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The Forum > General Discussion > The RBA's Scortched Earth Policy = Bad Economics

The RBA's Scortched Earth Policy = Bad Economics

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I think that the superannuation idea would work to control inflation, but not the real problem of market cycles.
Posted by freediver, Tuesday, 18 March 2008 9:58:22 AM
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One thing is certain ,as the pollies forsake their responsibilities,the focus should then turn on the RBA.The media needs to do their bit and question decisions made by RBA bureaucrats who really have our future in their hands.

It is just too snug and cosy for both the major parties to say that interest rate increases are out of their control.Govts create the environment for rate changes and they can do much in the way of fiscal policy to influence monetary policy.

I believe in a capitalist system that is balanced,but also believe that the current corporate regieme and and big Govt are working against the small innovators in business.

It would be interesting to see how many of our current Federal Labor Pollies could constructively enter into this discussion.Peter Garrett for example,seems to know nothing beyond enviromental cliche's,yet people like him are elected to run the country.
Posted by Arjay, Tuesday, 18 March 2008 9:01:14 PM
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But the politicians don't say it is out of their control. The Kruddmeister has been saying he will cut back government spending to reduce inflation, while conceding that the tax cuts will contribute to it:

http://www.ozpolitic.com/forum/YaBB.pl?num=1173068900/670#670
Posted by freediver, Wednesday, 19 March 2008 11:56:57 AM
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The more direct control over inflation - interest rates, was handed to an independent body because of the temptation of politicians to abuse them for short term gain. This has happened in the past. If the public does not understand how it works you can't expect politicans to manage it well.
Posted by freediver, Wednesday, 19 March 2008 12:00:45 PM
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Well its a global problem, far beyond our RBA. As large borrowers,
we will be affected, including higher interest rates.

What you had in the US is fraud on a large scale. Now
you have a capital drought, with estimates of up to 1 Trillion$
lost. Lenders won't lend at low rates like they used to. That
money that went from the Arabs to Citibank, I gather they are
paying 11% for that. What the Fed says about rates is worth
nothing, if there is no money to lend.

http://www.businessspectator.com.au/bs.nsf/Article/The-capital-drought-CV48P?OpenDocument

Given that we don't save much in Australia, as there are no tax
incentives to save, we borrow from that overseas pool. So we will
have to pay more or borrow less, its as simple as that.

This is not about liberal or labour.
Posted by Yabby, Wednesday, 19 March 2008 2:08:48 PM
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Most western countries do the same thing we are doing with our reserve bank. Sure we are a small player, but the exact same principle applies.

BTW, it is quite easy to get a significantly different inflation rate here compared to other countries. It's just that most countries try to achieve similar rates.
Posted by freediver, Wednesday, 19 March 2008 2:15:02 PM
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