They then deduced the possibility of profit making by lending out a proportion of the gold deposits and hoping that all the gold would not be recalled at the same time. 12. But, the goldsmiths were not experts in the theory of probability. Hence, their credbility and reputation became the most priced asset.
Partly this is because the contracting economy affects the policy settings, and partly it is because policymakers are quick to adjust their levers in an attempt to head off the contraction. Again, a comparison with the US makes the point. On fiscal policy, the Australian budgetary position has varied little over recent years, with predominantly small surpluses being the order of the day.