The 'Million Dollar Man', the governor of the Reserve Bank Phil Lowe marched on stage yesterday to the tune of some up beat funky music at the Morgan Stanley summit, where he addressed the assembled suits, from the 'big end of town'. Lowe, told the ten thousand dollar a day crowd that the battlers on Struggle Street are getting it too easy, and if they're not, then they should work extra hours, spend less and take in a lodger or two for some extra dosh. That was after Lowe was a party to jacking interest rates another quarter percent on Tuesday, the 12th rate hike since Lowe pronounced there will be no rate increases before 2024.

The Treasurer Jim Chalmers got it right when he said; "A lot of Australians would find (this rate hike) difficult to cop". Well Jim you know what should be done with a useless banker employed by the taxpayers. I'm sure you have the agreement of the majority of battling Aussies, to point this bloke in the direction of 'Centrelink" ASAP.

point this bloke in the direction of 'Centrelink" ASAP.
Paul1405,
Totally agree !

Come to think of it, he & many of his ilk must be strongly encouraged to share accommodation as he suggested the victims of his incompetent policies should do ! The git's still being there is proof that Govt. is as incompetent as he is !

Indy,

We have something in common, we both want to see this bloke shown the door. When you pay a bloke a million dollars, you pay him that amount not to stuff up, otherwise pay someone 20 grand and expect them to stuff up all the time.

I told you all weeks ago, the reserve bank doesn't want better living conditions and increased wages, it wants everyone working 2 jobs, and living on the poverty line with their parents and on lower wages.

Did I or did I not tell you?

I don't blame the Reserve Bank or it's chairman for inflation- but it's their job to manage interest rates when inflation occurs. I blame Corona lockdowns- that increased logistics costs, supermarket prices, high centrelink costs, locking people without vaccination out of the workforce, etc. The governments created conditions where supply was low and demand was high- more so in Victoria than other states. If airports were ring fenced and spot fires were quickly brought under control- inflation could have been managed better.

That's assuming that Corona was much worse than the flu- which I believe it wasn't. Taking ibuprofin every four hours, maintaining fluids, monitoring symtoms, bed rest for the worst four days was the best solution for me. Most fatalities occurred with the over seventies.

Even now many willing workers are blocked from participating in the workforce based on Corona policy- despite the claims that mandates are no longer in force.

Little wonder at the high prices in the supermarkets and high debt due to Centrelink burdens.

Hi AC,

You and I are on the same page on this, Lowe and his cronies of bankers and academics on the Reserve Bank board have no more concern for the battlers, than a snake has concern for the life of the mouse.

Why is it that these non elected mandarins, all appointed for terms of up to 7 years and eligible for re-appointment for the rest of their lives are treated by everyone, including government, as the untouchable, unquestionable and unassailable gurus of the economic well-being of the Australian people. You will hear our elected representatives in humble reverence refer to the "independent authority of the Reserve Bank". Well, who said they are independent when it appears their only concern is for their mates down at the "big end of town" and their corporate profits. Not wanting to sound like a "communist", but it might be high time for real economic management by our elected representatives that servers the people, and not the interests of Big Business.

Ever increasing wage/Profit demands are the REAL underlying cause of inflation as they undermine international competitiveness & brought/bring about outsourcing to lower Wage countries.
All of these factors are to our detriment ! Reign in short term profit in favour of long term sustainability is the only way out.
Lower unwarranted bureaucrat salaries by 1% now & freeze wages for ten years & introduce a 1% Transaction Tax to be put into a common Pension fun will be a great positive start to turn things around ! And, of course a National Service for all unemployed between 18-20. People need to accept that the services & Welfare they demand as their Right are directly coupled to their responsibilities & according to their merit !

So, we want to get rid of the Reserve Bankers, of which Philip Lowe is the spokesperson. This is a recipe for out-of-control inflation.

"Ever increasing wage/Profit demands are the REAL underlying cause of inflation as they undermine international competitiveness & brought/bring about outsourcing to lower Wage countries." (Indyvidual).

