There is a gigantic lie abroad about Australia. It is that it has been lucky and has, to date, dodged the secular stagnation and associated effects that has afflicted Western economies worldwide after the GFC. Nothing could further from the truth. While the rest of world adopted quantitaive easing (QE) to address the issue, only succeeding in making it worse, Australia adopted an equally destructive but less obvious form of macroeconomc re/deflation: quantititave peopling (QP). It has been running almost as long as QE elsewhere with exactly the same results: falling living standards, strengthened deflation, increasing class divisions and destroyed political stability.
Only now, in Australia’s case, it also threatens takeover of the democracy by a foreign authoritarian power.
Let’s consider what QE has done elsewhere:
- by printing money to buy various finaincial assets, central banks have kept capital constrained banks on life support;
- but that has increased inequality as asset inflation becomes the only game in town for economic gains;
- the result is chronically low interest rates leading to corporations investing in their own shares instead of efficiency or new capacity, as zombie businesses flourish and oversupply is supported endlessly, again entrenching deflation;
- as politcal dysfunction rises around weak wages and falling real living standards for workers, reform becomes impossible relying ever more upon QE.
That’s your QE feedback loop of doom. QP operates similarly only worse:
- by importing people the government ensures capital costrained banks are supported by artificial demand;
- asset prices like house prices rise and become the only game in town for economic gains;
- but these gains are more than offset by falling wage growth as the labour supply shock crushes worker pricing power;
- universites get ever dumber to attract unskilled third world migrants, locking in low productivity and weak wages;
- the result is chronically low interest rates leading to corporations investing in their own shares instead of either efficiency or new capacity, as zombie businesses flourish and oversupply is supported endlessly, again entrenching deflation;
- all arms of government have to lie in defense of the indefensible as politcal dysfunction rises around weak wages and falling real living standards for workers, thus reform becomes impossible relying ever more upon QP.
Ironically, the end result of QP is QE, which we will see next year in Australia as we run out of rate cuts. This raises the specter that we will accelerate all of the negative affects of both policies.
The real kicker in Australia’s case, however, is our exposure to China and ethnic Chinese immigration. Blind Freddy can see that the world’s great tyranny has launched a long term takeover plan of Australia’s politcal elite via bribes, lawfare, media manipulation and attempted control of the ethnic Chinese diaspora. We can put various plans in place to fight it but none of them is likely to succeed long term if the flow of ethnic Chinese peoples continues. There are already two ethnic Chinese electorates in Australia. What happens when that is four or eight?
The CCP’s tools of persuasion are powerful and include claims to indentity, bribes, as well as threats to life and limb of self and loved ones. It is extremely naive to think that any expatriate community can dodge this kind of sustained assault in the long run, which is not at all to blame that community. Those at fault are those that allow the foreign influence pressures to build.
Australia is irreversably multicultural. Cutting immigration won’t change that. This is a politcal not race issue. But what it will do is prevent the CCP from orchestrating a reverse takeover of the poltical system, as well as ending the deleterious impacts of QP.
That does still leave you with the problem of secular stagnation but we can fight that like everybody else while avoiding their mistakes. QE should be directed exclusively at the Australian dollar, not inflating asset prices (with the help of macroprudential policy).
Or, we could leapfrog many of the downsides of QE by jumping straight to helicopter money; the central bank printing money for fiscal expansion not financial assets.
It’s far past time that we shift away from mass immigration as an economic lever. The Australian economy and politcal system needs it for stability. The Australian Chinese community needs it for protection. The Australian national interest demands it.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.