high and outdated in the modern global economy.

…Former RBA board member Warwick McKibbin has called for the RBA to adopt nominal-GDP targeting, instead of inflation.

But he too has said the RBA erred in cutting rates twice in 2016 but has since missed the boat on moving rates higher.

…Economist John Edwards, who left the RBA board in mid-2016, says his view is the RBA will “not cut interest rates”, betting on the US-China trade war ending and the US economic expansion continuing.

“I still think the next move is up, but I would have to concede it probably won’t be in 2019,” Edwards says.

…Grant Samuel Fund Management adviser Stephen Miller says monetary policy is “pushing on a string”.

“We’ve probably done all we can with monetary policy, so if we think a stimulus is needed in the future, it should fall to a well-designed fiscal response targeting consumers through income tax cuts or cash payments,” Miller says.

Seriously? After a thirty year debt boom, why are we arguing over whether or not the RBA cut rates too many times at the finish line? This cyclical chest-thumping has been cheered on by the Shadow RBA and the RBA itself, both of which have totally misjudged the structural nature of the depressionary forces in favour of cyclical tools and remedies. This has largely been made possible by their fixation with the Pitchford Thesis, which says that debt accumulation by private individuals is always a good idea, Australia’s version of the spectacularly discredited rational market hypothesis.

The implications of this total failure of imagination in the Australian economic community is now about to become very much more painful. As the housing bust gets worse, unemployment takes off and inflation crashes, their response will determine how Australia’s first real confrontation with the return of depression economics is addressed.

So far the signs are not good. As house prices and inflation crash, the choices before us are very simple. We can go the European route being recommended by all and sundry of preserving the Budget, holding interest rates and currency too high and the adjustment will be foisted entirely onto local labour via higher unemployment and deflating wages. Or, we can go the more sensible American rout of slashing interest rates, printing money and supporting aggregate demand with fiscal spending that crashes the currency, forcing as much of the adjustment as possible externally.

Obviously we should go the American rout but do so with much more remediation policy to lean against the risk of greater economic inequality.

Australia does have one other tool that is an advantage that other nations lack in immigration policy. But that is only an advantage if it is used properly. Overly high mass immigration has already played the key role in crushing wages and productivity growth (via resource misallocation and crush-loading)  in this cycle. As unemployment rises ahead, overly high immigration will do great harm by making both much worse again. Indeed, if it is run too strongly, mass immigration could force the growing deflationary adjustment nearly all onto labour. My best guess is that the rate of immigration should be roughly halved to prevent this, which will still offer support to aggregate demand but limit the labour supply shock to much more targeted, high value and specialised vocations, as well cure the crush-loading of cities. Both will lift private sector incomes more quickly than otherwise, as well as help lower interest rates and the currency.

One final word must be added on the forthcoming election. The Coalition Government has shown zero awareness of this economic context. It appears wedded to tight federal budgets and surpluses even as the private sector aims to do the same, running full bore against the basic accounting identities of GDP. Plus it wants to run mass immigration at out-of-control levels. It appears to have no interest in equity and wants to sustain and grow the very debt bubble that is the number one symptom of depressionary economics in the first place. In short, it has learned absolutely nothing from the last decade of economic strife globally and, as it turns pear-shaped here, the Coalition may end up being what the Great Depression described as a “liquidationist”, ensuring that as much of the adjustment as possible is forced internally.

Labor has a much better mix of policies to deliver an externally led adjustment. It is offering huge tax reforms that will re-distribute asset inflation tax rorts to lower income household via income tax cuts. This is a direct support to greater equity, productivity and aggregate demand while allowing the asset price adjustment and enabling a lower currency. It is more likely to let go of any federal surplus with other fiscal spending supports. It’s major drawback is that it is a mass immigration extremist which will work against everything else that it is trying to achieve. As this failure becomes apparent it may be forced to re-regulate labour pricing to generate pay rises but given profits will still be weak this will only result in less jobs and lower wages anyway.

