Economics might sound boring but it is actually really important — and believe it or not, it’s way simpler than most people think.
The NDIS (National Disability Insurance Scheme) is also super important. That’s why it’s helpful to understand how the NDIS connects with the bigger picture: the Australian economy.
Back in the 1990s, our founder Adrian McMaster studied economics at Melbourne Uni. One of the surprising things he discovered? Most economics courses don’t think about how money works! That’s a big problem, because many people who study economics go on to be journalists, politicians, or policy-makers — and if they don’t understand money properly, they won’t be able to make the best decisions about how to manage money.
Money has a simple truth: Australian Dollars are created by the Australian Government. The Government can create money in three main ways:
- By spending money directly into the economy,
- Through the Reserve Bank of Australia (RBA), which it owns,
- Or by licencing private banks to create money when they issue loans.
Regardless of which way it happens, this money all becomes part of the total supply of Australian Dollars.
So why does this matter? Simply put, a Government that creates dollars can’t possibly run out of them. As long as it does it’s business using Australian dollars, the Australian Government can’t go broke.
What’s more, there is always enough Australian dollars to pay for things we really need – even if we have to create some extra dollars to do so. The limit on what the Government can do is not whether it has the money. The limit is whether there are enough actual resources (people and things) to get the particular job done.
The NDIS is a great example of this. The limit on how many people the NDIS can help is not whether the Commonwealth Government has the money. The limit is whether there are enough helpers available. The limit is people who can do the work, not dollars to pay them with.
As a famous economist named John Maynard Keynes once put it: ‘anything we can actually do, we can afford.’
Australia will always have enough Australian dollars to pay for what we need. As long as the things we need can be bought using Australian dollars, we will be fine.
More information
For a look at the core principles of the Australian economy, click here.
For a really deep dive into how the economy works, click on the link below to visit an external website lays it all out for you. Be prepared to let go of much of what you have been told about money. And take comfort in the fact that economics is actually a lot simpler than you have been led to believe!
The articles are written from a US perspective. But that’s fine because in all relevant ways we have the same monetary system here.
