Can Australia Afford the Stimulus Packages?

0
4
can australia afford the stimulus packages?

Hello dear readers

Firstly, I would like to say a big thank you and hello to all of my new readers. I cannot believe the growth I am seeing and thank you to all of you who have started to check out my new YouTube channel.

So, can Australia afford the $214 billion in stimulus money is being spent on the economy? Oh my, yes, not only can we afford it, but we can go quite a lot higher if needed. As always, we are seeing a lot of sensationalism and fear mongering in the media: “debt forever,” “how will Australia survive?” This is just not the case. What you need to understand is that Australia has an incredibly robust economy, our Gross Domestic Product (GDP) is $1.9 trillion per annum (this is how much our country makes per year).

Also, if you look at our country’s debt, we are at around 18% of our GDP. This really is not a lot. To give you some context, our big sister country, America, has its debt at 100% of its GDP and Japan, a former economic powerhouse, is at 150% of its GDP. Australia is actually sitting at historically low debt. Do you remember all of those surpluses we had that the government was talking about? They used the extra money to pay down our global debt. To give you some greater context, if our government spent an additional $736 billion to bolster the economy and pay more money to those Australians who cannot work, we would still only be at debt levels equivalent to 50% of our GDP.

Now, let’s get a little clarity around what this debt looks like. This is not like the type of debt you and I see; this is not a business loan at 15% or a commercial loan at 9%. This type of money is international funding. The government would be securing this money for around 1% on 40-year terms. So, in reality, it is not really affecting the country all that much (this is based on our current AAA rating as a country, one of only a handful that hold this rating). Here is an example: if we borrowed all of the $214 billion, Australia would pay only $2.14 billion in interest per year on an interest-only term. If we then chose to pay back $50 billion each year for four-and-a-bit years, we would have this debt knocked out in no time. The economy can handle that without losing any sleep at all.

Now, here is a fun one for you ?. Australia’s GDP growth rate has been, on average, 2.5% per annum over the last five years. That is growth of $47.5 billion each year. So, let me riddle you this: if our government borrows $214 billion at a 1% interest rate and we pay back interest only over five years, the payout figure at the end of the five years is $224.7 billion. I propose we just use the growth rate increase to pay off the interest and the loan (i.e. $47.5 billion each year). This would have our debt paid down in 4.7 years and not even felt by the economy because it was money we never had! … Okay, I will accept my medal now ?

Yes, of course I am being a little facetious, but you wouldn’t respect me otherwise now, would you? Haha.

(Facetious – “treating serious issues with deliberately inappropriate humour; flippant.” Literally my favourite word at the moment)

Also, look at how well our government has been handling COVID-19 and administering bread to the masses. Not once have they shied away from making sure that everyone has been taken care of. Sure, some people may be slipping through the cracks, but could you imagine being in Venezuela right now? Things were bad before this; how well do you think their government is handling its people right now? Or Brazil, where they are not even acknowledging it?

As always, friends, Don’t Panic! Things are never as bad as they seem (granted, sometimes they are worse. Make sure you don’t forget to shop for the week, before the only thing you have left in the house is a can of tuna and no can opener!!).

I love you all. Stay safe!

Shaun Fox

You can catch me on my website and socials below

www.shaunfox.net / YouTube / Instagram / Facebook / Twitter

Previous articleCream of The Crate: Album Review # 148 – Moody Blues: In Search Of The Lost Chord
Next articleMums with an intellectual disability already risk family violence and losing their kids. Coronavirus could make things worse
Shaun Fox is an entrepreneurial influencer and mentor a business coach and advisor. He is best characterised by his perpetually optimistic temperament in his professional pursuits, surpassed only by his charismatic and enthusiastic engagement with others in all his relationships. Shaun’s flair is not just limited to his wardrobe. Shaun’s approach to business is simple: irrespective of the product, anything can be achieved as long as you think creatively, assess the entire value chain and put in the hours. He has successfully applied this philosophy across a number of industries, including financial services, entertainment, hospitality, accommodation, tech, biotech, and mining. Shaun has been involved in the creation and management of financial companies for several years and delivers a simplified approach to the education of financial concepts and investment strategies. His vision is to create an entry-level platform that offers an easy path to investment by creating personalised education and an investment program that anyone can use. Shaun has always believed that the best way to create a successful enterprise is to include the entire value chain of people in the process and share the rewards of that success. “The only person’s behaviour we can control is our own and the only thing we can truly give another person is information.” – William Glasser an entrepreneurial influencer and mentor a business coach and advisor. He is best characterised by his perpetually optimistic temperament in his professional pursuits, surpassed only by his charismatic and enthusiastic engagement with others in all his relationships. Shaun’s flair is not just limited to his wardrobe. Shaun’s approach to business is simple: irrespective of the product, anything can be achieved as long as you think creatively, assess the entire value chain and put in the hours. He has successfully applied this philosophy across a number of industries, including financial services, entertainment, hospitality, accommodation, tech, biotech, and mining. Shaun has been involved in the creation and management of financial companies for several years and delivers a simplified approach to the education of financial concepts and investment strategies. His vision is to create an entry-level platform that offers an easy path to investment by creating personalised education and an investment program that anyone can use. Shaun has always believed that the best way to create a successful enterprise is to include the entire value chain of people in the process and share the rewards of that success. “The only person’s behaviour we can control is our own and the only thing we can truly give another person is information.” – William Glasser