Some indeed recall that stopping the economy from sliding into recession and coming out of the GFC indeed created a deficit because a deficit was better than a collapsed economy and we were the top performing economy for a while and about the 4th best when Abbott took over.

Some also recall that the Liberal government, despite all their claims actually doubled the size of that deficit and now we are hovering somewhere around the 20th best global economy.

rache very true try to convince some and you never will
Every chance exists by the time of the promised deficit one will not be delivered
In truth the title of this thread may be deceptive, we may, probably are, already in such a crisis
Everything points to debt being a very big trouble for any government here
Even more so for some in Europe right now

Belly,
Interest rates in America are set by the Federal Reserve (aka the Fed) to control inflation. Right now Trump's running expansionary fiscal policy (aka bigger deficits) and tariffs have increased (which is inflationary) so US interest rates are going up. But there's a possibility that the Fed are being overcautious (as the RBA were under Gillard) and even if that's not the case, the Fed would stop raising interest rates well before the level that would cause a debt crisis.

>Can even the most optimistic of us think interest rates can stay at all time lows
Can or will? The answer is very different.

The government could use fiscal policy to control inflation (when tightened) or boost the economy (when loosened) the way monetary policy is currently used. Indeed I believe they should as it would enable greater control of inflation as they could direct spending to regions that are running below capacity. Once they realise the implications of the ability to use a combination of fiscal and monetary policy to control the speed of our economy (and the fact that we have unlimited credit) we can effectively choose what interest rate we want (with a tradeoff between interest rates and tax rates).

But what I think will happen is: the government will not make any bold fiscal moves. Interest rates will remain at record lows for a few more years. Eventually business confidence will rise, they will borrow and spend more, and interest rates will gradually rise. But they will stay low by historic standards (probably staying under 5%) because the economy is far more sensitive to interest rate changes than it used to be.

stopping the economy from sliding into recession and coming out of the GF

rache,
that does sound good but I think it had more to do with keeping the superannuation coffers for the public service topped up.

Aiden this I knew, in fact our reserve bank is the same,how do you come to the view they will not raise them.
We once had rates as high as 17 percent, it nearly broke us.
Lowest rates in history right now? maybe for here but over the past year rate rises in America have taken place
Bad housing loans drove the GFC last time, and may, just may, tip the balance this time
World trade, personal debt, interest rate rises, all could, separately or together be the driver this time.
Only when is in doubt
Remember some make fortunes at such times

Belly, Thursday, 29 November 2018 10:28:08 AM

Answer- Are you saying that we need to be more responsible? Perhaps balance the budget? Limit consumption?

It appears that increases in property prices are subsidizing our foreign spending. Perhaps we are importing people so we can export product- getting a permanent loss of control of our country in exchange for a temporary gain of jobs. We have advertising to promote Australian Made. Wouldn't it be simpler to just have tariffs or other protectionist measures? Business is to make money for the shareholders not protect the interests of Australia's people- that is supposedly the governments role.

We cannot be all things to everyone. There are concentric circles of control.

We need to be less slave to our desires and more disciplined-

"Most people do not really want freedom, because freedom involves responsibility, and most people are frightened of responsibility."
Sigmund Freu