Plus government spending!

On jobs, lots of them could disappear altogether - fewer people, particularly immigrants.

Ninety per cent of our economy is made up of service industries. Many of the jobs within the sector are bullshitjobs. (David Graeber, 'BullshitJobs - A Theory', Penguin, 2018). Millions of people — clerical workers, administrators, consultants, telemarketers, corporate lawyers, service personnel, and many others — are wasting time in meaningless, unnecessary jobs. 

Posted by Indyvidual-

Ever increasing wage/Profit demands are the REAL underlying cause of inflation as they undermine international competitiveness & brought/bring about outsourcing to lower Wage countries.
All of these factors are to our detriment ! Reign in short term profit in favour of long term sustainability is the only way out.
Lower unwarranted bureaucrat salaries by 1% now & freeze wages for ten years & introduce a 1% Transaction Tax to be put into a common Pension fun will be a great positive start to turn things around ! And, of course a National Service for all unemployed between 18-20. People need to accept that the services & Welfare they demand as their Right are directly coupled to their responsibilities & according to their merit !

Answer-

Definitely food for thought- though I reserve right to disagree. Reagan talked about small government "ie. less bureaucrat spending". I like the bit about rights reflected in responsibilities. Continuous growth can be an issue- but investors won't if they don't get a return- and that means some small amount of growth is necessary- perhaps the return can be obtained through other non-financial or internal efficiency means- this is the sort of question someone with experience like Hasbeen is in a position to answer.

I often think that mismatches between supply and demand also drive inflation- something that on-tap production or short-run production could potentially address in part. But short-run production tends to be more costly than mass production. Mass production has more warehousing costs. It's probably a matter of weighing up the factors and these can be location specific.

Use of durable goods and modular parts rather than disposable consumer goods has much potential for economic sustainability but often require an investment/ cost on the buyer- perhaps light touch regulation can be applied here at strategic points in coordination with other regulatory bodies such as housing construction bodies. Of course these all require some adjustment in behavior.

It was the hebrew Freud family through Edward Bernays that created consumer culture in the US- a culture that spread throughout the west after WWII.

For example powdered milk could replace fresh milk- it has a much longer shelf life- doesn't require refrigeration- but often users don't like the taste depending on the use case. Of course diary suppliers will see a reduced market at least in the short term. Sometimes a partial change in behavior can be enough to stabilize the inflationary pressures. These sort of coordinating activities between different stakeholders seem to be low hanging projects for governments. Durable goods can be used to insulate buyers from short price spikes.

If diary farms had more direct access to the consumer and could produce their own powdered milk in spray drums then it could reduce the price of milk.

In this space reducing red tape seems to be a way to increase competition in our current contract induced supermarket oligopoly. At least the supermarkets are Australian- at least they seem to be- though sometimes I doubt it.

Of course one factor that tramples over everything is the rise of international markets where commodities are sold at world prices- given the current enforced free trade arrangements it sadly leaves local populations unable to purchase local produce- especially when foreign entities control the local production facilities and don't have a vested interest in the local people

Perhaps the concept of open world markets needs to be reviewed- but this is supported on global communist and business sides against the interest of the communities.

Marxist Communism advocates centralized control of the means of production in the body of a dictator- but I believe a more effective way of stopping people becoming a slave to the producers- is by allowing everyone to be a producer- democratizing production- equality of opportunity- by reducing red tape to such a level that anyone can in theory do it- especially for essential goods. Of course we should still allow people to benefit from innovation.

But perhaps Communism was never about reducing slavery.

As a society it's important that we teach children the dangers of Bernays Consumerism the Media Industrial Complex as well as the mistrust of Freudian's for the common people.

