Is the government’s stimulus package too big?
SK: No. But it’s not going to work. No amount of money the Government can throw at it will turn this problem around. Look at the overall cost of the US bailouts to date. In inflation adjusted terms it totals $4.6 trillion, which is $1 trillion more than the US spent on World War 2. LC: Are you implying that both the US and Australia are going down the same path re stimulus packages. How could they both be wrong? SK: The question relates to how we got into the problem in the first place. Economists were getting things wrong long before this crisis and they’re failing to find a solution because the whole model is wrong. LC: If the Prime Minister came to you and said, Steve, get me out of this mess. What would be your first step? SK: My first step can’t take place until after it’s become obvious that this system has failed because my system would make other systems fail. LC: What systems would fail under your model? SK: The financial system. I’d be saying, you have to abolish large slabs
