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The Forum > Article Comments > RBA underscores its independence > Comments

RBA underscores its independence : Comments

By Saul Eslake, published 10/8/2007

It is to the Treasurerís credit that he had no role in the decision to raise interest rates.

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It is indeed the case that the Reserve Bank has shown its "independence". Notice this is taken as a good thing so that the RBA can manage monetary policy and the macro-economy in the interests of the rich without the nefarious herd of ordinary people getting in the way, the one defect that economists tell us that Government's suffer from, namely the defect of being potentially accountable to the nefarious herd. The RBA has "credibility" to the extent that it succesfully manages matters to the taste of the rich, the chief task of not only the RBA but that dismal science known as economics.
Posted by Markob, Friday, 10 August 2007 12:25:18 PM
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Howard's dissembling

Well, he finally said he was sorry but not that he was wrong, about rising interest rates. At the last election John Howard did not say that interest rates would stay at record low levels or that they would not rise. He choose his words carefully, cleverly. He presented a conundrum. Rates would go up more if there was a Labor government. Not just hypothetical but also hypocritical.

The PM knew that this claim could not be tested. But more importantly for his current political fortunes he allowed the rest of the coalition politicians and advertising to present the extreme view that rates wouldn't rise.

Howard is the master dissembler. He selects his words very craftily, very cunningly. He leaves a general impression, but the subtle equivocation allows him to say later that he did not actually say what people thought he meant. He doesn't always tell lies, just half-truths. Children overboard?

Howard's technique has become tired. He wonders why his government is no longer popular. It is because voters have seen through his deceptions.

Mind you, he might have said he was sorry, but he didn't really mean it. He just regrets getting caught out.

Kevin Rennie
Labor View from Broome
http://laborview.blogspot.com/
Posted by top ender, Friday, 10 August 2007 2:09:15 PM
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Much of this inflation is due to rising petrol,food prices,house prices and Govt taxes and charges.It is not driven by wages inflation.It cost me over $20.00 in tolls to drive from Penrith to Neutral Bay.In many professions and businesses public transport is not an option.Where are our taxes going and why are we being punished by rising interest rates not fuelled by wages inflation?

This is why the electorate is furious with The Coalition.They see their real living standards diminishing,yet cannot determine who is at fault,so the Federal Govt is getting the blame.
Posted by Arjay, Saturday, 11 August 2007 12:27:35 AM
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Glenn Stevens rings up his mate at the ABS and gets the following advice: - petrol up 9.1%, hospital and medical services up 3.4%, fruit up 8.4%, rents up 1.6%, vegetables up 6.1%), furniture up 3.9% and houses up 1.0%.

So now we have the RBA putting up interest rates because:

1.Petrol prices go up - certainly not due to inflation - the price is tied to global markers

2.Fruit goes up - certainly not due to inflation - more likely drought and floods wiping out crops

3.Rent goes up - due to the Reserve Bank putting up interest rates last time

4.Furniture goes up because every one is buying expensive plasma screens (and not paying for them until 2010) - certainly not due to inflation. The Government can put a stop to that nonsense.

5.The banks keep writing to people seducing them into raising their credit card limit. Westpac write to me this morning inviting me to increase my limit from $15000 to $20,000

6.Medical expenditure goes up - because the Government has give the industry a blank cheque. Every account is paid, no questions asked, irregardless of the amount.

The medical and pharmaceutical industries bear all the characteristics of either monopolies or cartels. They are the most protected industries in the country - $60B of public money a year - and rising. Competition is restricted.

Any medical or pharmaceutical bill submitted to the Government is paid - no eyelids batted. Governments won't say 'No'.

After any visit to the doctor a bell rings over in Parkes and money is deposited in the doctor's bank account. No proper delegation. No control over burgeoning expenditure.

So why is the RBA putting up interest rates?

Inflation wasnít stopped by the previous 5 rate rises, What evidence that it will be stopped by the next 5 rate increases? All it will do is increase the level of misery all the way up to 18%.

The RBA is using a 20th Century financial solution to a 21st Century problem. The tool that it's got in its hand is limp and useless
Posted by Frank123, Sunday, 19 August 2007 9:54:23 PM
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