Written by Guest Author: Sam Zweck
They say recessions and a global crisis can happen about every decade. Go back to 2009 – the GFC. Derived from the US housing market crash and the fall of Lehman Brothers. Australia was quite weathered for that storm. This one, however, is different. A health crisis, namely, a pandemic. Something that has the potential to wipe out masses of people. There are a bunch of theories surrounding the outbreak of this virus. Some suggest that the virus was manufactured to kill off the elderly as we are an “ageing population”. It’s true. Just look at the ABS and the stats. Proportionally in Australia, 66% of people are over the age of 45. I hope this is not true because I love my grandparents and think we can learn so much from the old through their experiences and knowledge.
Other theories suggest someone eating a bat, doesn’t surprise me, to be honest. The Chinese food market is very unhygienic and unregulated. Perhaps a higher theological theory would say this is God, mother nature or something else saying, the world needs to breathe – give it a break. Humans are too selfish and greedy. Thus, demanding too many goods and services and in hand, manifesting climate change and global warming. Anyway, this post is more about shedding some light on the situation at hand and aims to discuss various ideas relating to economics, recessions, politics and mental health.
The GFC was bad, economically. The ASX crash was significant– corporations went bankrupt, it was horrible. I was perhaps 9 or 10 at the time so had no idea what had happened. It was only until my YR 12 research project that I discovered the true ramifications. I soon developed a basic understand around government policy and how important the government is during such times, and generally all the time for any countries prosperity and security. Monetary and Fiscal policy. Any Econ 101 course will discuss these fundamental principles, along with Tax, inflation, currency and some microeconomics. During an economics elective in my first year of studies, I learnt about the role of the RBA to regulate the money markets. International financial markets and institutions (IFIM) taught me a wealth of theories surrounding government debt and… balance sheets. Assets, liabilities, and equity – you get the point. The difference between what you own and owe is your net worth. Pretty simple. The accounting equation is paramount to understanding this relationship. Assets = Liabilities + Owners Equity. It can be rearranged of course.
The Australian government has dished out millions of dollars to splash around the economy. Why? Because without it, some horrible things could happen, and the “Australian Dream” could be over for everyone. The news has been everything money the last month. Who gets what and how? Lines out the door at Centrelink, you get the point. Stimulus package after the next. However, many must start to wonder, where does all this money come from? Surely not Taxpayers dollars?! I guess others don’t care. As long as they get their X amount of dollars to pay that bill or buy that new car, to achieve a new happiness through their assets. Many fail to fully understand the relationship between the RBA, government, and us. The most basic answer to this question is that: no one will have to pay back this debt. What a shock! You’re probably sitting there thinking – really?! Depends what you choose to believe.
Politics has a funny way of persuading people to vote based on financial discipline. “Labour put us in the Red, the Liberals will ensure Australia is back in the black!”. However, at the end of the day Australia is a Monetary Sovereign Government. Yes, we print our own money, so do many other countries! Yes, we can create money out of “thin air”. Yes, we can “type money into existence”. A few punches on the keyboard from the RBA into the system creates money. Credit the government. Liability to the RBA and asset to the government. Something like that. It’s basic accounting. There’s a macroeconomic theory to tie this all together – it’s called Modern Monetary Theory and denotes that “the practical uses of fiat currency in a public monopoly from the issuing authority, normally the government’s central bank. Effects on employment are used as evidence that a currency monopolist is overly restricting the supply of the financial assets needed to pay taxes and satisfy savings desires.” To put it simply, we will never run out of money as a country.
