More stimulating discussion

“By contrast, new converts to Keynesianism, such as Rudd and Barack Obama, believe in a positive multiplier. They believe extra government spending, like handouts to those most likely to spend it, creates new income on top of the governmental spend, as the unemployed are put to work.

This process is brilliantly satirised by Norman Lindsay’s magic pudding, which freely recreates itself the more that is eaten. The magic pudding perfectly captures the unmet promises of Australian politicians.”

UNSW Professor of Finance Peter Swan in the SMH.

I probably tend to think this policy is a bad idea. But I want to have my cake and eat it too. How’s that for a mixed metaphor.

I would like the government to give me $950. It’s only fair after they taxed me to give all that money to other people.

But I think it’s a bad idea for them to give other people money. I suspect a large amount will be whacked into paying off debt or savings accounts. Which is a positive cultural turn.

Treasury secretary Ken Henry says the stimulus will work – and interest rates will still need to be lowered. At least I think that’s what I heard on the Today Show this morning. If we weren’t planning to become students again at some point in the future now would be a great time to buy. Although I think there’s more hurt for home prices to come.