The pattern of boom and bust that characterised the Australian economy from the early 1970s to the early 1990s currently seem to be a thing of the past as Australia enters its sixteenth year of uninterrupted expansion. The expansion has lasted twice as long as those of the 1970s and 1980s, which raises the question — why has it happened? one way of simplifying our approach to this question is to identify the major factors that previously precipitated major slumps or recessions. The major recessions of the mid 1970s, the early 1980s and the early 1990s, were induced by monetary policy and a determination by of the Treasury and Reserve Bank to slow an overheated economy. The first two policy-induced recessions were aimed primarily at fighting inflation. The recession of the early 1990s was a product of policy attempts to slow the economy in the face of a combined current account crisis and domestic financial overheating, particularly the credit-fuelled asset price inflation of the late 1980s. Our main task in this paper is to try and explain why these earlier recessionary drivers have thus far largely abated during the current expansion. This involves tracing two processes, the economic problems in question, and the policy responses to them, especially the monetary policy responses