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An Epic Mining Boom…and We Blew it
Australia had a 10 year mining boom and forgot to get rich. Worse still…We came out of the biggest boom in the history of the world in a WORSE financial position than when we went into it.
Here’s what I mean…
1. We had a historic increase in national income thanks to a record terms-of-trade. Rivers of cash flowed into Australian coffers.
2. And yet the government and households managed to pile on record amounts of debt…
In other words, we’ve come out of the boom in MORE DEBT than when we went in to it.
You might think that’s impossible, but that’s exactly what’s happened.
Check out the graph below from Melbourne’s Grattan Institute…
The Institute reckons that between 2002 and 2012, Australia earned over $190 billion in national income, thanks to a record terms-of-trade.
Put simply, Australia got record amounts of income for selling iron ore, coal, and gold overseas. Meanwhile, the price of imports – the things you pay for – went down.
See how that works? You get more for what you sell and you pay less for what you buy. You SHOULD get rich. But somehow, many Australians forgot to.
Read the rest of this article at The Daily Reckoning
