From what little I know about Australian economy, I believe that there were more restrictions on leverage/gearing regarding housing than the US and Europe. Not to say there hasn't been housing inflation.
If that was indeed the case then, while not causative, could be one factor moderating the crisis in Australia.
If the same leverage restrictions existed for commercial investing (e.g. office complexes) that could also assist in moderating debt deflation cycles.
Yes, I'm US also, but I have read Bill Mitchell for a while. There is something about the Australian gaolers/criminals somehow moderating to good critics over time (a long story, not mine to write). In the US we just love being criminals - I think we import them.
Australia is a mixture of convict States and free settler only States, with no obvious difference in the subsequent history of the two, as even convict States ended up with lots of free settlers.
The authoritarian streak in Australian culture probably does owe something to the convict/gaoler heritage, however.
Australian policing does not vary by locality nearly as much as US policing does. Also, having no former slave population (so no large group selected for higher physical robustness and lower executive function) helps.
While convicts may have had some selection on that basis, there was no systematic under-policing, as has a long history in the US. Also, the opportunities in the new colonies were so much greater than back in England, that folk adopted very different life strategies.
It is also true that a lot of US mortgages would simply not be legal in Australia, which likely had some moderating effect.
LW; Americans are supposed to be self policing and ARE to a great extent. Even communities that suffer crime at high rates were prior to the 20th century destruction of the family.
LW we have already tried flooding ourselves with police it only works until... (long story having to do with politics above all but also Slash and burn Civil Rights as long real estate game)...it only worked this go round from 90s until 2014~ the truth in urban areas being our elections look more like India’s (communal violence) than a Swiss Canton.
But in Appalachia the ultimate poor white stereotypes have 1/3 the National Crime rate.
Further half the murders in America are from 2% of the counties.
That’s violent crime, for white collar crime...and real estate..
You can’t understand America now if you don’t understand The Revolt of The Elites in the 60s.
The Elites are trying hard indirectly (as they are cowards) to solve the tragedy of the commons by extirpating the commons via social destruction (the primary goal of creative destruction) via economics above all - economics in America is War - drugs, family breakdown, riots. Crime for instance is cyclically unleashed or cracked down on as electoral politics demands (and fortunes made in real estate see Pritzkers). There’s also open borders de facto under Democrats , not that the Republicans do more than talk. Automation and offshoring were also attractive until the last 3 years.
*AI is Satan because it threatens the key political support of the next to top 14% whom the 1% rely on.
*AI LLMs are actually Artificial Intuition guessers, there’s at least one English Major having a great new career as AI prompt Engineer. She’s making a living doing what kids on Reddit do for laughs (me too, I admit it).
LW from my American standpoint what do you think of the idea of energy money?
That is to say the Kilowatt dollar?
This would restore the intrinsic value of money, bend the energy curve and allow for the overwhelming policy priority of MORE. It’s delusional to think that MORE overwhelming all will go away absent a bout of creative destruction on the level of 1200 BC but with nukes (we’re at 1201 now).
Henry Ford had the idea some decades ago. Energy money is of course a logical destination of the Petrodollar, and probably preferable to the current path likely outcomes .... see again 1200 BC with nukes.
Commodity monies can work, if the commodity is very broadly traded. Thus, once the Fed was created, the gold standard was doomed, as a small number of Central Banks dominated gold holdings. If they screwed up, the whole system could be destabilised, as happened in 1929-32 as a result of the Bank of France hoarding gold, driving up money’s output value, creating a disastrous deflationary spiral.
Hmm. Is another explanation of our long 'recession-free' run simply that we ran a massive immigration program? If you import 1-2% population per year, then you need a pretty bad business cycle contraction to actually have negative GDP. If you look at Australia in per-capita GDP, you'll see we've had several recessions this past 2 decades.
The immigration helps. But it does not create the flatness of the business cycle. And we have been a high immigration country for most of our history. Certainly since 1945: that did not stop us tending to have as bad or worse recessions than other folk in the 1945-1991 period.
Prior to John Howard immigration was 70-100K/yr. Then from the 1996 it jumped to 250K (1% of population) and stayed there till Albanese where it is now 400K (1.6% of population). This is huge. In per capita terms we've had 4 or so recessions in the last 3 decades. The other huge factor for us is the floating exchange rate where the AUD/USD has ranged from 0.63 to 1.10. Taken together these two factors account for a much larger share or our 'measured prosperity' in avoiding recession than is commonly thought. IMHO.... :)
I agree that the floating exchange rate acts as a shock-absorber and that has most certainly helped. But the exchange rate was floated in 1983. We still managed to have the 1991 recession.
The “but if you change the measure we had recessions” argument actually supports my point about a much flatter business cycle.
Also, rates of migration were higher in the 1950s and 1960s.
I do think it’s important to look at Australia’s exceptional situation. But I may be biased.
From what little I know about Australian economy, I believe that there were more restrictions on leverage/gearing regarding housing than the US and Europe. Not to say there hasn't been housing inflation.
If that was indeed the case then, while not causative, could be one factor moderating the crisis in Australia.
If the same leverage restrictions existed for commercial investing (e.g. office complexes) that could also assist in moderating debt deflation cycles.
Australia may also benefit from its heritage of being founded by gaolers and criminals hence having a more natural resistance than Americans.
I’m American of course.
