Business
Free government financing no free lunch: Lowe – The Australian Financial Review
The RBA governor says that while the government should borrow to provide fiscal stimulus and help the economy there is no such thing as a free lunch, while again scuttling the idea of negative rates.
“The central bank, unlike any other institution, is able to create money and the resource cost of creating that money is negligible. So the argument goes, if the government needs money to stimulate the economy, the central bank should simply create it in the public interest.
“The reality, though, is there is no free lunch. The tab always has to be paid and it is paid out of taxes and government revenues in one form or another.”
Dr Lowe explained that if the central bank bought government bonds…
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