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The Forum > General Discussion > Inflation - The root of most of our problems

Inflation - The root of most of our problems

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I hear the constant indignation issuing from the community at large regarding all inflationary pricing (which covers just about everything!)
The question that everyone should be asking is: "Why do we have to have inflation?" The answer is simple and is parroted resoundingly around the world: "We have to have inflation to stay competitive with the rest of worlds pricing structures to maintain competitiveness and create international trade!".......RUBBISH!...the only people that benefit from inflation are the big people, big business and Government instrumentalities!
I am appalled at the current price of Land, which in general is costing as much as 3 houses and land would have cost way back in the 60`s! It is no wonder that people are struggling to service mortgage repayments and I believe that in the not too distant future many will lose their homes to repossession!.... guess who wins again,... the greedy Banks and Lending organisations, selling off the repos to mates waiting in the wings!.....why,... because inflation puts up prices and interest rates!
We had a "peoples" Bank, that at one time used to help the battlers through their hard times, but as GREED took it`s toll the Government decided to privatise it to put more money into consolidated revenue. "Good" government has gradually sold off by privatisation, Australia Post, Telstra, Stae Electrical Authorities, "Which" Bank and many other public organisations and utilities that were established and paid for by the taxpayers of Australia, but we still see disgraceful roads, mounting road trauma, diminishing Healthcare, increasing violence, drug addiction, increasing bankruptcy and social breakdown in general, so again we need to ask where all this is taking us as a nation?
As a ComSuper Pensioner I was advised that because the CPI (ABS) from March to July this year was negative, I along with many others would NOT be getting a Pension increase! (this advice was received through the mail the same week that the Politicians gave themselves another 6.7% increase in their "paltry" remuneration, bringing their increase to a total of 14% in the last 18 months!.....THEY LOVE INFLATION!
Posted by Cuphandle, Wednesday, 29 August 2007 6:35:58 PM
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The maintaince of low levels of inflation through the inflation targeted monetary policy of the Australian Reserve Bank provides the best possible outcome for economic growth of Australia's economy in real terms and the general prosperity of all Australians.

The supply of money to an economy can either match, undersupply (deflation) or oversupply (inflation) the expansion (or contraction) of an economy in real terms and hence effect nominal value (prices, wages etc...)

Attempting to perfectly match an expansion in money supply with the expansion of an economy is impractical. Deflation for various reasons is synonymous with economic contraction (recession & depression), whilst high or hyperinflation is destructive to a nations economy and its people.

Low levels of inflation, as practiced by the RBA's target of 2-3%, allow an economy to avoid deflation and expand, whilst also preserving value (better) and confidence that would be destroyed by hyperinflation.

What alternative are you proposing?
Contracting the supply of money through higher interest rates?
A deflationary cycle like the great depression?
Full-Reserve banking with its inability to fund economic expansion?
Posted by Tristan, Thursday, 30 August 2007 9:51:13 AM
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a few good lines, tristan, on a very slippery subject. i can imagine ways to run the world better, but given the vast uncertainty the central bank must work around, 2-3% inflation is the least of our problems.

rising population and declining resources means that ozzies have to run much faster every year, just to break even. insert 'globalization' with flight of low skill jobs over seas, and even some middle jobs beginning to leave, and you don't need to blame banks for our problems.

the pollies are the problem, and on a deeper level, the ignorant fools who let them run our nation.
Posted by DEMOS, Thursday, 30 August 2007 2:07:06 PM
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Well done,Inflation is certainly the root of all evil if you live in a poor country.
My father brought a home outside London for 4,000 pounds sterling in 1956.Today the home is worth 900,000 pounds.
I purchased a home in Melbourne for $11,000 in 1969. Today the home is worth $400,000.
So with this kind of inflation the western world is using the poor for profit.
I am no richer in Australia than if I had stayed in England and did simple job.
Australians are being robbed daily by the infalation madness that is so invogue in the western world.
The western world and especially the banking and taxation sector live on inflation.
The only way to stop the infalation plague is to stop buying properties for investmnet.
Superannuation is promoting inflation by investing in higher and higher returns.
Posted by BROCK, Thursday, 30 August 2007 5:30:08 PM
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Inflation is natural! It has always occurred and always will! You can try and limit inflation but you can never halt it.
Posted by EasyTimes, Thursday, 30 August 2007 6:39:48 PM
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