It is not clear that any Australian authority has a grasp of the magnitude of the depressionary monster stalking the nation.

David Llewellyn-Smith


    • Free capital flows is one of the dumbest, stupidest ideas around, along with the natural rate interest and virtually the whole of neo classical economics, but hey, it serves certain interests so let’s keep baniging on with it this innane and utter mind #$%#@#.

      • Its an idea from a set of ideas which together make up the thing we call secular humanism – i.e. this idea is part of our state religion.

        The point is that there is too many of us now, and so secular humanism is failing the associated scaling challenges. The reality is that it has probably been failing since we cross 5b souls, but the failure modes( i.e. corruption) are now distinct enough that its obvious.

        The challenge is, we don’t know what our next set of religious beliefs (/social technology) after secular humanism (and its associated feedback loop – democracy) should be. That is, what social technology will we use for governance as we move from 5b -> 50b globally.

        It used to work. It does not any more, because its obsolete. But we don’t know what comes next, so right now sucks, because when we work these things out, normally its messy.

      • That is scary, T.

        It would make sense to lock and bolt the front door while this sort of uncertainty transpires.

      • I know mate. God-damn terrifying is closer to the mark.

        But for the first time in human history, we understand what is going wrong, mostly because we can look into history and see all the other approaches taken and what worked/failed. There is a very good reason why all great empires in failure mode, fail in pretty much the same ways.

        This time around however, there are heaps of really smart folks across the world who understand this, and are moving to address the issues. As a species, we have online hive minds, dapps (day apps), pre sentient algorithms, macro-scopes, there is even a guy out there who is convinced that success lies in the invention of new emotions. Personally, i’m working on a universal translator, hints of which you should start to see this year.

        As far as bolting the door goes, literally taken it will not work, metaphorically it will happen anyways. That is, you specifically going all prepper is unlikely to save you, because when these changes happen, fate decides who lives and dies. But on a larger scale, you should assume global immigration is cooked, and will not return to what it was for a few generations. But that is why we call them ‘migrations waves’ correct, otherwise its just known as ‘invasion’.

        Be cool. As silly as this sounds, we got this. You would be surprised at exactly how clever our species is – if you have kids, teach them about faith, and praying is a pretty good idea too.

        Turning and turning in the widening gyre
        The falcon cannot hear the falconer;
        Things fall apart; the centre cannot hold;
        Mere anarchy is loosed upon the world,
        The blood-dimmed tide is loosed, and everywhere
        The ceremony of innocence is drowned;
        The best lack all conviction, while the worst
        Are full of passionate intensity.

        Keats – 1919 – we are at the widening gyre/centre cannot hold part. This has happened before, many times, and each time we got through it ok. Be cool.

      • Wrong ‘..Eats’ – it’s Yeats you want. Even if he’d lived far longer than Kurt Cobain or Jim Morrison, Keats didn’t stand much chance of being alive and publishing in 1919.

      • lol.. my bad googlefu. remembered the widening gyre reference, and then cpy/pasted from somewhere dodgy. still, it was a good reference to remember. i’ll get off me backside later and find the actual one.

      • @T. Reference in one comment to both Yeats and “be cool”. Makes me think you listen to Joni.
        Yates (the widening gyre) from Joni’s “Night Ride Home” and
        “be cool” from Joni’s…well…”Be Cool”, on “Wild Things Run Fast”

      • And what rough beast, its hour come round at last,
        Slouches towards Bethlehem to be born?

        The Second Coming

      • Its an idea from a set of ideas which together make up the thing we call secular humanism […]

        People may be familiar with “secular humanism” as the principles that underpin pretty much every aspect of modern civilisation. Fundamental human rights, freedom of religion, legal representation, equality before the law, property rights, right to vote, etc.

        I imagine the path of reasoning that leads from secular humanism to free capital flows is quite entertaining, given the former’s economic ideas typically tend towards “socialist big Government” rather than “free market”.

