Posted on by Colin Twiggs

Industry policy cannot offset the Australian dollar | MacroBusiness

Houses & Holes at Macrobusiness writes:

Adding a couple of $100 million to industry innovation support is just not going to cut it. Our authorities should do exactly what the rest of the world is doing. Go to the G20 and join the chorus of indignity directed at currency manipulation, come home and drive down using every available tool. That is essentially what the recommendations of the Manufacturing Taskforce aimed at doing. If you think nothing can be done, ask yourself, why are we the only ones not doing it?

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4 Replies to “Industry policy cannot offset the Australian dollar | MacroBusiness”

  1. I would assume one of the reasons Australia isn’t printing money is because the result is to invite inflation in the future with all of the extra dollars floating around. I have often wondered what the impact would be if Australia ‘printed’ its own sovereign wealth fund ($20 Billion as an example) and invested solely overseas and used the income generated to either invest more overseas or use as consolidated tax revenue.

    Colin, given that the money is kept overseas and only the yield is repatriated, do you think this would be a way to print money without having an impact on domestic inflation in Australia and would it keep the currency the same? One advantage might be having investment income coming from overseas to increase government revenue?

    PS: I really appreciate the charts you put up on your website and they are always insightful and very educational.

    1. Thanks Adam,
      Printing money would cause inflation and weaken the dollar, making Australian exporters more competitive. Using the printed dollars to create a sovereign wealth fund is more constructive than using the money for welfare payments. An alternative would be to buy gold. But increasing the number of dollars will decrease their purchasing power — there is no way to escape that.

  2. Nobody in the government has sufficient education to understand that the RBA has the power to sell the AUD down to whatever level is necessary to make our economy competitive.
    The prime directive of all ALP governments is to remove manufacturing and agriculture from our economic landscape. As Margaret Whitlam said ” Australia does not need farmers, it can import all its food”.

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