If diary farms had more direct access to the consumer
Canem Malum,
I think Farmers should leave diaries to the printers ! (Sorry CM couldn't resist) ;-)

Thanks Indyvidual for the pickup on the diary/ dairy. I believe you can write your diary invisibly if you use dairy. Kudos

Imagine you have a lung cancer sufferer, the disease caused by decades of smoking. The sufferer is now being administered chemotherapy to combat the effects of the self-inflicted illness. But our sufferer is complaining that the therapy is painful and sickening in and of itself and doesn't like it at all.

So what does our sufferer do? He demands that the doctor be replaced, presumably by someone who won't administer the life-saving drugs that the sufferer dislikes.

Our current economic woes are self-inflicted. The lockdowns and the consequent massive government deficit spending are the root cause of this inflation/currency devaluation/low GDP economic trifecta.

The vast majority of Australians were and probably still are completely onboard with the lockdown mania. They thought that the government merrily handing out vast sums so that people could isolate and not work, would be consequence free. The people who were trying to warn of the problems down the track were censored, ridiculed and sidelined.

So now the cost of the lockdown mania are falling due and the sufferers aren't happy. Fo they absorb their own errors? Do they ask why their leadership led them down the garden path? Do they suck it up and resolve to not be misled in the future?

None of it. Instead they seek out scape-goats and pretend that the cure for the ills caused by their own cheering for lockdowns is unwarranted. They don't know what the cure is but they want it to be pain free.

So they call for the doctor to be sacked. To be replaced by what? They don't know and have no answers as to what other cures are available.

Lowe made lots of mistakes when he got the timing of the interest rate increases wrong. But he's right that they are necessary to solve the problems caused by those who supported the lockdown mania. But being right doesn't matter.

The only question is whether our cancer patient will die because he didn't like the cure.

Thanks mhaze. Kudos.

You have misdiagnosed the problem, mhaze. The patient does not have cancer.

The primary cause of the inflation is a breakdown in global trade due to the war in Ukraine. Without Russia supplying the oil, gas and timber it used to, the prices of those commodities soared.

Raising interest rates is at best an inefficient "medicine". When demand is high it's fairly effective, but currently the demand has been hit hard by the previous interest rate rises, and there's not much more further rises can do in that regard. They do help by lifting our dollar's short term value (at the expense of its long term value) but they also adversely affect production, as they discourage business investment.

BTW I don't think anyone expected the lockdowns would be consequence free; merely that the consequences of Covid running rampant would be worse.

Smoking reduces your fitness. So does Covid. So does the wrong medicine!

___________________________________________________________________________

Josephus,
'Tis not a matter of getting rid of the Reserve Bankers; it's more a case of wanting to stop them going feral like they did in the Gillard era when they actively sabotaged the economy.

There are worrying signs it's happening again, particularly with the last rate rise when there were strong indications that inflation's already peaked.

This is a recipe for out-of-control inflation.
Josephus,
Is the present situation any different ? Just about every bureaucrat is guilty of gross mismanagement of the economy & greedy citizens are complicit !

The wring of hands and gnashing of teeth by some who believe there is no other way is typical. The likes of Lowe and his board takes the usual capitalistic approach in attempting to remedy economic problems within their "free market" economy. The "solution' according to the gurus of Capitalism, always involves a painful penalty being imposed on the ordinary people, with resultant hardship through economic sanctions, brought on by the cutting of incomes with real wage reductions, cost penalties and increased unemployment.

Aidan wrote: "The primary cause of the inflation is a breakdown in global trade due to the war in Ukraine. "

Well that is just rubbish. Its just a made up excuse to try to hide the fact that inflation was caused by the increase in money supply as a result of the quantitative easing that was required to make the lockdowns acceptable to the public. Those who, like yourself, fell for the who Modern Monetary Theory (the unlimited credit card malarkey) need to try to find some other reason to explain why the entirely foreseeable results of the slack fiscal policies occurred.

The fact is that inflation was already rising and out of control long before the war occurred eg (http://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/mar-quarter-2023); and the outbreak of the war had no effect on the trajectory of the rise. But governments the world over have tried to deflect by blaming the entirely foreseeable results of their reckless spending on something else. I'm sure they'll be pleased that at least some people have fallen for their deflection.

