Good post Robg. Couldn't have said it better.

It's amazing how many people have an opinion on interest rate movements, but have little to zero understanding of the why's and wherefore's that drive them. They just don't like them, and don't comprehend the big picture.

In the real world, the government has no power over the movement of interest rates as some have suggested.

Like Rob said, it's the only system we have, it does work as intended, and it's not like we're hearing, or are likely to hear of any viable alternative coming from the economists in the near future. The reason we won't hear of a new method is that the current one functions well, hence economists are not going to be spending their time trying to fix something they don't perceive to be broken.

Well Stomont and Robg. you both seem to be suggesting that no one is seeking an alternative to the boom and bust cycle. I've certainly heard a couple of economists argue that the system has been broke for many years - but no-one wants to try to fix it.

I don’t believe that the Government has any business deciding the “appropriateness” of peoples’ spending. We live in a democratic, free enterprise system, which allows us to buy what we want to buy if we have the wherewithal to do so – be that our own funds or those borrowed from others.

It is up the individual to decide whether or not he or she is spending money appropriately. Many people do not seem to have that ability, and it is not the business of government to teach the ability or insist on “sensible” spending. People who think otherwise would be happy in the Nanny State that freeranger envisages until they found out that the Nanny State hands out less money than does the system we enjoy.

It’s quite simple: you can have anything you want if you can afford it. If you can’t afford it – and that means paying cash or knowing that you will be able to pay off the loan when it is due – you can’t have it. If you stuff up, don’t expect the government – via taxpayers – to bail you out.

There are too many people wanting to have whatever rich people have without putting in the effort and taking the risk. They have become used to a freak period, which enabled them to have want they want now and pay (maybe) later. This has been an aberration, not the norm, and we are now seeing the beginning of the end of that aberration.

People don’t seem to get the message. Interest rates rise because they are buying too much on credit. Instead of blaming the government or the Reserve Bank, they should be having a good look at themselves

Leigh, I am no advocate of the Nanny State - but unfortunately that's largely what we have. Government's (of any colour)use taxpayers funds to bail people out of problems such as when they haven't bothered to insure against fire or flood. This effectively penalises those of us who do insure.
Even the current drought is a great example. The problem is greater than just a lack of water because accountants have encouraged farmers to increase debts levels to take 'advantage' of the taxation system.
Accountants and economists have contributed to the problems of the rural sector. Without debt most farms could survive.