Australia’s Debt Bomb

Martin North interviews economist John Adams about structural imbalances in the Australian (and global) economy.

“I do think they will try to print their way out of this problem.”

Hat tip to Macrobusiness.


I do take issue with the comparison of CPI to Broad Money growth. Broad money growth should closely match nominal GDP growth (real GDP plus inflation) and not just inflation or its surrogate, CPI. The chart below compares nominal GDP in the USA to the money supply (MZM + time deposits is not quite the same as the official definition of Broad Money).

Nominal GDP and Money Supply

The Fed opened the spigots before the last two recessions, without much effect — in an attempt to inflate the economy out of a recession — and closed them too quickly in 2010, causing a hiccup in the recovery. Since then money supply growth has normalized at close to the increase in nominal GDP.