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Is ‘Fair Go’ Dead

When the soldiers returned from World War 2 they wanted to wash away the bitter taste of war, forget about where they had been and build a new World Order based on democratic values and a better society for themselves and their children. That was what they had fought for and the egalitarian approach and the concept of the ‘Fair Go’ became part of our vocabulary. We witnessed the migration into a post war Australia and the building of the Nation through schemes such as the Snowy River. The country had debt, but through hard work and endeavour everyone could afford to buy a home and put a roof over their head. War production turned to domestic/ building production and so forth.

We now contrast then with now. This graph came across my desk contrasting the Government debt of the USA to their GDP. I couldn’t find an equivalent graph for Australia, but I figured the numbers and the comparison would be very similar.

We can see from the graph that the debt levels now are equivalent to those of World War 2. As US government debt has been increasing, so too has the balance sheet of the US Federal Reserve. COVID19 accounted for a US$4 trillion rise in the Federal Reserve balance sheet. This sits at about 20% of US GDP, and matches the rise in US government debt. This means that the US can afford to fund these low bond yields and converged cash rates around the world to zero with interest rates marginally above that. The question is can we and what is the social effect of this?

For working people and for younger people saving for a house to establish themselves, these policies are detrimental. These negative interest rates degrade the purchasing power of people’s salaries. Their salaries have no way of keeping up with the price of housing, the price of commodities ,construction and share prices which are fuelled by ongoing cheap money for those who have the capacity to borrow and with Government policies supportive of the status quo. Add on the supply chain disruptions that are increasingly looking longer term and we have all the ingredients to forge a society of ‘haves’ and ‘have nots’, disaffected and the unaffected, winners and losers. A society, where the rules of the game reward reckless speculation, where you can own a $10 million private residence but still be entitled to an age pension and where only those who can rely upon the Bank of Mum and Dad can expect to become property owners and where renters become serfs.

The question we should be asking is whether this is the society that we wish to build going forward. Or is the concept of a ‘Fair Go’ a thing of the past?

Something to get you thinking about this week.


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