However, strict regulation must be implemented to monitor inflation. We don’t want to be like Zimbabwe where we must wheel a barrow full of cash to purchase a loaf of bread. So, when people say a negative comment such as: “someone has to pay this debt back, and it will be your generation Sam, good luck with it, your quality of life is therefore much lower than mine was”. Tell them to get stuffed, nicely, and tell them to read about MMT. Tell them to Google Steven Hail and listen to him talk. He’ll change their opinion and outlook. Sure, household debt (the debt that we owe a bank for a Car) or paying back a mate who foolishly lent you interest free money, is different to this. That can cause real riots in the streets. Government debt is not a bad thing. In fact, seeing debt as a means to grow and leverage an economies output is much more positively minded. Debt helps growth. It’s like when a business wants to purchase more assets to grow – what do they do? You know the answer to that. Want to learn more? Feast off Steven’s work:
Aside from economics and money. Let’s focus on other issues in our world. Perhaps a health disease which many fail to understand and empathise towards. Mental health. I am currently reading The Resilience Project by Hugh Van Cuylenburg. So far so good. This book has really opened my mind. It’s so easy to get caught up with the little things in life. If you’re fixated on money and getting to the next tax threshold then in my opinion, you’re materialistic. That’s okay. We all are, we’re human. We are not perfect. I get that. But when one can truly appreciate the basics in life then we can become mindful and be in the present, the now (The Power of Now is another good read by the way!).
Gratitude and empathy are not easy values to live by. Recently I have decided to reside with my girlfriend and her family due to government restrictions around Covid19. I’ve caught myself out numerous times when I become consumed by material things and am not grateful for what I DO have. The other day I ordered NBN because Netflix wouldn’t load fast enough, wasn’t HD and I had to hot spot my phone…! What a hassle hey. What a first-world problem more like. When you step back and realise that some people in the world don’t even have a phone or enough money to afford mobile data then you can practice gratitude. In my opinion. I could go on about Covid19, but in summary, if you reside in Australia then you are seriously lucky. This time last year I was about to embark on a backpacking journey across Europe. I saw how they lived, literally on top of each other in apartments. They were inevitably going to be worse off than us.
Of course, with real isolation kicking in across the globe, people’s mental health is in question. Routines destroyed, coffee catchups down to a minimum, goals ruined etc. So what. We are still allowed to exercise and go food shopping, so that’s positive. Find a way around it. Use this “extra time” to learn something new or to focus on something religiously to distract you from the death that is happening in the world. Depression is tough, I’ve personally been there and it’s not fun. I did all the right things and got through it which I’m grateful for, however, many don’t get the same access to treatment that I received. I was lucky and grateful that there were so many supportive family and friends around me. What does annoy me a bit is the fact that people are so down and focussing so much on the deaths from a virus…! People die from viruses all the time. Throughout history. Plagues. It even in the bible! Something has to kill us! It’s somewhat a coincidence that the peak of death from Covid19 falls around Easter. That’s what Easter is about, death. Good Friday, Death. Jesus dies. But then three days later he rises. If we can take something out of the Easter story and apply it to today’s current situation, it’s that new life does exist. With death comes new life.
It’s funny how the media catastrophise about COVID-19 in Australia, common, we haven’t had many deaths compared to other countries. Yet, every day, lots of people take their own life – some say it’s selfish. I find it so sad that scientists are working overtime to find a workable vaccine, yet the issues of mental health seem to be pushed aside. Typical, because you can’t see someone dying from depression, but you can sure see someone suffocate and collapse on the floor – it’s all perspective.
The media want attention, traffic, and more money. Why would they talk about suicide deaths? Sure, it’s probably more personal but mental health doesn’t get a reaction because no one understands it – unless they have had it. Simple. People say, “oh, that person was so selfish to kill themselves, they should’ve asked for help”! Were they selfish? Or, did they think the world would be a better place without them despite the people who they didn’t realised loved them? I’d say the latter. Depression literally changes the chemicals in the brain – it’s crazy. People are speaking out and raising funds, but money won’t do much. It’s all perspective and relative to one’s situation. Perhaps depression is genetic, maybe not, no one really knows. I guess, you just must deal with it. What goes up must come down…
(All ideas, opinions and thoughts are my own. Developed over time and applied when needed. All theories are learnt through the University of Adelaide business school)
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