Aidan wrote: "Without Russia supplying the oil, gas and timber it used to, the prices of those commodities soared."

While its true that oil prices rose for a short time after the invasion, they quickly fell once people realised that oil supplies weren't being affected. Prices were the same in August 2022 as they were in February 2022 when Putin invaded. But why did inflation persist? Oil prices are now significantly lower than they were in February 2022. Likewise natural gas prices are way below where they were in Feb'22. Why hasn't inflation also fallen if it was caused by the temporary price rises? Why? Because the rise in inflation has nothing to do with these purported commodity price increases. That's just an assertion to hide the real cause.

Governments fell in love with the idea of not having to adhere to spending limits and thus splurged both before, during and after the covid lockdowns. Warnings that ignoring monetary policy would end in tears were ignored when they weren't being ridiculed. Those who pushed the open ended credit card malarkey won't accept they've been proven to be hopelessly wrong and will continue to scratch around for any excuse irrespective of how historically inaccurate it may be.

Aidan wrote: "Raising interest rates is at best an inefficient "medicine"."
Equally Paul complains of that he doesn't like the solution without offering any alternative.

Raise interest rates is inefficient. But its the only tool available just as chemotherapy is less than optimal but still the only option. In years gone by, authorities could have also turned to fiscal policies to combat inflation...that is, they could have run budget surpluses to cool demand. (indeed I recall Aidan once telling me that that is what governments would do if inflation occurred!!)But that option is no longer available following the inane spending policies of the last decade.

Raising interest rates isn't optimal, isn't pleasant and causes untold hardship. But there is no other remedy. Its that or just let inflation rage in the hope that things will resolve down the track.

You've got to smile at those who rage against the interest rate rises but have no other 'solution'. For them, the cancer is preferred to the solution.

I always find it funny when intellectual pygmies try and describe economics.

Very basically, Inflation is caused by too much spending from the government and/or consumers. Inflation can be controlled either by government self-control or by reducing the propensity of consumers to spend.

The RBA's most crucial function is to ensure that inflation is under control. When a government is incapable of self-control such as all labor governments and spends like a drunken sailor, the RBA has to step in and raise interest rates. This forces consumers to spend more on financing debt and less on purchasing things. This is not capitalism or socialism this is pure economics which is politically agnostic.

The high inflation rate/cost of living/energy prices are all linked to Labor incompetence.

The root cause of government debt today was the over indulgence of the Morrison government in racking up a trillion dollars of spending, as they lined the pockets of the mega rich down at the big end of town, Australia now has nothing to show for it, except a Noalition debt for as far as the eye can see. Fortunately Labor has not gone down the same path, with economists describing the recent Labor budget as prudent and non-inflationary, delivering a surplus.

The Noalition are always long on rhetoric and short on delivery. I think the Australian people have woke to the fact they are a do as I say mob, but not a do as I do bunch of clowns. I had a terrible thought, Dud Dutton and his cronies could one day be running the country, what a circus that would be!

The $trillion of Labor debt has been vastly added to in the last year by the Labor/gangreen spending fueling debt and inflation.

Inflation was just starting after covid and Labor took charge. It was Labor's responsibility to control it, and they did bugger all to curb inflation and even spent more, which is why Aus is in the trouble it is now.

After 13 months of government Labor has no one but itself to blame (other than the rantings of the village idiot) Labor is responsible for:

High inflation,
High power prices,
Higher cost of living (wages rising less than inflation,
High interest on Mortgages,
Higher risk of power outages,
higher risk of racist constitution,
etc.

mhaze,
Take another look at the ABS link you supplied, and you'll see that after negative inflation in lockdown, there was indeed a surge in inflation when the economy opened up. But that's to be expected, for the obvious reason you've identified. 'Twas hardly "out of control" as it had started falling before the really big surge in inflation caused by the war.

