Tackling inequality has the potential to drive the kind of economic growth Australia has been looking for

July 9, 2018

In the decade or so since the global banking and financial crisis plunged the world into the Great Recession, policy makers around the world have been adopting a range of policies that were previously considered ‘unconventional’ as they has sought to promote economic growth, lower unemployment and reflate economic conditions.

Think about some of those policies.

Negative interest rates – fancy being paid to borrow money!

Quantitative easing or QE, which has been colloquially referred to as central banks printing money and dropping it into the streets out of a helicopter.

Government debt levels exploded to levels only seen when the world was at war as revenue collapsed and in some instances, fiscal stimulus measures were implemented. To this day, governments are struggling to get their budgets anywhere near balance, let alone in a position to reduce debt.

It is clear, or at least it should be, that these policies cannot be in place forever.

At some point, interest rates will normalise, central banks will have to mop up the excess cash from the economy and budgets will need to be repaired.

This begs the vital questions of how to pull off these tricky maneuvers without disrupting financial markets and the economy?

I think I have an answer.

Stephen Koukoulas in Business Insider