Thanks ...your occasional articles and newsletters are very useful. I don't believe that the 'd' word / problem was discussed once in last night's debate. Do I get that right? If so, what do you make of that? I think also it is important to develop proposals for a re-managing of the finance system. What might they be? To what extent should / can it be based on the concept of social solidarity?

I loved the comment on ABC Radio National's AM programme today on inflation figures - food prices and energy are going up but inflation is low because import costs are coming down - i.e. I don't need to worry so much about my ability to buy food because that essential wide-screen TV just got cheaper! Anyway, food and energy are not part of the "core inflation" figures in any case - because who needs food and energy?

Recent predictions have been for a tripling of food prices within 5 years. If Australian's are so debt-laden that a 0.25% increase in the interest rate makes them scream then what will happen as food budgets triple (and oil is on a trajectory to pass US$100/barrel soon)? There is an economic bloodbath coming! There will be hunger and homelessness in the mortgage belt - but Howard insists we must be optimistic about this country or we do not deserve to lead it!

The article does not draw attention to one of the principal causes of the problem, the lack of adequate control over the volume of the money supply. The USA has been creating money at a furious rate largely to pay for their imports of oil to fuel their SUVs and to fund their Iraq activities. They have been doing this since early in the Vietnam War. Our banks have been borrowing these dollars to fund speculation in the investment housing market in competition with those young people really needing a home. All of this is attributable to John Howard and his Campbell Report, eventually put into effect by economic illiterates with Howard's support. In the early seventies the Financial Review ran a series of articles by Neil McInnes, "What do we do with these worthless American Dollars?" What we did was put off the evil day. Putting those days off only makes the final reckoning worse. Any industry which needs a licence to operate and a lender of last resort to bail it out of its mistakes must be closely regulated. On this basis Campbell and Howard were wrong.
As for never having it so good; We are exporting assets such as coal, natural gas, Uranium and other minerals to pay for current consumption. We should only sell assets in exchange for assets such as infrastructure assets either here or overseas but now owned by foreigners such as the Singaporean Government.

Dear Foyle / Michael,
This is an important discussion that needs to be further developed. Foyle's comment suggests that one proposal for fixing the mess lies in a role for government in controlling the volume of money transfers. I agree with that but, does this also mean controlling the type of money flows also. Can this be laid out in a bit more detail? How would it fit into a broader program of democratic, change based on principles of social solidarity?
Don

Surely the key problem is that we are living far beyond our means. I am afraid I have always acted as an economic terrorist by believing that the only necessities in life are bread, water and something to keep off the rain, and that everything else is a luxury. As a result I have been spending as little as possible, only borrowing to buy assets, and always looking out for bargains. As a result, although I only have a moderate income, I have more money than I can spend. It seems to me that the thirty-five years since Gough Whitlam have been spent on profligacy by both government and public, with the reckoning being endlessly postponed. Believing as I do that borrowing is always a sign of moral failure, and that the inevitable reckoning only serves as just retribution for stupidity, I have also noted that the Americans leave us for dead in the profligacy stakes.

The coming reckoning, when our foreign debt is called in, (as has happened twice before), which could be associated with the Americans having theirs called in, means that we will have an eventful decade.

What is needed NOW is a substantial INCREASE in interest rates.

Howard has left us with a real time bomb and when it detonates he will probably have retired. The voters will blame the unfortunate government in power at the time,( probably Labor).