My letter as per below was published in the AFR on the 30th June
In “When the past starts catching up with the future” (AFR, June 26) Maximilian Walsh contends the US economy reached a significant milestone in May when the number of employed Americans returned to the peak recorded before the advent of the GFC. But therein is also a salutary reminder it has taken six years to replace those jobs previously lost just after the GFC.
Australia managed to largely avoid any diminution in employment, which Walsh attributed to government stimulus and our favourable commodity trade with Asia. But what he did not mention is our past higher level of saving compared to the US whose successive governments ran up huge deficits. Having exhausted all reserves, their only resort was the use of quantitative easing.
Australia’s national saving has been much higher, due to the Howard government surpluses, corporate savings which funded the increased investments in mining and from superannuation, to underpin stimulatory measures and investment.
A national savings flow is essential to sustain investment and to build a reservoir to employ against any unexpected external shocks.
Australia managed to largely avoid any diminution in employment, which Walsh attributed to government stimulus and our favourable commodity trade with Asia. But what he did not mention is our past higher level of saving compared to the US whose successive governments ran up huge deficits. Having exhausted all reserves, their only resort was the use of quantitative easing.
Australia’s national saving has been much higher, due to the Howard government surpluses, corporate savings which funded the increased investments in mining and from superannuation, to underpin stimulatory measures and investment.
A national savings flow is essential to sustain investment and to build a reservoir to employ against any unexpected external shocks.
2 comments:
One major problem the US made for itself was taking far too much advantage of it's reserve currency status. It seems nobody ever told them that wasn't one of the immutable rules of nature on this planet.
Good point Susan.
b/wishes
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