8 November

Ideas are everything. For the past few decades (starting with John Howard), governments have embraced 'monetary policy' as the way to keep our 'economies' moving. All it really means is they've tried to make money really cheap, so we'll all go out and borrow and invest. It's cost the Reserve Bank a fortune to do this (see graph - units are millions), and it's climbing hugely over time. What's the alternative? Government actually spending money - fiscal policy. And that money going into the pockets of ordinary working people, so they can spend it. Their wages haven't budged, but their debts have skyrocketed (second graph - ratio of private debt to GDP, now at over 200%) just to make ends meet. What we call economics is just a conjuring trick to hide political decisions.