Hi Pharque99, it would bring the Aussie dollar down, but it would also be dire for people living on the middle to lower class brackets by stretching their finances to far just to survive as the cost of things like groceries would soar.
You see the high dollar is unusual for Australia which under normal circumstances would sit at .75 to .80 cents against the greenback, but because of the economic downturn the greenback has lost it's value and others in the EU like Greece and Spain and Cyprus ETC.
Because monetary policy has been formulated to try and stem this problem' the Fed in the US decides to print more money to pay bills to pay Government workers and pensions and to keep the economy alive, the theory is if you have more money in circulation, more has to be spent, which in turn means more jobs and manufacturing which adds to GDP, unless you are in a depression or coming out of one, then this flow on effect does necessarily have it's deemed response because banks pull in their money, as do investors in perceived hard future times, like the story of the ants and the grass hopper.
As demand builds again for certain products and services, and people in banking and investors becomes immune to the perceived anticipation of not going over a fiscal cliff, the flow on effect of fiscal policy will become more evident in it's cure to stimulate the economy in the right ways.
It's like Leukemia treatment, you get really sick in the beginning, but as you get use to the treatment and start to see the cancer retreating, your spirit rises and you may recover, but you have to be careful with your lifestyle though in future.
America is showing signs of this at the moment and this is why the markets are recovering as investors want to get in on the bottom, once this gains momentum and all the wheels on the cart are oiled and turning in unison, things theoretically should become more stable.
It is a Socio Economic world, the important thing is to remember what caused this in the first place, I think it was too much Credit and large banks lending too much money that couldn't be paid back if everyone all at once lost confidence in the system and Major default resulted.
Whilst Credit is good between countries in areas of trade ETC. it can be dangerous to unleash it on the private sectors like housing loans in large amounts regardless of ability to pay back and avoid default which became the worlds recession over the last 6 years.
Sorry to woffle on, many will have different opinions, but that's Socio Economic Democracy for you, have a good one.
