Sunday, August 01, 2004
Like the US, Australia's economic - and, increasingly, social - problems go back more than thirty years and fundamentally derive from the attempt to "fight inflation" by hiking interest rates and "damping down" the economy. All that did was produce, first, stagflation, and then shift domestic inflation to huge and chronic deficits in the balance of trade/payments. In the process, we - both the US and Australia - gutted our industry, crippled our rate of fixed-capital investment, abandoned full employment, burdened ourselves with massive debt, etc etc. A major adjustment - a mild and euphemistic term for collapse - is inevitable in the US and, sadly, Australia too, probably quite soon.