Do you know of any countries that practice any of the following?? - No debt creation money like the Fed and ECB - Low debt/GDP ratio - Low inflation (low growth in money supply) - High reserve ratio for Fractional reserve lending I appreciate your collaboration.
Wouldn't THAT be something... Conservative and responsible fiscal and monetary policy in a sea of profligate spending...
What makes you think that Central Bankers are less likely to succumb to groupthink and peer group pressures? Sounds though that PBOC would qualify under most of your criteria.
PANAMA has no central bank and therefore no money printing. Its currency is the dollar, and the country must get its reserves through exports. Nevertheless, this country has had its share of irresponsible governments, but their deficits have been financed through debt -bonds- and/or taxation (same thing in the end), it goes without saying that it's impossible to monetize the deficits. Taxes are low for expats but not for locals, inflation has been low, and it has never had a banking crisis, except during the Noriega embargo.
Australia had no net govt debt - http://www.budget.gov.au/2005-06/overview/html/overview_07.htm This year there will almost certainly be a budget deficit for obvious reasons. Household debt is quite high.
I would say from your information that Panama at least got monetary policy right. To keep their dollarization they must keep exports higher than imports at all times. Fiscal Policy seems to be a universal evil..........that's why we need small governments.
Thank you. I did not know Australia was committed to such fiscal discipline. Is it the same with their monetary policy?? Do you know how monetary policy and banking in general work in Australia?? Do they also have debt money creation, high m3...........stuff like that??
As for the banks, they seem to be in MUCH better shape than in the US or Europe. The govt has guaranteed bank deposits, but the banks have to stomp up for this and there have been no govt handouts to banks nor any requests for such. There are really only four big banks anyway and they are reasonably large even by world standards. Housing prices are very high - possibly the highest in the Western world compared to average income. In my area median house prices are 8.5 times average income (3 is normally considered affordable). Mortgage default rates are still quite low. Whether this situation continues remains to be seen.