Shock horror we hear today that inflation is once again on the rise and interest rates look like doing the same.The prime drivers of this inflation were not wages but fuel prices and drugs on the PBS.Ever since the Howard Govt and now the Rudd Govt have made the RBA ever more indpendant of of their influences,the RBA aggressively raises rates with gay abandon with no consideration for the desruction wrought on households or businesses.What are they they trying to achieve?

Well with a $600 billion balance of payments deficit and industry still deserting Aust,real wages must fall under the philosophy of free trade.You do this by letting price inflation take more money from the pockets of consumers and then take even more by increasing interest rates.Canada for example does not have such an aggressive tarrif reduction regieme as us and their interest rates are always lower.Even with much lower wages how do Aust businesses compete with Govt red tape,rules,taxes and regulation?

The philosophy of free trade was that through specialisation all countries would benefit and third world countries would match our living standards,but no one predicted that demand for energy would outstrip supply.

By making the RBA totally independant Govts cannot be blamed for recessions caused interest rate increases or the lowering of living standards to match those of our economic competitors.In one way it is an abrogation of responsibility.If Govts bare no responsibility for our economic woes,why not let the RBA run the entire economy and just have elections as a side show?Pehaps this is why our modern pollies align themselves so much with movie stars.Democracy is an illusion.

We have a $trillion economy,the highest per capita in our history of $47,000.00.Why are ordinary Australians doing it so tough?The answer is we don't as a pop own our resources and energy.We have been globalised.Were dilemmas like these ever posed at the 2020 summit?

Arjay, maybe the Reserve Bank knows that the inflation genie is a lot further out of the bottle than either it or the government are willing to admit, due predominantly to rapidly rising fuel prices - which very quickly affect the prices of everything else, and our overall economics.

Maybe they are not raising interest rates quickly enough. Maybe not by a long shot….if they desire to cancel out or significantly reduce the enormous upward pressure on inflation generated by rising fuel prices.

Maybe the problem is 99% due to rising fuel prices. Maybe everything else that you mentioned amounts to a sideshow – RBA independence, tariffs, illusionary democracy, etc

Maybe there is just no way that we can avoid massive inflation, interest rate rises, unemployment and civil upheaval……..unless we put our collective minds towards addressing peak oil with the urgency of national defence in the face of imminent invasion.

Ludwig putting up interest rates here,is not going to stop the Arab world and Caltex from increases in fuel prices.The very intent of interest rate increases in the past was to reduce demand.Fuel is a fairly inelastic commodity.We need it for production of food to the transport of other necessities as well as getting to work.

Woolworths and West Farmers are virtually cartels,which sell us food and other necessities.How will interest rate increases make them reduce their prices?We have become modern day serfs in our own country and the media is used as a distraction from the real source of our woes.

Don’t get me wrong, I’m not an advocate for raising interest rates. I was just proposing a possible scenario as to why they have risen more than some people think they should have, including many who think entirely within the narrow and warped parameters of continuous-growth based economic rationalism.

I agree that putting up interest rates would not stop increases in fuel prices. It would put more pressure on the battler to reduce consumption, of fuel and everything else, while not addressing the root cause of the problem at all. But I can just imagine the RBA putting them up largely due to rapidly rising fuel prices, while not admitting the main cause and placing the blame on whatever else it can.

There is no doubt about it; we are being distracted by our unillustrious new government, by many institutions including the RBA and by the media, from the real source of our woes.

Incidentally, I wonder if we really do have a trillion dollar economy, and whether it gives us the highest per-capita rate in real terms that we have ever had, or whether that is just another furphy? https://www.cia.gov/library/publications/the-world-factbook/geos/as.html#Eco

I wonder why the last character insists on dropping off every time you cut and past into OLO (:>\

https://www.cia.gov/library/publications/the-world-factbook/geos/as.html#Econ

And still the link isn’t active. Now I’m completely befuddled |;~{