  1. GunnamattaMEMBER

    I think people will only notice when the political economy has been completely smashed. And that will only be when the vested interests which have control over policy setting delivering the population ponzi, a de industrialised economy obsessed by real estate, and which once stood firmly against a banking royal commission have had their grip on the political economy prized finger by finger from it. Even the mainstream media might have twigged by then.

    Christopher Pyne delivers damning verdict on the state of Australian politics

    But basically our politicians cant acknowledge the defining characteristics (as far as the bulk of the electorate is concerned) of the Frankenstein age they have brought about

  2. It’s major drawback is that it is a mass immigration extremist which will work against everything else that it is trying to achieve. As this failure becomes apparent it may be forced to re-regulate labour pricing to generate pay rises but given profits will still be weak this will only result in less jobs and lower wages anyway.

    Hey, I thought that this matter of immigration was meant to be entirely self correcting a so a non-issue. Wasn’t the thesis that as soon as we hit a recession (let alone a depression) the Mexicans would stop coming? Not only that, but hundreds of thousands of Mexicans who are already here would pack up and go home?

    I’ll be quite disapppinted (but not surprised) if that’s now off the agenda.

      • We have a track record demonstrating that we’re prepared to round up and import people without filtering for quality, so I would expect more of the same.

        A “cyclical low” would still, in my estimation, be easily enough to continue destroying wages, amenity, access to services and access to housing. So it is rather cold comfort.

      • Stewie GriffinMEMBER

        “If only the Federal Reserve had not been preoccupied with defending the gold standard instead of the real economy; if only Herbert Hoover had followed an expansionary fiscal policy instead of trying to balance the budget; if only policy in general had not been governed by a “liquidationist” philosophy that saw short-run economic pain as a necessary purgative for previous excesses — then the catastrophe could easily have been avoided. And since we know better now, it cannot happen again.”

        THIS is why I say Culture matters . It matters as to who you turn towards for answers to your social problem (which is what economic problems are) and the cultural values that underpin the advice that they will provide.

        Krugman hails from a culture whose religious texts are filled with advice on money lending and the importance of honouring debt. It does not recognise the “excesses” of debt as a societal problem, but as an issue of personal responsibility arising at the level of individual, NOT the lender or indeed the entire credit creation process – it is little wonder that the advice that an economist bathed in these cultural values, provides a solution that essentially amounts to the preservation of debt.

        Contrast the differing results – the pre-1928 excesses were written off and the benefit of miss-spent capital was returned to the community by way of lower asset prices, with the 2008 approach – the excesses were underwritten, the asset prices and their owners remained protected, and the general population continue paying undue and un-earned economic rents to them.

        Krugman and his ilk will point to WW2 and say “See, this is what happens if you liquidate.” But they will be lying – WW2 happened precisely for the opposite reason, ‘To Make Germany Pay’ ie to force it to honour the debts from WW1 that were imposed on it. It isn’t the liquidation of debt that leads to war, but the preservation of debt and the resulting political instability.

        Culture matters – it should have all be liquidated in 2008.

    • I think it’s only self-correcting as long as the third world shitholes the immigrants are coming from will be more attractive than Australia… while the country is both under water and on fire, our smog isn’t as bad as subcontinental or east Asian smog, public defecation is a newsworthy event rather than a fact of life, our slaves tend to be in suburban shopping centres painting nails and giving gobbies rather than making 50,000 iPhones a week and our corrupt politicians are idiots, rather than billionaires, so as long as this remains the same, the flood of immigrants paying to come here will continue.

  3. Fiscal stimulus is clearly the answer but this will be hard when the worst media in the world continues to pretend a budget surplus is the sole criteria for good economic management.

