You can’t reduce debt by taking on more debt

Pop. That is the sound of the pin of reality piercing the inflated balloon of Australian economic wishful thinking.

Fresh this afternoon:

Victoria and NSW have lost their prized AAA credit ratings, with ratings agency S&P Global downgrading both states on Monday in moves that put a cloud over the federal government’s own AAA rating.

So much for all the spin that Australia’s government debt is less than that of other nations. So much for destroying the private sector to protect the public sector. So much for increasing debt today to reduce debt tomorrow. So much for it being a great time to borrow because interest rates were low.

Presumably, Australia’s relations with China were also a factor given because of the hits…