Monetary policy is impotent - RBA Governor

The article linked below is as much an opinion piece as a news article (so not that suitable for IA's). However there is an important message in it. Monetary policy alone won't work to manage the economy.

Ever since the idiot Costello conned everyone into believing a Budget surplus was the equivalent of good economic management Australian governments have not really distinguished themselves in fiscal (budgetary) policy planning and execution. The one exception was the Rudd governments textbook response to the GFC.

Glenn Stevens, the retiring Governor of the RBA, has given a clear message to th government. Stop obsessing about the deficit, it isn't the problem, start spending on infrastructure to boost demand and build capacity.

VCE students will recognise this as a question of the policy mix. IB students will see the liquidity trap and he ineffectiveness to monetary policy as well.

The SMH article is here

As above for VCE and IB interest.