I wish people would stop describing quantitative easing as Keynesian though. (I know StanleyS didn’t but a lot of writers are). The basis of Keynesian economics is that when the economy is growing, the government should run a surplus. If there’s a recession the government should then be in a strong position to borrow money to boost the economy. When the recession is over and the economy is growing again, the debt can be repaid.

For the last few years the Aussie and Kiwi governments have run surpluses so they are legitimately able to borrow money now, if they choose to. The US and UK governments, by way of contrast, ran up enormous debts while their economies were doing well and they had no reserves for the bad times we’ve run into now. They borrowed too much in the good times and they’re borrowing even more in the bad times. This is not Keynesian, this is insane.

Headline interest rates in Australia/New Zealand are around 3 to 3.5 percent compared with US/UK at close to zero percent. NZ’s Reserve Bank says there won’t be much more in the way of interest rate cuts there.

Aus/NZ governments were running big surpluses in the last few years unlike UK/US which have been running deficits.

Aus/NZ have no need for Mugabenomics – so called quantitative easing. The US and UK governments, however, are more or less insolvent. The whole point of “quantitative easing” or “printing money” is to bring about inflation to diminish the real value of the borrowings they have undertaken. They don’t care that, in the process, they will destroy the savings of the people who have behaved responsibly and saved for a rainy day.

Keynes famously said that “the markets can stay irrational longer than you can remain solvent” but the US dollar now has a long way to fall and there’s no reason to expect the sterling to strengthen against the Australasian currencies – expect the contrary.