Yes, I'm US also, but I have read Bill Mitchell for a while. There is something about the Australian gaolers/criminals somehow moderating to good critics over time (a long story, not mine to write). In the US we just love being criminals - I think we import them.
Australia is a mixture of convict States and free settler only States, with no obvious difference in the subsequent history of the two, as even convict States ended up with lots of free settlers.
The authoritarian streak in Australian culture probably does owe something to the convict/gaoler heritage, however.
Australian policing does not vary by locality nearly as much as US policing does. Also, having no former slave population (so no large group selected for higher physical robustness and lower executive function) helps.
While convicts may have had some selection on that basis, there was no systematic under-policing, as has a long history in the US. Also, the opportunities in the new colonies were so much greater than back in England, that folk adopted very different life strategies.
It is also true that a lot of US mortgages would simply not be legal in Australia, which likely had some moderating effect.
LW; Americans are supposed to be self policing and ARE to a great extent. Even communities that suffer crime at high rates were prior to the 20th century destruction of the family.
LW we have already tried flooding ourselves with police it only works until... (long story having to do with politics above all but also Slash and burn Civil Rights as long real estate game)...it only worked this go round from 90s until 2014~ the truth in urban areas being our elections look more like India’s (communal violence) than a Swiss Canton.
But in Appalachia the ultimate poor white stereotypes have 1/3 the National Crime rate.
Further half the murders in America are from 2% of the counties.
That’s violent crime, for white collar crime...and real estate..
...that’s not a post
....or a book
.... that’s an entire library!
Once Creative Destruction was called Arson for the Insurance money, but we call it economics.
My rejection being American and Categorical.
You can’t understand America now if you don’t understand The Revolt of The Elites in the 60s.
The Elites are trying hard indirectly (as they are cowards) to solve the tragedy of the commons by extirpating the commons via social destruction (the primary goal of creative destruction) via economics above all - economics in America is War - drugs, family breakdown, riots. Crime for instance is cyclically unleashed or cracked down on as electoral politics demands (and fortunes made in real estate see Pritzkers). There’s also open borders de facto under Democrats , not that the Republicans do more than talk. Automation and offshoring were also attractive until the last 3 years.
*AI is Satan because it threatens the key political support of the next to top 14% whom the 1% rely on.
*AI LLMs are actually Artificial Intuition guessers, there’s at least one English Major having a great new career as AI prompt Engineer. She’s making a living doing what kids on Reddit do for laughs (me too, I admit it).
https://www.businessinsider.com/how-to-write-better-ai-chatgpt-prompts-according-prompt-engineer-2023-3
LW from my American standpoint what do you think of the idea of energy money?
That is to say the Kilowatt dollar?
This would restore the intrinsic value of money, bend the energy curve and allow for the overwhelming policy priority of MORE. It’s delusional to think that MORE overwhelming all will go away absent a bout of creative destruction on the level of 1200 BC but with nukes (we’re at 1201 now).
Henry Ford had the idea some decades ago. Energy money is of course a logical destination of the Petrodollar, and probably preferable to the current path likely outcomes .... see again 1200 BC with nukes.
Commodity monies can work, if the commodity is very broadly traded. Thus, once the Fed was created, the gold standard was doomed, as a small number of Central Banks dominated gold holdings. If they screwed up, the whole system could be destabilised, as happened in 1929-32 as a result of the Bank of France hoarding gold, driving up money’s output value, creating a disastrous deflationary spiral.
Energy is broadly traded and universally used.
Electricity is now as broadly traded as water or food - and as almost as universally used.
And bbl (barrels of oil) and MCF/CCF natural gas to BTU and so on...
Here’s conversion calculators.
https://www.rapidtables.com/convert/energy/kWh_to_BTU.html
Not to mention unleashed animal spirits pointed in a decent and productive direction for a change.
All the BTC miners can produce instead of consume or steal electricity.
Hmm. Is another explanation of our long 'recession-free' run simply that we ran a massive immigration program? If you import 1-2% population per year, then you need a pretty bad business cycle contraction to actually have negative GDP. If you look at Australia in per-capita GDP, you'll see we've had several recessions this past 2 decades.
The immigration helps. But it does not create the flatness of the business cycle. And we have been a high immigration country for most of our history. Certainly since 1945: that did not stop us tending to have as bad or worse recessions than other folk in the 1945-1991 period.
Prior to John Howard immigration was 70-100K/yr. Then from the 1996 it jumped to 250K (1% of population) and stayed there till Albanese where it is now 400K (1.6% of population). This is huge. In per capita terms we've had 4 or so recessions in the last 3 decades. The other huge factor for us is the floating exchange rate where the AUD/USD has ranged from 0.63 to 1.10. Taken together these two factors account for a much larger share or our 'measured prosperity' in avoiding recession than is commonly thought. IMHO.... :)
I agree that the floating exchange rate acts as a shock-absorber and that has most certainly helped. But the exchange rate was floated in 1983. We still managed to have the 1991 recession.
The “but if you change the measure we had recessions” argument actually supports my point about a much flatter business cycle.
Also, rates of migration were higher in the 1950s and 1960s.
https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1617/Quick_Guides/MigrationStatistics#_Table_3:_Net
Actually, the notion has quite a history.
https://en.wikipedia.org/wiki/Creative_destruction
Nicely put.
Its Malice Oblige.
I am so stealing that …