Australians have an unsustainable debt addiction, which will be hard to kick, and painful to recover from. ‘Deeper in Debt’, A new report by CPD fellow Steve Keen has found that in just 18 months time we may be spending as much of the national income on interest payments as we were in 1990 – when interest rates were at 17 per cent.
Australia’s level of irresponsible lending isn’t as high as that which brought on the US subprime crisis, but because our debt to GDP ratio is growing so much faster the impact of any slowdown will be more severe here – and the pain will be much more widely spread.
In ‘Deeper in Debt: Australia’s addiction to borrowed money‘, Steve explains the dynamics of Australia’s debt addiction in clear and accessible language. The paper outlines the probable economic consequences of the end of the debt binge, offers advice on how to cope with the debt hangover, and proposes reforms to prevent it happening again.
There is much more to Australia’s debt bubble than intergenerational change. This report for the Centre for Policy Development delves into the dynamics behind the accumulation of private debt, to explain why debt has risen so much, what might finally tame it, and what the consequences might be of weaning Australia off its debt addiction.
Deeper in Debt explains the dynamics of debt accumulation and the statistical evidence that our current borrowing trends cannot go on forever. The author outlines the probable economic consequences of the end of the debt binge, offers advice on how to cope with the debt hangover, and proposes reforms to prevent it happening again.
Several reforms are suggested to deal with this serious long-term threat to household finances and Australia’s economic stability. They include:
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