Continuous and larger budget deficits are required

There is a popular segment (that is, I assume it to be popular) on the national ABC television news in Australia each night. the Finance Report presents one or more graphs which motivate the presenters so-called insights into what is going on in the Australian economy. I rarely see it and when I do I tend to ignore it because the presenter is infuriating to say the least. But last night, he presented to charts which were of interest although the conclusions he drew left the “elephant” that was standing in the room unnoticed. The conclusions he drew were facile and he ignored the most obvious conclusion – that the Australian economy could only maintain growth into the future if the budget deficit was larger and on-going. That would have been a bridge too far for him to cross but that is what his data and all the other related data that he didn’t present tells us. Us – in this context – being those who understand how the macroeconomy works. So today’s blog is a reprise of the graphs (or my versions of them) with the essential commentary that might have been presented last evening and would have helped the viewers appreciate the current economic situation more fully and understand why deficits are essential in these situations.

Read more
Back To Top