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The Wrong Plan for Australia

I have an op-ed in today’s Wall Street Journal on the Rudd government’s fiscal stimulus package.

posted on 15 October 2008 by skirchner in Economics, Financial Markets

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Posted by .(JavaScript must be enabled to view this email address)  on  10/15  at  06:27 PM

Your concession that some government stimulus is needed is disappointing. Tax cuts would have been far better to stimulate the economy than government spending.

Monetary policy should not have been changed unless inflation went outside the RBA range, as loose credit was a contributing factor to this crisis in the first place. This crisis is nothing like the Great Depression because there has not been a sharp contraction of the money supply; there is no “credit crunch”, a point you did not mention.

Notice how quickly the Australian budget will go into deficit, from a $17-22 billion surplus. Watch for the “ratchet” effect outlined by Dr Robert Higgs in his book Crisis and Leviathan - the new powers adopted by the RBA and the federal government will not go away after the crisis is over with. We have moved one step closer to socialism.

Posted by Sukrit Sabhlok  on  10/17  at  03:12 PM

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