To anyone who considers this stimulus package a good idea then consider this.
The cause of the global economic crisis has been the easy availability of cheap money resulting in a highly leveraged society with large amounts of accumulated debt. Asset price bubbles are everywhere. The severity of the problem is unprecedented globally.
A downturn in the economic cycle is a necessary mechanism like sleep is a necessary mechanism to allow us to survive. The economic boom fuelled by the availability of cheap credit is akin to staying awake for many days without sleep. After a binge like this, the sleep needs to be deeper and longer than normal. BUT the government stimulus package is like someone who keeps waking you in the middle of the night saying, get up and continue the binge, you don’t have to sleep so much.
The accumulation of debt caused the problem and now the government wants to add to that by accumulating more debt in the form of a government deficit (aka tax payer owned debt). Asset prices will be artificially propped up by government intervention. This is not sustainable in the long term.
If this isn’t bad enough, we also need to consider the research that Mervyn King, the Governor of the Bank of England did a few years ago, which shows there is a direct causal link between quantitative easing (printing money) and hyper inflation.
If you think we are somehow immune to the impact of these issues in Australia then put your head back in the sand.
There is no such thing as a free lunch, someone has to pay and will. Many have already started. Only the dead will escape.
