Based on this - Low interest rates = expanding economy.
Why don't we just go to zero percent, wouldn't this = bigger level of expansion in the economy.
I think other countries that have done this have failed to stimulate their economies (look to the USA where they have had close to 0 rates for years)
In answer, that is only one factor in the economy.
To summarise all of the above the situation is this:
A robust strong economy has multiple earners. Mining, Agriculture, Retail, Tourism, Education, Manufacturing, etc...of item and goods that be traded across the globe.
Building Houses and selling Goods Made Overseas are not earners but spenders of the economies wealth.
Australia has a lop sided economy. We have mining and agriculture but retail and manufacturing we sell little os.
The strength of mining is such the $ is high and destroying the other earners. Education and Tourisim is struggling. Even food is coming from OS is cheaper than grow up the road. WHY?
The issue is when mining stops, due to any number of reasons beyond our vision and or control, what do we have to fall back on?
So what are we doing about it?
We are making our energy more expensive through bureaucracy, carbon pricing, etc.. so we cannot complete.
Yet, we sell our coal cheap to China who burn it, defeating the purpose of carbon tax and providing them with more cheap energy.
http://www.abc.net.au/environment/articles/2012/03/19/3455327.htm
We add unrealistic and unaffordable rules to employment, to wages, to business which our Overseas competitors don't have. i.e. Unfair dismissal extremes, workers comp cover for staff travelling to work, etc..
http://www.news.com.au/business/wor...mployers-offside/story-e6frfm9r-1226489795262
We put taxes on our own companies that the Overseas companies don't pay. I.e. Google, Ebay, Ikea, etc...
http://www.smh.com.au/business/worl...it-we-hardly-pay-anything-20121113-298zf.html
We don't apply GST to internet sales under $1000 from goods OS but we do to locals importing goods from OS who emply locals, pay rent, pay taxes, etc... I,e, Ebay, Amazon, any one.
We correctly apply high levels of safety and warranty to products made here and those imported here but not to goods bought on the internet. I,e, Chinese toys painted with lead. Non compliance labelling and materials.
lead.
http://www.productsafety.gov.au/content/index.phtml/itemId/984581
We allow our land and wealth to be bought by Companies that are fronts for other Countries Sovereign Wealth funds but we are not allowed to buy into their lands wealth.
http://www.radioaustralia.net.au/in...australian-coal-mine-to-china-touches-a-nerve
We rightly apply rules and safeguards to food production here but accept food from OS where rules are non existents.
http://newsweekly.com.au/article.php?id=3626
We allow the importation of subsided food products thereby destroying our own agriculture base. When gone, prices will go up.
http://www.abc.net.au/rural/news/content/201202/s3441240.htm
All of the above are real issues, that is why if our economy dies, the level of rates is irrelevant.
Regards Peter 14.7
PS Coupled to the fact we have small population, large land and sea mass to protect where our neighbours have the reverse, high population and much less resources per capita.
So when we are bankrupt, with the USA looking after it self, how do you tell China not to fish in our waters when they have more warships and economic power to bring to bear?