Stimulus Packages

There may be discussions that the financial crisis is over. This, I believe, is premature, because the fundamental aspects that create economic instability are still present.

Right from the outset it should be stated that a domestic stimulus package for the Australian economy, an economy which earns its money from the export of agriculture and minerals and which spins around the money by the provision of services, will not be assisted by personal expenditure in imported plasma screens and sound systems and the construction of school halls. The outcome of the stimulus expenditure does not proportionally increase the aggregate size of the economy. Any benefit is far outweighed by the extensive leverage to which our nation is exposed.

If we imagine the Australian economy as an Australian family household, the debt has brought new plasma screens, ceiling insulation and a new coloured phone but the house remains the same size, the same value and no one in the house is earning more money because of the expenditure.

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