On Thu, Nov 06, 2014 at 06:43:30PM +1100, Lev Lafayette wrote:
On Thu, November 6, 2014 4:35 pm, Michael Scott wrote:
I understand the definition of a recession. I simply said it hasn't necessarily yet been avoided. We may still yet fall into recession as a direct result of the GFC.
Sure, that's quite possible. With an export-based economy our wealth is very dependent on what happens overseas, even more so that other countries. A downturn in trade and a poor internal fiscal policy could result in such a problem.
We avoided recession immediately resulting from the GFC, but the US government is still "printing money" to keep their market afloat. Interest rates are being deliberately kept low so the government can afford its debt. It won't take too much vibration in the US for confidence to go through the floor again.
"Printing money" is, in part, the means to avoid a liquidity crisis. As money is meant to represent the total capital value of an economy, it must also include a form of depreciation that is reflected in the money supply. Australia dealt with the recession very well because it combined infrastructure investment with retail expentiture.
I think the worst policy in the U.S. was the dying days of the Bush administration which was simply a bail out, no strings attached. "Oh, you failed? Here have some money so you can do it again".
Personal opinions below: The US has stopped printing money (or quantitative easing as they put it), and that's the reason for the recent uptick in the greenback and the fall of the Australian dollar (the dramatic fall in the Aussie overnight is because of the Republican victory in the US mid-trm elections). Australia should start building up some industries that are not dependent on digging holes in the ground. Else, the next generation will have to live with much less than people do today. Sam