the author of this long, wandering article seems to be against increases in interest rates, and says we must reform our economies because of the mess we are in.. sure changes in interest rates are used as a means of throttling back economic growth if it looks like developing into a bubble or developing too much inflation, but why is this bad? Interest rates are a blunt instrument - we could certainlu use better - but if the author has a suggestion for something better he should make it. As for being in a mess, we are in a mess because the Yanks stuffed by regulation of their banking system. Dunno what that has to do with interest rates. In any case, the indications are that we are pulling out of it..

Itastonishes me the media in Australia are too bloody stupid to pik up and discuss the ideas floated by the author of this article. I recall the author of this predicted the current crisis.
Cumedgeon that you fail to understand the fundamental cause of the current crisis was the legislation forcing US banks to lend to people without assets, income or solid credit history simply says you've been taken in by some weird idealogical reasoning that defies logical economics.

Mylmited assessments poin to a period of hyperinflation in consumer goods ad a simultaneous period of deflation in 'solid' asset values.

I too predicted the current crisis. And I think it far from over too. I think all the stimulus packages have done is postpone the inevitable. THe real problm is the inacessiubility of credit for industry.

I hope I'm wrong

Keith - 'Cumedgeon that you fail to understand the fundamental cause of the current crisis was the legislation forcing US banks to lend to people without assets, income or solid credit history simply says you've been taken in by some weird idealogical reasoning that defies logical economics.'
Actually if you look back at my post, that's what I did say..
Sure banks could lend more to business, but they are doing that - slowly. the rest of the article makes only limited sense. You need to say what it is we should do.. an actual suggestion.. leave it with you.

solution
easy end floating exchange rates, establish an international framework for monetary system,develop an international reserve currency based on the Euro, Yen,Yuan and $US, force investment into productive sectors out of speculative sectors, abandon total reliance on price signal (interest rates) for monetary policy, substitute quantitative measures such differential reserve ratios for lending to different sector, coordinated fiscal and monetary policy to prevent asset bubbles developing.
essential end the policy reliance on the economic voodoo of the neoclassical school of economics.

'...we are in a mess because the Yanks stuffed by regulation of their banking system.'

C. my analysis was much more specific and aimed at a particular piece of legislation. The Community Re-investment Act. Which forced banks to lend to people without assets, income or credit history.

Your statement is non-specific and states the Yanks banking system was stuffed by reglation. The US banking system is still functioning, it's regulation hasn't been re-legislated, and so isn't, as you claimed, stuffed.

Of course you can now claim that's not what you mean't but we are not yet capable of reading minds.

Sir,

What comes from your pen is factual, instructive, in beautiful English and eminently logic.

The other day a grandnephew of mine just out of the hall of graduation, imparted me, his first lesson: “Scarce are the persuasive virtues of Logic” he pronounced.

On reading your essay on Interest rates and thinking about the present state of the Australian and global economies and the history of their gradual, quasi linear descent into the present frightening conditions on the incline prepared for them by the most disaster-prone class of insensitive, incompetent and arrogant of people, Politicians, the Armageddon by default seems the most likely, in fact already at the point of inevitability.

I have dispensed with radio and televisions and yet the enormities of their clamors hits one on the train, on the road, on the footpath, coming from people’s mouths, from street posters, from graffiti, from shop windows and from the ubiquitous scraps of papers that litter towns’ nooks and crannies.

And then the word Economy in its infinite multiplicity of fields, hits while one cannot close the eyes to the waste of all that is material, emotional, religious; waste that seems impossible to contain and of which every one of us is condemned to be the factual agent.

I am, of nearly your vintage, a man fortunate for having had a bountiful life but on the land of others, the Aborigine