Picture this. It's the height of the financial crisis. Economies worldwide are about to tank. And yet, one western economy bravely looks toward crisis and tackles it head on.
Budget stimulus helps the economy avoid recession - lump sum payments are given to families, and the government decides to spend lots of money building schools and other infrastructure. Interest rates are cut and a bank deposit guaruntee is brought in.
None of the country's major banks collapse, and no bailout are needed. A few fund managers collapse, but overall structural damage to the economy is minor. Government debt as a proportion of GDP only reaches 18% and it will be paid bank by 2023/14. Government debt is way lower than European countries, most of whom sit between 50%-100% of GDP. And it will be paid back within 4 years. Unemployment peaks about about 6.5%.
And most importantly of all - the country avoids official recession. We even have money to reform health care and introduce a national paid parental leave scheme.
Sounds like a fantasy? Nope. This country does exist. It's called Australia.
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