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  • PD Jonson

Australia's financial problems - a bold solution

Updated: May 1, 2020

The Morrison government is rightly concerned about the cost of saving the Australian economy. When asked if he would be going to save companies that were in trouble, the Prime minister seemed not especially interested. He is no doubt totting up the cost of the many promises he has, rightly in my view, already made to Australian citizens. I also applaud his bold measures to 'flatten the curve of infection', closing our borders to foreigners, making returning Aussies 'self-isolate', helping people who lose jobs, or are simply unable to cope with current uncertainties.

Here is another bold idea. It is an idea that may solve the government's fiscal problem and would leave the government's balance sheet clear of debt in five or ten years.

The government/Reserve Bank can in practice print and spend money at will. If the money printing is by or for government, various rules mean the government will quickly build a pile of debt. The Reserve Bank of course actually prints the money and I would hope excess money printing would create debt for the central bank or the government. Here is my idea, so far not one I have heard even from Mr Trump.

The Australian government/Reserve Bank should print as much money as is needed to save icons of Australian corporate life. In return for a substantial loan or outright purchase they should receive shares in the troubled companies. These they carefully file, perhaps in Peter Costello's Future Fund and fully accounted for. If companies supported by government cannot pay a dividend, then extra shares will need to be handed to the government at 'normal' rates, equal in each year to the average of the past five years.

Whenever companies supported in the way outlined here become fully viable no doubt their share prices will in most cases be far higher than they were when they were being rescued. The government, or the Future Fund if that is the chosen vehicle, will be able to sell their shares on a rising market. Short of a global end to capitalism, the government will more than totally repayed and will almost certainly make enough profit to also repay the debt built in the current wave of deficit financing.

I am not a greedy man. But I expect to be rewarded in some substantial way for devising this plan, and I would expect to be included as an advisor to government as the plan is devised in detail and also to have a role on the board of whatever vehicle is chosen to operate the plan.

Courtesy Johanas Leak

Other interesting sources.

Please see the Weekend Australian, especially articles by Blainey, Kelly and Sheridan.

Also the AFR, whose large red heading says 'Its War'. (No link I can find to pass on.)

Plenty of other interesting articles not to be missed.

Adam Creighton has a nice full page article in the Thursday Oz featuring the 80 year old Professor Bob Gregory of ANU, titled 'A shock to the system' or in the digital version 'buckle up for hell rise'.

Bob Gregory says: 'This recession will be - the first one ever triggered by coffee shops, restaurants and airlines will be very deep and long' - he tells the Australian. 'We have to be humble given the enormous uncertainty, but we're looking at a jobless rate of 8 Percent rather than 6'.

Sporting life

Richmond decimated Caaarlton! with 5 goals to none in the first 15 minutes of the first AFL game for points of the season. The Tigers were slightly outscored by the Blues for the rest of the game as the final result had the Tiges only 4 goals ahead.

Jack Martin brilliant with 4 goals in the third quarter and third generation star Silvani chimed in with three goals. The Tigers had all but two of their grand final team in place while the Blues received some bad injuries, including the only ruckman in the team, Matthew Kreuzer, who wrecked his ankle in a ruck duel and may not play again this year.

Collingwood thrashed the Bullies. ...

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