Good post, I agree with the essence
p) of it.
But money out of superannuation into homes isn't going to happen and if it did it would be
highly deflationary!
The worst thing to do when deflation threatens is to encourage a contraction of the money supply. What is needed is debt inflation (monetary expansion). Allowing people to pay off debt on their homes with their (forced) savings = debt deflation. Allowing first home buyers to buy with their (forced) savings = debt deflation.
This is why it is so important that the government's stimulus package is
spent not saved, and
most certainly not used to repay debt!!!
Plain vanilla 'money printing' is always an option right up until the point where deflation sets in. From that moment, you can chuck all the money you want at people and they'll put it aside in order to buy more cheaply tomorrow than they can today. This is why both the RBA and the government are taking extraordinary actions (with doubtless much, much more to come). They don't give a fig about inflation at this point. Inflation is after all their friend. A slowing credit expansion (whether lack of supply or lack of demand for it) is what they're trying to halt. A credit contraction is what they hope to avoid.