The Reserve Bank has slashed interest rates by 1%, but we still have higher inflation and a stagnating economy. Does anyone remember the70's term, stagflation?
On a related matter, Henry Ergas thinks we have forgotten the lessons of the 70's:
On a related matter, Henry Ergas thinks we have forgotten the lessons of the 70's:
CHRIS Higgins, former director of economics at the Organisation for Economic Co-operation and Development and treasury secretary in 1989-90, once described the 1970s and 1980s as "the school of hard shocks".
Increases in oil prices and spiralling inflation tested to the limit governments' ability to manage economic policy. In the process, vital lessons were learned which deserve not to be forgotten. As governments struggle with the global financial crisis, three of those lessons seem acutely relevant.
The lessons are very much worth knowing. Read the full article to learn what they are.
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