Interest rates rising - who's hurting?
- Thread starter MPmelb
- Start date
Is Australia running into a dangerous circle? High rate brings in a labour government. A labour government brings in even higher rate. It then brings in more import than export. The RBA keeps raising the rate until 19% then they understand they need reducing the rate. Like the guy - ex RBA governor said the 90s high rate was good.... I do not understand these fat rats like seeing ordinary people are suffering...
Analyst, in your opinion, why did the RBA raise rates this time? What do you think is the objective of the reserve bank? You seem to have this idea that the pollies and RBA just do things to mess around with people? Now, if you say they do it to keep themselves in power I can understand, but what possible advantage could a political party have for making interest rates higher (remember the RBA is independent)? Howard is getting shafted precisely because of this. You don't think people would kick Labour out if they put in policies that result in higher rates?
Alex
Alexlee
I do not know the answer. All we see is based on the so called "logic" --- taught logic by the economic book. All I see the way we are running the rate will bring a 90s situation.
Do you really want to see the 19% rate again? If NOT, we should think differently and do differently.
By the time rate reaches 19%, the RBA and everyone will see it has to be 19%--- totally bulls....t.
I do not know the answer. All we see is based on the so called "logic" --- taught logic by the economic book. All I see the way we are running the rate will bring a 90s situation.
Do you really want to see the 19% rate again? If NOT, we should think differently and do differently.
By the time rate reaches 19%, the RBA and everyone will see it has to be 19%--- totally bulls....t.
Why does the RBA raising rates from 6.25% to 6.5% LOGICALLY lead to the idea that rates will hit 19%? Are you saying that the RBA will just say 'we raised rates last time so let's raise them again?
That last sentence didn't even make sense to me.
Alex
Alexlee, if Labour wins the government, it will be total wipe out to liberals. Laour will have a majority of everything. Young Kevin will probably perform like 95 John Harward. He will probably run 10 years. You look at those labour governments which got from the liberals: WA, Vic,... Their opposion (liberals) no way can get rid of the labour in short period of time. Remember states have 4 years term, two terms will be 8 years....
Because they are run by machines not by brains. They were taught by the text book saying so. If you review the rates leading to 19% in 90s, you probably get the same situation.
In my view, the rate is to adjust the heat of the economy not purely the inflation. If the economy is too hot, it probably needs a rise. I do not see Australian economy is too hot.
Legally they can be gotten rid of in 4 years, no? If voters don't do that, that's our stupid fault for not exercising our rights.
Why would a labour government necessarily lead to policies that lead to increased interest rates?
Alex
Personally, I view inflation as an indicator of the heat of the economy.
Actually high rates in the 90s was to try to kill off high inflation. The success of which created the prosperity of the last decade.
Alex
What we need to do is to band together to form a union. We could be the PIUA. Then, we can get our union to take up the cause to the government, and MAKE them give us lower interest rates, higher deductions etc. After all, we're the backbone of this country, and the government dont give a stuff about us.
Otherwise, we could start up a charity, for the poor starving property investors. We do it tough too you know.
Tubs, you and the one who cant analyse seem to be suffering youth and political nievity.
Let's put one myth to rest. Australia doesn't set the world agenda. America does, and particularly did so a decade or two ago and it was US Fed Governor, Paul Volker who set the interest rates at 18%. As Australia had made all the same financial errors that they had (Lib governments then, and our Libs are still travelling the same road as they with 14% p/a money creation ) we had no choice but to take the same harsh medicine. Volker is hailed as a hero in the US for having the guts to do what he did but our Paul is despised for something he had no control over but he was bluntly outspoken in his acceptance of the inevitable and he tried to tell us what to expect. Personally, I respect that.
Let's put one myth to rest. Australia doesn't set the world agenda. America does, and particularly did so a decade or two ago and it was US Fed Governor, Paul Volker who set the interest rates at 18%. As Australia had made all the same financial errors that they had (Lib governments then, and our Libs are still travelling the same road as they with 14% p/a money creation ) we had no choice but to take the same harsh medicine. Volker is hailed as a hero in the US for having the guts to do what he did but our Paul is despised for something he had no control over but he was bluntly outspoken in his acceptance of the inevitable and he tried to tell us what to expect. Personally, I respect that.
Might be time to quote Jim Puplava. He says something like: "Everybody loves early inflation but late inflation hurts everybody."
The Howard Gov has been expanding M3 money supply at over 10% pa for years, recently 14%. Expanding M3 like that is inflationary and we have had a ball. Now that we are entering the later stages of inflation and the Res must raise rates people will hurt, they will change the government and the Libs will blame Labor for fixing the mess they created. It has happened this way before.
Don't fear Labor, they are just a bunch of incompetents like the other mob and they will have the same self-serving advisors so why should things change much? We are The Lucky Country afterall.
The Howard Gov has been expanding M3 money supply at over 10% pa for years, recently 14%. Expanding M3 like that is inflationary and we have had a ball. Now that we are entering the later stages of inflation and the Res must raise rates people will hurt, they will change the government and the Libs will blame Labor for fixing the mess they created. It has happened this way before.
Don't fear Labor, they are just a bunch of incompetents like the other mob and they will have the same self-serving advisors so why should things change much? We are The Lucky Country afterall.
Historically, Australia has shown itself to vote Labor in times of social upheaval (war etc) and economic struggles due to their more left wing focus on economic and social policy. Historically also (!) Labor has not shown themselves to be good long term economic managers, perhaps due to their focus on social policy ahead of fully costing the economic management of such changes. Australians are not generally partial to quickly changing governments, so tend to give them an extra go for a second term (except in the instance of poor old Gough!)
The 1920s would be an exception to this though in some respects.
PS I dont vote so I don't have a vested interest here.
All in all, long term it is cyclical.
I thought it was neither, the RBA no longer look at money supply when setting interest rates, which may be a mistake, but I thought it were the commercial banks who create the money, based on demand for credit. Steve Keen explained it well recently, I'll see if I can find the link, it may have been his submission to the federal enquiry in lending practices.Hi Ben. Maybe you can tell me whose decision is it to expand M3? Treasuries or the RBA's? Honest question.
Thats very true. Having paid 22% at one time and nearly losing everything, it's a timely reminder to everyone what is possible, especially those thinking of voting for Rudd.
Inflation aint going anywhere but up. Anyone know what the price of wheat is right now? Oil? It's all to come yet.
See ya's.
