People have been led to believe, wrongly, that their personal financial circumstances will improve when the federal budget is in surplus but the opposite is true. A federal surplus occurs when the government taxes more than it spends, (and what the hell point is that?). The net result is billions of dollars being sucked out of the economy.
Treating federal budgets like that of a household has starved economies of precious resources and has facilitated unprecedented levels of private and household debt. Editor-in-chief Claire Connelly explores the consequence of this logical fallacy in an excerpt of her upcoming book, How The World Really Doesn’t Work.
Economist Dr Steven Hail on how Japan has managed to avoid another financial crisis without creating a major private debt problem, while America and Australia… have not.