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Section: Economics

  • ECONOMICS

    Why debt forgiveness may be inevitable

    • David James
    • 25 July 2022
    3 Comments

    Monetary authorities are caught in an impossible situation. Inflation is rising: it is over 5 per cent in Australia and over 9 per cent in the United States. Inflation is often seen as a way out of excessive debt because it erodes the real value of money and therefore the real value of the debt. But what is increasingly being discussed are ways to cancel the debt.

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  • ECONOMICS

    Rising interest rates point to a larger problem

    • David James
    • 28 June 2022
    1 Comment

    The question that should be posed is how effective has the Reserve Bank been at ‘managing’ the economy and financial system? ‘Not very’, has to be the answer. Not that the RBA is alone. The same pattern has been seen across the developed world. Central banks have one weapon at their disposal, the cost of money (the interest rate), and there is not much evidence they have used this tool to make their systems sustainable. Mostly, they have made matters worse. 

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  • ECONOMICS

    Can financial fictions survive reality?

    • David James
    • 31 May 2022
    2 Comments

    As commodity prices and inflation soar in the ‘real’ world we may be witnessing a prelude to another 2008-style crisis triggered by the foreign exchange markets. The risks certainly look similar and can be described with a simple question. Can the fictions produced by out-of-control financial actors survive reality? 

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  • ECONOMICS

    Out-of-control house prices requires a different approach

    • David James
    • 11 May 2022
    4 Comments

    In purely economic terms, the upcoming Federal election is extremely unusual. The shut down of the Australian economy for almost two years because of health measures really has no precedent in our history. Only war can produce that type of shock. The Federal government’s financial response was as extreme as the state of emergency measures, including a sharp increase in Australian government debt. It remains to be seen, however, if the government gets much credit for injecting so much free money into the economy. It is unlikely.

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  • ECONOMICS

    Supply to survive

    • Julian Butler
    • 31 March 2022

    In 2020 as the Covid-19 pandemic raged globally, as Australia shut its borders and some states shut in their people, massive government income support was introduced. The government was a little slow coming to recognise the need for such measures. Once they had, they wanted the support rolled out as quickly as possible. Frydenberg, Scott Morrison and their colleagues recognised that a demand side boost was absolutely necessary to sustain economic activity. The government was uncomfortable, though, with this approach.  

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  • ECONOMICS

    How will Russia sanctions impact the global economy?

    • David James
    • 22 March 2022
    1 Comment

    Russia’s invasion of Ukraine has led to severe financial sanctions being imposed on the country that are likely to have lasting consequences. Problem is, they may not be the ones the sanctioners are expecting. They may even come to regret what they have done.

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  • ECONOMICS

    What will rising interest rates mean for wealth inequality?

    • David James
    • 01 March 2022
    3 Comments

    Australia’s Reserve Bank mainly concentrates on keeping inflation within an acceptable range and maintaining a high level of employment. Social equity has never been considered to be part of its mandate. It should be. Interest rates have been the biggest cause of economic and social division in Australia, not just between rich and poor, but also between older and younger generations. 

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  • ECONOMICS

    The rise of the machines

    • David James
    • 31 January 2022
    5 Comments

    There is a great deal of commentary about the growing importance of artificial intelligence, or AI, especially in business circles. To some extent this is a self-fulfilling prophecy — if people think something will have a seminal effect then it probably will. But if the supposed commercial benefits are significant, the dangers are potentially enormous.

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  • ECONOMICS

    Best of 2021: Homelessness is caused not by poverty but by wealth

    • John Falzon
    • 04 January 2022

    When you put rising housing costs alongside stagnating wages, an alarming trend in normalising insecure work, persistent unemployment and underemployment, and statutory incomes that are going backwards in real terms, there’s good reason to be deeply worried about an increase in homelessness.

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  • ECONOMICS

    Best of 2021: Why corporatism, not capitalism, is the root of social harm

    • David James
    • 04 January 2022

    There really is no such thing as ‘capitalism’ — or rather there are so many capitalisms that the word is altogether too imprecise to be useful. A much better term to identify the problems, even evils, of modern developed economies is ‘corporatism’. This can be precisely identified and its transgressions and general harm are getting worse.

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  • ECONOMICS

    Why Australia’s rural sector is ripe for financial reform

    • David James
    • 06 December 2021
    1 Comment

    If Australia does draw back from globalisation — as opposed to trade, which will continue — then there should be more focus on our primary sector and how it could be better financed. Australia’s long history as a primary producer constitutes what economists call a ‘comparative advantage’: an economic area in which a country does best while giving up the least.

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  • ECONOMICS

    Climate change trillions

    • David James
    • 08 November 2021
    1 Comment

    The Glasgow United Nations Climate Change Conference has been advertised as an effort to focus on sustainable environmental solutions. What got much less attention, if any, is that it is probably at least as much about having a sustainable financial system. Many noted that China, did not send its leader: Xi Jinping, president of the world’s greatest CO2 emitter. There was also another significant absence: the financiers who are hoping to profit from the trillions allocated into climate change projects.

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