I don't know what the Australian central planners did since I don't follow their stories, but I follow the Federal Reserve US side story, and despite all the media articles about open lending / bailouts, the Federal Reserve did the very opposite: it did its best to make people NOT spend.
For the obvious reason, because if they did, they would see strong general price inflation and that is a chain reaction they can't have in the current situation.
Some figures that form the basis for this statement:
http://research.stlouisfed.org/fred2/data/REQRESNS.txt http://research.stlouisfed.org/fred2/series/REQRESNS
The required reserves have been around $40-60 billion since 1980 and $40 billion since 2000.
In 2009 it was quickly driven up to $60 billion.
2011 crossed the $80 billion.
2012 crossed the $100 billion.
2013 almost reached the $120 billion.
And then the velocities of the M1 and M2 money supplies.
M1 holds the most 'direct' spendable dollars. Banknotes, bank checking accounts and so on, the dollars that are most likely to be spent in the nearest future.
M2 holds the termbased deposits. Bank longterm saving deposits.
The velocities of these money supplies indicate how much people spend versus how much they save. For example, a dollar velocity of 5 means that someone with a nominal income of $10000 over a given period, holds aside $2000 during that period. In other words: the person holds/maintains 1/5 of his earnings as savings.
The higher the dollar velocity, the less that the person saves / holds aside dollars.
A dollar velocity of 100 would mean that the person with that $10000 income only holds $100 aside. The lower the velocity figure, the bigger the part of the income that is saved instead of spent.
A velocity of 0 means that the person completely stopped spending his income or stops having an income at all. That doesn't mean that the economy came to a standstill though, since people can still trade EXISTING products, and that's why the velocity of money is not the all-sayer that some seem to use it as such.
The Federal Reserve measures the income along the gross domestic product so dividing that by the money supply gives the velocity of the dollars of the money supply.
Let's now move to the data:
http://research.stlouisfed.org/fred2/data/M1V.txt http://research.stlouisfed.org/fred2/series/M1V/
In 1980-1990 the velocity of the M1 stock was 6-7 (so people held on average 1/6 - 1/7 of their nominal income aside).
2000 crossed the 9 and 2006 the 10. It reached an all time peak of 10.7 on 1 october 2007. 1 year later, 1 october 2008, it started to collapse at a ridiculous fast rate, in just 3 months, it dropped from 10.4 to 9.5. Such a fast collapse was never seen in history, even not during the highdays of the late 1970 crisis. And the collapse didn't stop there, as of present, it just keeps dropping, it's now a mere 6.6, a level that needs 2 decades back to see again.
So since the 2008 EEK! people hold a much bigger part of their income aside as banknotes, coins and checking accounts.
Relative to 2008, the velocity of the M1 money supply dropped 38%
And what stands out even more is the velocity of the longer term deposits, the M2.
http://research.stlouisfed.org/fred2/series/M2V http://research.stlouisfed.org/fred2/data/M2V.txt
For most of the half century, it hung around 1.7- 2.2 (it's typically much lower than the velocity of the M1 stock, since it's about peoples longer term savings).
But in 2008, the velocity collapsed, and for 5 years later, it dropped further.
On 1 juli 2011, it reached the lowest since 1959, the start of the data, a low that last occurred in 1964, the last year of the 90% silver circulation coins.
And it didn't stop there, it just kept on falling. On 1 april 2013, it reached 1.575, another 5% lower than the 1964 record low.
Relative to 2008, the velocity of the longer term savings M2 money supply, dropped 20%.
See, in 2008, people started to save like squirrels in autumn. And the central banks put the brake on lending by tripling the required reserves over the past 5 years and PAYING banks on their excess reserves. In 2007 the US law was changed as to allow the Federal Reserve to do this.
2008 started with a M2 - M1 (the longer term savings part of the money supply, since M2 incorporates M1) of 7453.9 - 1368.5 = 6 trillion dollars.
On 29 juli 2013 the long term savings were 10762.2 - 2574.0 = 8,2 trillion dollars.
So in 5 years, people piled up their savings with 2,2 trillion dollars, +37%
Compare the interest percent they receive on their savings from their banks with the percent that the central bank pays their banks, and it's easy to understand why banks can make huge profits.
