I don't see the point of the comment that the RBA has only one woman on the board; Maggie Thatcher was one too many female Prime Ministers and proved conclusively that women are just as stupid and vicious as men when it comes to economic policy.

Interest rates really only hurt if you are borrowing. If you're a saver well it's all to the good. After learning about the rise of Toyota I'm a firm believer in self financing expansion.

The problem is with most businesses boom times means no efforts to control costs whatsoever. This is the time for trimming fat. When high interest rates hit and companies have to cut back what often gets cut is muscle, not fat. Most organizations find they're trying to work harder while having a tight arm around their windpipe. That's not a recipe for success.

Higher interest rates are a blunt instrument. Economists point to econometrics as if its a science, but if its so scientific why does it not have predictive power? If those who suffered from economic theory could take out malpractice suits against economists I think there would be fewer economists. I think most people would agree that this would be a good thing.

Whilst I agree it is like a scorched earth campaign I would also suggest that individuals and companies should have more foresight than the market usually rewards. There's no excuse for myopia in business. Boom and bust is hardly a new phenomenon.

Well let's go back to the functions of money,ie the medium of exchange,a store of wealth etc,but no one mentioned that money itself should become a commodity,that is allowed to distort the functioning of the real economy.

Money is only the oil that lubricates the economic engine,but now we have let the oil be the salient ingredient,hence we have the current market failures.It is the banks/money markets who are the gate keepers of liquidity and they manipulate the market to their own ends.

There are better ways than the repeated failures of recessions that ordinary folk suffer,while the money sharks make merry buying up bargains.

Newly elected, born again PM:07 Rudd and his shell-shocked Treasurer Winnie-the-poo Swan, have much swatting to do, preparing for the forthcoming May Budget. It will be a bottler. Razor's honed, the demonic slasher-gang have been canvassing every Government Dept and Ministry, to trim fat, weed out excess's and produce a credible balance sheet that would either make or break the dynamic duo. Defence spending, pensions, welfare, benefits, child care,maternity leave etc will undoubtedly be on the high end of the grim reaper's agenda !

Promised rebates, tax cut's for the wealthy and a measely $ 23 rise for the batttler,are going to offset some of the grandiose schemes Labor's back-room henchmen have been plotting and planning, nigh on eleven years in the Political wilderness.

The embattled Federal Reserve Bank has served Oz well. It's function, despite what Politician's and Government's of the Day would wish - is strictly INDEPENDENT. It's role - safeguarding our National Financial/ fiscal interest at home and abroad. Over the decades, the RBA have kept us on the straight and narrow, and despite Global upheavels, bust's in the Stock markets, recessions and precarious downturns, successive Governor's and Board of Dir, have steered us in the right direction, provide monetary security and ensured Aust's wealth and prosperity is intact, albeit expanding twofold !

The RBA is not only attuned to ructions in Timbucktoo - it has eye's and ear's in every State Capitol, regularly consults with G8 players and has exchange Officer's based in the IMF, OECD, World Bank and dozen's of Finiancial Institutions big and small. It's analyst, researcher's and economist's are the brightest Worldwide - we should be proud.

For those with short memories, Christmas 07 was a bonanza. Queenslander's splurged a record $ 8.6 billion on shopping alone. A record $ 63.5 billion was spent on Residential Property. Over 27 % was speculative.

The plastic-fantastic credit was the Royal-flush. Qld's economy out performed the rest of Oz by 5.25 %.What of the rest of the Nation ?Remember there was a Mining Boom and Rose Porteous Hancock ploughed her $30 million mansion into oblivion, and

quickly rebuilt a monumental sea-change Shangri-La on a double size canal block - much to the envy of Perth's Rich and Famous !!

Come July, the US sub-prime disaster struck. It spread World-wide, impinging on all the National Bank's and credit houses. Suddenly, hedging funds and speculative script became worthless. Who dived in with a rescue package - the maligned RBA!! It restored credibility, confidence and a full measure of the might of Federal resources, overlooked by many. It plugged Corporate, small business entrepreneurs, Mom/Dad speculators etc from insolvencies and bankruptcies. Insolvencies cost Oz economy $ 10-12 billion a year. A whopping 3-5 % of GDP.

For the past 15 years RBA has kept inflation at 2-3% target.This has inadvertenly protected people's savings and long term Superannuation from eroding in value - in real dollar terms. Higher inflation leads to wages, goods and services spiralling out of control like some South American economies. People collected their wages in wheeelbarrows. Crime and the Black market prospered in Foreign currencies. In the end it wasn't worth going to work unless one was paid in US dollars. Rebellion, followed Army dictatorships.

Current Account Balance's must be looked at in perspective. It isn't all bad news - imports of Aircraft, machinery, computers, high tech medical equipment are long term and leading edge. Broadly, Oz must stay competitive.

Compared with OECD Countries, our economic growth is better than most European, UK and NZ. We're lagging behind the robust Asian tigers.

Whinging about the Bank's is retrograde. Without Bank mortgages, ATM's, credit cards, security, other facilities, you'll be paying higher Brokerage fees, managerial fees, Insurance and still be hiding your funds under the bed ??

Finally, we are now paying for the gross exuberances. You cant spend money you haven't got.

Dont despair, where there's pain, there's GAIN ??

Ian in Tokyo – “After learning about the rise of Toyota I'm a firm believer in self financing expansion.” Sure it would be great if we all had the Japanese business model of the Keiretsu which has a bank at its centre but many of these business models are more trouble then they are worth as we saw with financial problems in the late 90’s. Sure Toyota is a success but there are many other Keiretsu which have stumbled along due too the poor business model of buying off only your own members even when the products/services that were offered were of a poorer quality or more expensive then those offered by a competitor. Toyota is the acceptation not the norm.

Arjay – Sorry I misunderstood your question before.
I think a great way to avoid some of the problems people are facing with rising interest rates is teaching them basic financial planning. People who have not budgeted for a rising of a few % in interest rates are there own worse enemy. The best option I think for people who are not well versed in economics is too lock in there home loans at a long term fixed rate. This way they know exactly how much they are going to need to pay each month no matter what interest rates do.
Your idea for taking money out of wages and putting it into super is good but it does not tackle the business side only the individual side. It would also be a political hot potato because who would decided when to take extra money out of super? How much? And when do we reduce back to 9%? And then in low inflation and growth why not drop in below 9% to encourage spending? How does this effect the overall monitory and fiscal policies? Its too complicated and too much like hard work for the government and they leave themselves open to attacks from alsides and from all different groups