THE Economy

To many people the economy is something that is not clearly understood and while we cannot here fully discuss the whole subject, we will give a brief understanding so that many will be able to understand what happens and how it may affect your own life.

The main thing about the economy is how the whole of the business of government is set up to allow the financial markets and the goods and services to be delivered to all of the nation as well as maintaining jobs for as many as possible and to supply support for those who cannot find work or are disabled or sick so that all can have a reasonable life to enjoy.

The government raises money via taxes and other charges to pay for all the services that they are involved in supplying to the community. The expenditure of government involves in the support to the disadvantaged and other community projects as well as the wages of all the public service personnel, including all the infrastructure expenditure.

The government uses some so called levers to manage the economy, including the supply of money and interest rates – this is done via the Reserve Bank. To increase money supply the government will have bank notes printed and conversely to reduce the money supply they will withdraw bank notes. Via these and other processes the inflation rate is managed at a level that the government is comfortable with.

When it comes to wages growth as far as the economy is concerned the increased level of unemployment in certain categories will put a damper on wages growth and as the employment levels increase the potential of wages growth is increased. Many assume that increases in wages is good for the economy but as there is often an upward movement of prices for goods and services as wages increase it can be shown that some wage increases are a financial burden to the low income earners as all wage increases are often taken up by  price increases.

The term GDP (Gross Domestic Product) is often spoken of and it is actually the theoretical number of times a dollar moves around the economy (the higher the number the better the economy is claimed). We contend that as there are real economic differences in the income levels in the Australian economy, we contend that there are good and bad GDP components, as high prices sales will distort the economy to be more positive than the experience of most Australians who are on much lower income than the high spenders. It is easy to distort the real economic situation of most Australians by several high priced housing or other high priced sales.