Contrary to what you claim, the results are almost entirely consistent with MMT. The single exception is that MMT predicts the inflationary effects would happen in real time; in reality lockdown caused a time delay by limiting people's opportunities to spend money.

Your question about why inflation hasn't fallen again is a good one. I think the answer is a combination of four things:
• though some commodity prices have fallen again, others have continued to rise
• profits are higher
• increased uncertainty about costs means businesses are unwilling to cut their margins
• higher interest rates have increased business costs.

But what it clearly isn't is rapidly rising wages. Phil Lowe has constantly been predicting that, and he's constantly been wrong. That's why he must go!

The "only tool available" argument is just wrong. Inflation would have fallen even if he'd done nothing. And fiscal policy is just as available now as it was in years gone by. BTW I think I said governments CAN and SHOULD (rather than would) tighten fiscal policy if inflation occurs. And to some extent (insufficient IMO) they are: AIUI this is the first financial year since the GFC that the Federal government's running a surplus despite governments on both sides trying to take credit for surpluses that never eventuated.

No matter how much you try to liken inflation to cancer, it never will be.
Corruption is cancer.
Inflation is more akin to diabetes.

Stop whining & just thank your lucky stars COVID didn't happen during a Labor Govt.

According to the table in Hebrew author Steven Stilbiger's book "Ten Day MBA"- Chapter Economics...

Communists believe Marxist economics I suppose from "Das Kapital".

Leftists and "John Maynard Keynes" believe that unemployment is the biggest evil

Rightists and "Milton Friedman" believe that inflation is the biggest evil.

Not sure what type of economics Aboriginal's follow- perhaps Trotsky economics.

Now the Aboriginals are Trotskyists! This guys too much.

When Captain Cook landed they said; "Good'day Leon, glad you could pop in!"

Canem,
Aboriginality is not a political position.
Trotskyism is a subset of communism.

Posted by Aidan-

Canem,
Aboriginality is not a political position.
Trotskyism is a subset of communism.

Answer-

Many Trotskyist Organisations- often they seem to call themselves Socialist consider that Communism has never been tried- perhaps because they have a blind spot- they can't believe that their principles don't work. Many decades ago socialists/ communists started to dominate worker organisations such as the working mens clubs.

But Trotsky as a national leader would have been much worse than Stalin.

It's strange that perhaps persons of notorious interest linked with the Aboriginal community seem to be linked also with Communist principles or paradigms. Communists believe that the nation state (and eventually "world communism") is responsible for them.

Some (Ayn Rand, Nietzsche, Aristotle, Patrick Deneen) have equated this with the Priestly/ Beggers/ Thieves/ Slaves/ Victims Code as opposed to those that just want to be allowed to create their own living. Nietzsche called this the Knightly Code supporting the morality of self sufficiency, resilience, strength, enterprise, integrity, greatness. Not all of those espousing the Knightly Code are genuine- many that aspire to the Knightly Code don't make it. But essentially the point of the Knightly code is to produce enough to sustain- this is in principle achievable by manufacturing- if the government stays out of the way. Everyone can dry vegetables and store for the winter of discontent, everyone can get oats to store for the winter of discontent, everyone can limit their excesses, everyone can teach the young, everyone can support/ sell goods and services to each other for the common wealth, everyone can afford to live in a safe/ hygienic house- even if it's a mud house- mud comes from the ground- water comes from the sky, everyone can think and plan for themselves- if the government stays out of the way- mostly the government should only be used between groups of people- at different scales of the political/ cultural hierarchy- not within groups of people.

Governments at different levels should control the size of their own populations if they becomes a threat against their neighbours.

Bob Whittacker said that he learned as a child that communism was about the workers and farmers living according to enlightened principles created by academic ideologues. He said he laughed- I do too when I think that Communists are trying to get you believe that giving up your own power to world communism will help you survive.

Mao was much worse than Stalin too but sadly appears to be very influential in the world today because we didn't recognise or act on the threat- our inaction appears poised for hundreds of millions of dead