    • MountainGuinMEMBER

      Sweeper, i agree there are illogical barriers to altering fiscal policy as conditions need. But as MB observes, this issue affects all policy tools.
      If a fiscal surplus is not predicted or delivered, it is now called poor ec management.
      Interest rates and quantitive processes seem to be only palatable to delay issues while they grow bigger, rather than acting in long term interests.
      Immigration policy is toxic. Any proposed moderation is met with calls of racist or heartless dispite hardships on Australia w stagnent wages and insufficient infrastructure.
      In term of businesses, with FTA agreements, free moving capital, and internet shopping it is v hard to compete in anything apart from our land based goods- food and minerals. Im unsure if we can take more advantage of education or tourism.
      Im just thankful that the dollar is floating. At least it can react as needed.

      • If the issue is a shortfall in demand the answer is expansionary policy. This does not include depreciating the real exchange rate as that implies a tight money policy long term.
        Also inadequate demand should now be seen as the long term problem rather than competitiveness. Countries are now competing for demand not productivity or cheapest unit costs. It is not the 80’s and that was overdone anyway.

      • Australia’s advantage in this low interest rate / secular stagnation era is that it has a large amount of fiscal headroom.

    • It only has fiscal headroom if you ignore the external account and pretend there is no such thing as Current Account Deficits, Foreign debt and Foreign ownership of Australian resources and assets.
      Of course modern economics on ALL sides says these things don’t matter!!! Of course they don’t – we got into this predicament purely because….well because…well… just well!

  4. an australia in recession or depression in this day and age is barely a bad place. material living standards have advanced to the point that being the poorest person in an industrialised western state during harsh economic times still affords a better quality of life than nearly all other human beings to have ever existed experience or have experienced, living or dead. the migrants will not stop coming as long as they are allowed, and those that are here will still mostly not go home. all economic downturns will effectively be ameliorated by the continuing unmitigated flow of third world skraelings.

    • You guys need tickets and fly to Asian countries such as Singapore, Hong Kong, Shenzhen …etc. Your superiority complex syndrome is blinding you out of the real world.
      Stop this garbage propaganda and admit it. You are loosing it on so many levels and this is just a last moments desperate fight against the world tide.

      And by the way , the Asian countries you are referring to prison the bankers if they ‘re found guilty. Not letting them to choose to leave the job for a holiday or family time. So if you asked me,

      I am more than willing to live anytime in such countries, at least they’re trying to enrich their poor by lifting their standards to middle class. Not like what’s happening here trying to push everyone towards the poverty line.

    • HadronCollisionMEMBER

      Humbly invite you to take up Newstart and declare bankruptcy to mimic a depression and see how hardly bad it is

      • Worst case, you’re on newstart ($490/fortnight), you move to a country town where rent is $70 a week (rent assistance (~$60/fortnight). Total $550/fortnight. Less, rent ($140), electricity ($50/fortnight), gas ($15/fortnight), mobile phone ($15/fortnight), internet ($25/fortnight) = money to spend on food and alcohol is $305. Not much, but these costs (electricity, gas, internet) would also likely be shared. All you have to do is not get pregnant and it appears manageable (although limited choice). But I took that to be the point of the post above, whilst not great, still better than living in other places in the world?

      • I suspect living in a country town where rent is less than $70/ week (I found one in the whole of Gippsland on, – with some fine print so could take some doing)with no car would require someone to be very comfortable with having next to zero social contact – especially given zero entertainment budget and also require a decent level of health and fitness to be able to get to shops etc. on foot (and probably need to include some budget for shoe replacement and maintenance given the walking needed).

        Might be better than some places but could be a lot worse than some others. Need to be the right personality type, and surviving to a decent age looks like a distinct disadvantage.

      • I suspect living in a country town where rent is less than $70/ week (I found one in the whole of Gippsland on, – with some fine print so could take some doing)with no car would require someone to be very comfortable with having next to zero social contact – especially given zero entertainment budget and also require a decent level of health and fitness to be able to get to shops etc. on foot (and probably need to include some budget for shoe replacement and maintenance given the walking needed).

        Might be better than some places but could be a lot worse than some others. Need to be the right personality type, and surviving to a decent age looks like a distinct disadvantage.

