Via Ross Gittins:
…secretary to the Treasury, Dr Steven Kennedy…explained to Senate Estimates the long-established orthodoxy among macro-economists in the advanced economies that “short-term economic weakness or unsustainably strong growth is best responded to by monetary policy” (interest rates) not fiscal policy (government spending and taxation).
Now, I have to tell you Kennedy isn’t making these rules up. They did become orthodoxy in advanced-economy treasuries in the 1980s. They’re the reason John Kerin’s budget of 1991, delivered in the depths of “the recession we [didn’t] have to have” contained zero stimulus, meaning the stimulus, when it came in February 1992, came too late.