Australia’s Economic CPR

Well the money has finally gone out. My previous stint of unemployment and the lack of a tax return being filled out means I got no money. Which is a shame because I would like to have really stimulated the economy with $900. But I get nothing from our wonderful Prime Minister. Do I care? Not really. It’s a silly plan with good intentions but doomed to fail.

So for everyone not in the know: The Australian Prime Minister (Kevin Rudd) decided that each citizen would be given a certain amount of money, up to $900, based on how much they earned in the last financial year. The idea was, of course, to stimulate the economy as I talked about in my previous article. Now I certainly like this idea more than simply paying the debts of big business – your average man and woman haven’t been firing scores of workers the way they wipe spaghetti sauce from their chin. But with or without their moral high-ground, I’m not satisfied with the measures our government is taking and not so sure they’re actually deserving of the money.

Alright so the money, colloquially known as RuddBux, has gone out. Now the idea is to get people spending their money. Citizens of Australia, the government is paying for you to go out and have a nice dinner, buy some new DVDs and maybe a couple of books. Feel free to use the tax money for a new suit or maybe a full massage. That $900 is a gift to you and the government wants you to spend it!

So the idea is that people start spending again, money circulates like the blood of the economic system and people maybe even fall into that familiar habit of not saving their money and things are on the way back to getting better. It’s an attempt to stop people saving all their money and perpetuating the financial issues faced by the world. But there’s one big kink in the plan.

Everyone who gets the money is going to be someone with a bunch of bills to pay and a bunch of debts to pay off. Everyone being in huge debt is kind of the reason we are where we are. Everyone has spent more money than actually exists and so people can’t pay the companies and the companies can’t pay their workers so they fire them which means those people can’t pay their debts or for the services they live on which means those service providers can’t pay their debts. So no one can pay any debts and so they’re certainly not going to go and be a good little consumer and so business continue to not make any money and have to downsize again. The cycle repeats and the banks are all shouting “Well somebody better come up with the money!”