Interesting article, was disappointed not to see the growth in money supply discussed as a cause of inflation.

We've got 12 or 15% annual growth in money supply in Aus. (most in form of new cheap credit), is that not the biggest driver of inflation? This is most obvious with asset price inflation - "need another $100k for your mortgage? sure, just sign here".

Ever-easier lending regulation thanks to an irresponsible government keen to buy off the electorate has seen cheap credit pushed on many who can't afford it. But its okay, when the downturn comes the banks will simply evict Howards aspirational battlers and on-sell at bottom dollar to Pratt, Packer, Lowy, MaqBank, et al, who will 'regretfully' make squillions. And so it goes.

Rising interests rates has had a harsh impact on aspirational home owners in Sydney's West. Unfortunately we have merely glimpsed the cracks in the retaining wall.

We desperately need more early warning measures. When will the number of morgagee sales by banks be routinely published along with inflation figures and interest rates?

It took a freedom of information request to the supreme court for the bad news to be reported in NSW.

The triple whammy mentioned in the article is not the worst of it. Severe multiplier effects will kick in when the massive debt bubble eventually bursts in the USA and here in Australia.

I hope that the Reserve Bank has a comprehensive disaster recovery plan in place when the one tool at its disposal, interest rates, is found to be as useful as a sandbag in a New Oleans sea wall when a force 5 hurrican hits.

I can't agree at all with this line of argument. If you increase the cost of borrowing, fewer people will borrow, and those with debts will be stimulated to pay off their loans. In addition, it would also encourage other prudent people to save money instead of spending it. All these changes must reduce demand for price sensitive commodities, from houses to cars, and thus lead to a reduction in their price, and thus to a reduction in inflation.

With the current bipartisan policy of perpetual inflation (which could be ended at a stroke by a return to the Gold Standard), there must be an adequate return for those who choose to save, or their capital will become worthless, and they will not be prepared to continue saving it. As a believer in the old fashioned virtue of saving first and spending second, I have no debts, more money than I need, and live a very comfortable, though simple, life.

I consider that the country would be much better off if more people did the same thing.

If Rudd is elected and plays silly buggers with the US over withdrawing troops from Iraq, and then Wall Street decides it might be a great time to call in the Australian foreign debt, those Australians misguided enough to have become overburdened with debt could be in serious trouble indeed.

Does anyone subscribe to the austrian school of economics?? It is not bad to loan money that is used for productive purposes at the natural rate of interest. The problem as I see it with the current system is that the lose creation of credit through the fractional reserve banking system and the ease of obtaining cheap credit. it seems that anyone can get a loan for nearly anything these days. The rate of supply of money goes up quicker than the supply of goods and services and hey presto we have inflation. Get rid of fractional reserve banking, put better controls on lending and we would be in better shape for the long term.