In the 1980s, then British prime minister Margaret Thatcher used the analogy of managing the household budget to enact a dramatic cut in government spending – arguing that governments can’t keep spending and must have a balanced budget.
It reared again in the European sovereign and banking crisis in 2012. Suddenly debt was OK as it created demand but once that growth was achieved, the topic of “budget repair” was foremost in the minds of policymakers. However, Australia has not been shunned by creditors, nor seen sky-high interest rates needing to be paid to attract capital.are trading about 0.4 per cent more than those of the US at 2.5 per cent. That is a full 4.5 percentage points lower than the average rate paid since Neil Armstrong stepped on the moon.
If official interest rates rise, as we and the market expect, Australia’s fixed rate debt costs do not rise. Rolling over new debt does, but with such infrequent maturity profiles it barely moves the needle. Of course, one of the largest challenges that Australia and the world faces is climate change and the potential that more frequent climate events brings about higher and more regular expenditure to mitigate the effects or repair the damage.
We need more financial experts identifying the reality behind government debt, and how our sovereign currency actually works. There has been too much neoliberal myth propaganda for way too long. Mon4Kooyong KooyonVotes
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