Yes, interest rates are a poor indicator. A country with 20% inflation would have high interest rates and easy money, but people often say that low interest rates are a sign that money is easy (like they say about Japan, where money has in fact been very tight). So that's why you can't rely on interest rates alone.

The only indication of whether money has been easy or tight is NGDP growth or inflation, relative to trend. Don't take my word for it, ask Ben Bernanke:

"Ultimately, it appears, one can check to see if an economy has a stable monetary background only by looking at macroeconomic indicators such as nominal GDP growth and inflation"

http://www.federalreserve.gov/boardDocs/Speeches/2003/20031024/default.htm

Since the central bank can print infinite quantities of money if it likes in order to hit its nominal target, then yes, the outcome is the the appropriate setting.

As for Brazil, the nominal GDP growth path doesn't look that different compared to Australia. Yes Brazil has had worse real growth, but that reflects supply side problems, and nominal GDP is the statistic we care about for this purpose.

And if you read the links thoroughly you would also have seen the one that explained that where nominal GDP was above trend when the currency rose by less than commodity prices (2004-2008) and hence nominal GDP rose to an annual rate of roughly 10% before the financial crisis, and since the currency has stayed elevated while commodity prices have been falling, nominal GDP has fallen significantly. Is that relationship "significant" enough for you?

Australia has an "implicit" NGDP target; over the past decade NGDP growth has averaged about 6.5%. This is what sets us apart.

Links for Brazilian and Australian NGDP:

http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=BRAGDPNQDSMEI&s[1][range]=5yrs

http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=AUSGDPNQDSMEI&s[1][range]=5yrs

AA,

Here is your unqualified statement that is patently false:

"No-one has answered the question regarding the observation that Australia now has economic outcomes better than at any past time and better than anywhere else."

Which compared to Howard is patently false.

As for the stimulus and your contention that the bigger the stimulus the better the result:

"Henry provided advice to the Rudd Government that without the continuation of the stimulus package, 100,000 jobs would be lost, and GDP would reduce by 1.5 per cent. No modelling was made public to support either of these contentions. After the release of advice, Shadow Treasurer and Minster in the former Howard Government, Joe Hockey, commented that he had never seen a piece of Treasury advice so clearly designed to be released to the media.

Further,graphs printed in the budget papers purporting to show that there was a statistically significant correlation with the size of G20 member countries' stimulus packages and their respective economic performances, however the data had been cherry picked and only 11 G20 economies had been included in the analysis. When all G20 economies were analysed, no correlation existed."

From a Senate inquiry:

Prof. Davidson— "No, I totally disagree with the argument there. Certainly the school halls seem to be the most extraordinary waste of money that we have ever seen in our lifetimes. The Australian reported that $850,000, I recall from memory, was being spent on a single-pupil school and nobody thought to think why would we even think about giving this kind of money to a single-pupil school let alone actually give such an amount of money to a single-pupil school. And in today’s Australian we read that they are spending $2.45 million on a school hall for a school that already has a hall, which will give it an extra 30 square metres of space, but nonetheless most of the kids will still have to stand outside. I cannot believe for one second that this is productivity enhancing expenditure."

Q.E.D.

Aust Banks have a derivative exposure of $20 trillion which is 6 times their assests (our mortgages) or 16 times or our GDP.

Banks view derivatives as a form of insurance but in fact are a complex form of bettin, using our assests as collateral.

The Commonwealth Bank for the first time this year has refused to declare their exposure to derivatives.How can their insurance policy be worth 6 times our mortgages? How can they possibly be bailed out?

To quote Tony Makin, Professor of economics at Griffith University.

"BAD economic policy is invariably based on an economic fallacy. At the industry level, an example of this is that government assistance to manufacturing preserves long-term jobs, and at the macroeconomic level, that boosting unproductive government spending can prevent recessions without harmful lasting effects.

Both of these fallacies warrant rigorous rebuttal, the latter especially since the federal government spent nearly $90 billion on fiscal stimulus, and because the claim is frequently made that it has been the great economic success story of the past five years.

Many still insist that fiscal activism saved Australia from recession following the transatlantic banking crisis, aka the GFC.

Yet, contrary to the crude Keynesian justification offered for it back then, let's not forget that fiscal activism failed to prevent GDP per capita going negative in two successive quarters, a technical recession by this measure. And that the national accounts show it was net exports, assisted by a heavily depreciated dollar, not government spending, that bolstered aggregate demand at the critical time."

Also the paper authored by Emma Aisbett, Markus Brueckner, Ralf Steinhauser and Rhett Wilcox, entitled Fiscal Stimulus and Household Consumption: Evidence from the 2009 Australian National Building and Jobs Plan, indicated that that the direct payments made to households by the Australian government in early 2009 - the Tax Bonus for Working Australians - had no discernible effect on consumption, at least of non-durables. Additionally, the impact of the announcement that payments were to be made had only a small and transient impact. These are telling results and contradict the government's pronouncements on the supposed economic benefits of the fiscal stimulus.

So 3 prominent Australian economists think that the management of the stimulus was incompetent.

Greetings again all,

@Grim23, re: “where nominal GDP was above trend when the currency rose by less than commodity prices (2004-2008) and hence nominal GDP rose to an annual rate of roughly 10% before the financial crisis, and since the currency has stayed elevated while commodity prices have been falling, nominal GDP has fallen significantly. Is that relationship "significant" enough for you?”

Only if it's demonstrable that Australia was different from the rest of the world.

Was it, Grim23? If so, by what data?

Re: “Australia has an "implicit" NGDP target; over the past decade NGDP growth has averaged about 6.5%. This is what sets us apart.”

Perhaps. Where is the data showing NGDP average growth rates for all OECD economies?

And what gave rise to Australia's NGDP growth averaging 6.5%? The stimulus packages?

The question remains: What were the decisions which propelled Australia’s economy from 11th ranked in the world to first – and top by an extraordinary margin?

Thanks, Grim23.

@Shadow Minister, re: "No-one has answered the question regarding the observation that Australia now has economic outcomes better than at any past time and better than anywhere else."

This is correct. On how many indicators are the raw figures better through the Howard years than now? One? Two? Three?

My list has 25 indicators on which outcomes are better now. Correct?

Re your reference to Joe Hockey: He has credibility with whom? By virtue of what qualifications?

Re: “The Australian reported that $850,000, I recall from memory, was being spent on a single-pupil school …”

So, an uncredentialed witness to a hostile political inquiry seems to recall a vague allegation in a Murdoch newspaper by an unnamed source about an unidentified school somewhere … ??

And this proves what exactly, Shadow Minister?

Re: “I cannot believe for one second that this is productivity enhancing expenditure."

Have you checked Australia’s productivity recently, SM?

Extraordinary growth for seven consecutive quarters – best in the world, and best in Australia’s history considering the global environment by far. No?

http://www.tradingeconomics.com/australia/productivity

QNulED, SM.

@Arjay, that is extraordinary! What is your source?

Thanks.

Cheers,