Australia General Discussion 4.0: It ain’t easy under Albanese

[Secretary of State Liberal Hack]

Why is the Australian political realingment going so slowly ?

[Secretary of State Liberal Hack]

Interest rates are rising much faster than expected.  Although the rise itself should not come as a surprise, the size of the increase, the largest in 22 years, suggests that much more pain is coming.  It's particularly bizarre in light of the fact that the allegedly independent Reserve Bank acknowledges that the inflation is due to international factors, yet their only lever for cooling the economy is to force mortgage holders to pass on more money to banks, which goes straight to their profit margins.  Apparently paying several hundred dollars a month more to have a roof over your head is going to somehow bring down the price of petrol and lettuce?  It's a bit like sacrificing a goat in the hopes of a good harvest.

Inflation is about both factors, and it's frankly textbook macroeconoimics(which has gone ignored for the last 3 years) that raising interests rates reduces inflation by reducing consumption. Look at Turkey if you wanna see what happens when you ignore that.

[Secretary of State Liberal Hack]

It's particularly bizarre in light of the fact that the allegedly independent Reserve Bank acknowledges that the inflation is due to international factors, yet their only lever for cooling the economy is to force mortgage holders to pass on more money to banks, which goes straight to their profit margins.  Apparently paying several hundred dollars a month more to have a roof over your head is going to somehow bring down the price of petrol and lettuce?  It's a bit like sacrificing a goat in the hopes of a good harvest.

Inflation is about both factors, and it's frankly textbook macroeconoimics(which has gone ignored for the last 3 years) that raising interests rates reduces inflation by reducing consumption. Look at Turkey if you wanna see what happens when you ignore that.

I don't disagree at all, but there's no point ignoring the unique attributes to the inflation that we're currently experiencing, which is that it's largely externally driven.  Wages are flat and business investment is at a post-war record low.  So all that is happening here is that the RBA is cutting workers' spending power.  The only heat in the economy is coming from rising prices, not from rising wages.  Consumption metrics are also obfuscated by supply chain disruptions.

The RBA likes to point out that households have amassed considerable savings throughout the pandemic, which they believe could be used to pay these higher interest rates, but that seems a bit rich considering that the distribution of that money has been disproportionately to wealthy households.

Yes a raise hike willl be painful short-term, but at this point it's clear something has to be done. Current inflation rates are unpopular and broadly harmful, and given that the Alabense government is likely to engage in redistributive and stimulative spending, well interests rates is one of the only other levers that can be pulled to control it.



And the extent to which the inflation is externaly driven is becoming more limited as oil prices begin to fall back to normal. Australia high housing prices are not sustaniable and something has to be done to control them, a rate-hike might be one of the only politicaly acceptable ways of reducing demand for housing.

[Secretary of State Liberal Hack]

I love how in the Australia thread, one of the most far-right posters is a fully paid up member of the labour party.

[Secretary of State Liberal Hack]

I still stand by my belief that he doesn't believe what he's saying.

Why would a former labour leader pretend to be a far-right nutcase ?

[Secretary of State Liberal Hack]

Goodbye Dutton, it wasn't nice knowing you.

[Secretary of State Liberal Hack]

https://twitter.com/lachlan_kennedy/status/1655737972019564544?t=mgTZ8o19BHNqfIY...
What's going on here ?

[Secretary of State Liberal Hack]

This seems like a huge suprise