Last year: Australia's growth rate = 4%
Australias's growth in money supply = 14%
i.e. Pure inflation of (14%-4%) = 10%!

No wonder home prices are so high!

The US stockmarket is only held up by monetary inflation at the moment - and even that is now failing to fool the punters. The US stockmarket market has been falling in euro or gold terms for quite a while. See:

http://www.financialsense.com/fsu/editorials/2007/0416.html

and the Shadow Government Statistics website:

http://www.shadowstats.com/cgi-bin/sgs/data

As the US market continues to crash, the US Federal Reserve will lower interest rates in an attempt to hold it up. Far higher rates of inflation are not far away.

Bye Bye USA!

Michael,

What are you talking about? The US market isn't crashing and hasn't been since 9/11 occurred. Over the last century it has a trend line of up, including the Great Depression, a severe but temporary dip.

Continues to crash? you must be listening to Bush who tells us the sky is falling if we don't "win" in Iraq.

So whatever charts, tools and other tips you listen to. They are wrong and so are you.

DavoP,

Just read the links I gave. THEN use your keyboard.

Michael

Think it is still, a watch this space moment. A less US economy, moderately high oz interese rates and a resources boom could push the Aussie dollar up. 1973/4 revisited? Perhaps not, but maybe a tilt in that direction?

If rates go up John Howard can say goodbye to the next election.What the Coalition should have done,was to bring in tighter bank regulation to curb excessive borrowings both in regards credit cards and home borrowing.We now have over inflated house values with people left without real spending capacity.Credit cards have been a curse.

More increases in interest rates will see a recession with resultant job and property losses.With young people unable to afford housing in our cities,this limits both job prospects and incentive for people to work.

38% of the cost of a house is related to State taxes and charges.NSW has been just chugging along with a lame Govt for some years and it won't take much to send it under.

The Reserve Bank needs to do some creative thinking to get us out of this dilemma rather than just using a slegde hammer to crack a peanut.

"A less [stable] US economy, moderately high oz interese rates and a resources boom could push the Aussie dollar up. 1973/4 revisited? Perhaps not, but maybe a tilt in that direction?" - My earlier post 3/7.

Should have bought some Aussie back then, as I am offshore .:)

All,

The Great Depression probably had more to do with the Protectionist response [limiting Trade]that the loss in market capitalisation. When the US stopped buying goods from other countries, those other countries had lessened ability to buy US exports.

An increase in the USD would further pressure mortgages/household equity. A decline might encourage a flight of USD from pension funds to non-US Sovereign AAA countries. Bank maturity tranformation is also needs to watched: A fall in Bank profitability would hurt more than the smaller issue of sub-prime lending by light-weights.