      • Fruit picking areas are likely to have higher priced rent than $70 per week.
        Katherine, NT advertises a large number of fruit picking jobs.
        Here’s the cheapest place available there on at $190/ week (definitely accomodation for one)

        Not entirely convinced that every migrant arriving by plane would find it an improvement. Some might, others might not.
        Definitely need to budget for running a car though with a 90 minute walk to the centre of town.

      • Another ignorant post on how easy it is to live on the dole. $70 rent….LMFAO, and rental assistance is means tested. Just more blind hatred for welfare.

    • and still, 190k people per year think otherwise, plus all the Visa over stayers. We don’t need _everyone_ to come, just a couple a hundred thousand per year.

    • I have been to many countries and continents around the world and I have to say I somewhat agree with Stagmal. Even with 20% unemployment this place still has a lot going for it. Although I suspect Western Sydney will become ground zero for a Mad Max like future.

      • Lenny Hayes for PMMEMBER

        Second and third that comment.

        Economic refugees are not coming from Singapore (?!), Hong Kong and Shenzhen – they are coming from Amritsar, Karachi, Dhaka, Kathmandu, Lagos, Sai Paulo etc. If you been to any of these places, a house in Sunshine is paradise in comparison.

        It’s not a superiority complex, just acknowledgement that there are unfortunately far, far worse places in the world where people are trying to survive. Emigrating to Australia is a logical process and outcome.

      • I agree with Lenny and Gav. Most of our migrants come from 2 countries. Putting aside the 1% in both countries there is a lot to be said for being Australian.

    • Diogenes the CynicMEMBER

      +1 for the use of the word skraelings – the Vikings definition of the ice dwellers was utter wretched beings, at least if I remember rightly form my Lecturer’s Viking history teachings. But the skraelings survived in Greenland when the Vikings died out as temperatures fell…

  5. Should ‘environmental limits’ join that list of fundamentals? The case for endless consumption, development and growth that underpin modern economics is also failing.

  6. thanks to “technological progress” that made us well connected to everyone yet more lonely than ever, provided so much convenience yet made us busier than ever, gave so much wealth yet placed us never so close to poverty, gave so much “happy” FB and Instagram moments yet made us never so miserable and depressed.
    economic depression is just result of overall depression we live in

    in history books in a century or two (if people survive and if literacy survives) our age is going to be called “age of depression”

    • reusachtigeMEMBER

      But thankfully you’ve got a backyard blog to whinge on. Oh, and p0rn and computer games! Life’s tough hey!!

  7. Because there is nothing else we have to worry about.

    The world’s insects are hurtling down the path to extinction, threatening a “catastrophic collapse of nature’s ecosystems”, according to the first global scientific review.

    More than 40% of insect species are declining and a third are endangered, the analysis found. The rate of extinction is eight times faster than that of mammals, birds and reptiles. The total mass of insects is falling by a precipitous 2.5% a year, according to the best data available, suggesting they could vanish within a century.

    Time to stop playing politics with our only home for the foreseeable future? Nah…

    • ….and this extinction rate is before the introduction of 5G across continents. Evolution to many global decision makers happened in 7 days, so their relying on their hyper-educated technical master to accomplish this task again. Oh but surely our hyper-debt based monetary system will grow us out of this disaster.

  8. Jumping jack flash

    Excellent article!
    Yes, this is exactly right. The inspirational leaders of our economy with enormous brains, brains that are substantially bigger than the 0.7×10^6 debt-dollar mountain that is now required to buy a “starter house” for an aspiring first home buyer in Sydney, need to actually take notice of what is happening not only to the Australian economy, but to the global economy.

    This much debt is simply unsustainable. No joke. They need to look back through history. If it was so easy to get instantly and insanely rich as simply getting “someone else” to borrow a ton of debt money into existence, legitimise it by attaching it to an asset, and then hand it all over, then why hasn’t anyone thought of doing it before?

    And what happened when they did…