Back in February, I came across a Youtube channel called Nugget’s News. Mostly they are about cryptocurrency. I know as little as it is possible to know about cryptocurrency while being aware of its existence. But every now and then, Nugget’s News does a kind of economic review. In January they did one forecasting economic doom. I found the data they shared very interesting and logically presented and so I keep an eye on them.
Today I found a June update. The rhetoric was less extreme but it still wasn’t positive. Australians, as a population, are in huge amounts of debt. House prices, compared to static wages, have gone up astronomically. Mortgage stress is an increasing problem and therefore, it’s unsurprising that retail spending is on the go-slow. Worse, for people in debt, house prices are sinking and, while there is some hope that government changes to policy will boost the market again, Nugget’s News seems to think it’s only likely to be a temporary relief.
According to Nugget’s News, the main reason Australia’s GDP is as healthy as it is depends almost solely on massively inflated iron ore prices. But now China (our biggest customer) is questioning the reason for those high prices and other countries whose soils secrete iron ore are looking to get in on the booming market. No doubt, with increased supply, costs will go down and Australia’s single biggest economic strength will falter.
The message, both locally (from the RBA) and internationally (from the Bank for International Settlements), is that monetary policy is no longer enough to perk up drooping economies. Even Quantitative Easing seems to be sagging as a potential solution.
So, economists ask, what are the alternatives? It amazes me that nobody seems to know. I mean, I’m not saying I know, but I haven’t studied economics or the history of it. Surely somewhere in history there is an answer? I have listened to multiple podcasts and watched a couple of Youtube videos on this topic. I even tried to directly ask an economist (who was publishing one of the videos) what he thought the solution was. I received silence as my reply. Beyond fiscal/monetary policy there is a quiet space bigger than Jupiter out there, as far as I can work out. Lots of people know something is wrong. But nobody seems to know who the First-Aid Officer is. Tsk tsk tsk. OH&S no no.
I assume this blank-mindedness must have something to do with how theoretical finance has become. I don’t know much but I don’t think anybody has ever found a wad of cryptocurrency behind the couch cushions. Maybe economics is another area where the rate of technological advancement has far exceeded the ability of human comprehension to guess at its consequences. Perhaps when John Maynard Keynes wrote his famous books, he didn’t forecast this kind of high-level shuffling of imaginary valuables.
I am a new and ignorant dabbler in this field so if anybody has better explanations, I’d love to hear them.