Fiscal Policy & Monetary Policy
Fiscal policy view:
The primary goal of fiscal policy is to support full employment. Where there is idle capacity such as Australians seeking work, Government spending should be directed toward utilizing and upgrading that idle capacity, in an efficient manner where practical.
A secondary goal of fiscal policy is to seek both a private and public surplus in the long term, which will inevitably include moving from a trade deficit to a trade surplus.
Increased Government spending during the troughs of the business cycle can either come from savings, by borrowing or by creating debt-free currency*.
*The preferred mechanism for creating debt-free money is not crystal clear yet. One action towards some clarity on this was an open letter to the RBA on full reserve banking. A working solution for Australia still needs to be developed.
Monetary policy view:
Monetary policy is determined by The Reserve Bank of Australia (RBA). The RBA makes decisions independently of the Australian Government, and is one of the reasons Australia’s economy fares better than others.
If one wanted lenders to follow the RBA cash rate then one would restrict the lenders ability to source funds from overseas. Such a method would be preferred over making pointless press conferences about how naughty the banks are each time they delay following a change in the cash rate (current politics).
A difference of opinion exists with the RBA on monetary policy to do with house price inflation.
- Ensure Australian state and federal governments and all their subsidiary departments have open, transparent and consistent accounting practices. As a minimum this means being on par with the best financial reporting practices in the business community and releasing accurate information annually that others can rely on.
Further develop the credit accelerator as discussed by Steve Keen for the Australian economy so that it is capable of making a useful contribution to decision making.
Australian politicians will:
- No longer receive financial benefits after they have stopped representing their electorate (i.e. they have been voted out).
- Be entitled to the same healthcare benefits as the general public.
- Have their in-office salary indexed with the average Australian wage.
The primary benefit of the above change is simply to begin the process of restoring some trust between the Australian public and the politicians who are supposed to be representing our interests.