It is generally accepted that no good, service or transaction trades efficiently at the price of zero. Credit is no exception. Rather, a zero-rate policy increases the risk of misallocating real resources, creating a new set of imbalances or possibly a new set of bubbles. For example, in the Tenth Federal Reserve District, fertile farmland was selling for $ an acre two years ago.
On the luck side, we do have the good fortune to be geographically well connected to the fastest growing part of the world economy at a time when its demand for mineral resources has undergone a major expansion. That was undoubtedly a factor in the Australian economy’s general resilience over the past few years.