LvO talks national debt on Radio 2GB

This morning I was interviewed by Luke Grant from Radio 2GB to discuss Friday’s article “Don’t fret over the national debt”.

In the interview I discuss the missing ingredients in last week’s federal budget and why concerns over Australia’s ballooning national debt are unfounded.

Unconventional Economist
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  1. Jumping jack flash

    The national debt is/was a pittance when compared to the amount of debt that the people are expected to own.

    The effect is largely the same – debt gives an immediate boost to the amount of money sloshing around the economy. However the kicker is the interest. Interest is that magical “extra money” that isn’t usually expected to be created by debt, and needs to be “found” from somewhere else and handed over to the banks for the privilege of using their debt.

    Just at face value, the interest paid by the government is far less burdensome on the real economy than interest the people are required to pay.

    The effect of the people’s interest bill on the economy (coupled with insufficient debt growth) is clear to see for anyone who will look.

  2. Looked at that priority infrastructure list and to be honest most of it is political. As an example I dont think the M12 and another airport are critical priority infrastructure right now especially post covid. The list seems to have been captured by the government in charge rather than a true assessment and that’s always the worry with giving the government a free pass to spend. Besides most of the infrastructure deficit is in services typically provided by the states (local roads, rail, hospital capacity, schools, etc) not in federal infrastructure.

    Government needs to spend money to stoke demand I agree. Just not sure they need to stimulate construction when most tradies in Sydney are charging quite well and aren’t short of work. Infrastructure stimulus isn’t well targeted stimulus spending now; projects in Sydney are already labor/resource constrained and dont really need the stimulus imo.