The dangers of cheap money: How low can it go?

You'd be forgiven for being confused about the economy and markets at the moment.

As our business writer Stephen Bartholomeusz says in this week’s Please Explain – "the world is a very messy place".

  • The federal government's commitment to delivering a budget surplus in 2019/20 is looking sound – but partly thanks to an unforseen tragedy in Brazil forcing up iron ore prices.
  • Our interest rates, now at a staggeringly low 1 per cent, may not be low enough to stimulate growth.  It begs the question, where can the RBA and Treasury go, when there's no lower to go?
  • Australians are all of a sudden incredibly organised at tax time as we race to get our hands on the first of the Morrison tax cuts. But will that money be used on spending – or just paying down our historically high personal debt?
  • China’s growth is 6.2 per cent – that sounds high but it's actually a record low. What does that mean for Australia?
  • And there's something very strange going on in the US corporate reporting season where major companies' falling profits are driving the market …. up?

This week on the podcast I’m joined by Bartho and our senior economics correspondent Shane Wright to untangle the mess.

We also speak to China correspondent Kirsty Needham to find out what 6.2 per cent growth looks like – and check in on the still very tense political situation in Hong Kong.

Demonstrators stand off against riot police during a protest in the Shatin district of Hong Kong on Sunday.Credit:Bloomberg

Listen to Please Explain on iTunes, Spotify or Google podcasts.

Support our journalism

Our supporters power our newsrooms and are critical for the sustainability of independent journalism.

Subscribers allow us to tell the stories that matter and fund podcasts like this one.
Becoming a subscriber also gets you exclusive behind-the-scenes content and invitations to special events. Click here to subscribe to The Age or The Sydney Morning Herald.

Source: Read Full Article