Hip, Do they have clocks in Queensland, I thought they were still using sun dials. What year is it up there? 1914.

Banana-benders are indeed a different species, and I should know!
I married one, then went to live there for a couple of years, my second son was born there( luckily I took him south before he was infected) and a previously sane section of my extended family also moved up there, with dire results.
Great place to visit but, please, inoculate your brain at the border! &-)

Aidan,

Your ignorance of economics is epic. The RBA is bank that creates money only by the printing of notes and coins. The "creation" of money that you allude to is done in the manner that every other bank does, ie it borrows money and lends it out. For example:

Joe deposits (or lends) $100 to a bank, the bank then lends out $95 to Fred who buys goods, and whose creditors deposit the money into the bank, which then lends out say $91 etc etc. This is exactly why the working capital of the bank needed to be restored, as it enables the RBA to buy the debt of banks and large companies and inject money into the economy to get industry moving and create jobs whilst still making a profit for the government.

Swan's pilfering of the RBA's working capital was pure economic vandalism.

Shadow,

Your ignorance of economics is epic. Most money creation is now done electronically rather than by literal printing and minting (and it is not the RBA that mints coins).

The RBA doesn't have to borrow Australian dollars before lending them out. It is their ultimate source. Restricting a central bank to loan out only what it borrows would not result in any benefit, but would compromise its ability to control the money supply by setting interest rates and would introduce a stability risk. Such a restriction certainly doesn't exist in Australia, andI don't think it does in any other country either – because hypothetically if it did, the government would have nothing to lose and everything to gain by abolishing that restriction.

"Swan's pilfering of the RBA's working capital" was pure myth.

Aidan,

In simple terms, you are talking bollocks.

You will find that the RBA is not a great lender, and the reason that interest rates in the banks dropped slower than the RBA lending rate is that the banks had to borrow from overseas at rates higher than the RBA rate. When the US government implemented quantitative easing, it essentially issued $bns in treasury bonds and bought bank and company debt with the proceeds. Reserve banks the world around are considered lenders of last resort, and typically lend amounts "transactional gaps" for as short as a few hours to a day or two.

Perhaps you should actually read a book rather than spouting the first daft idea that comes into your head. While transactions are now done electronically, the RBA cannot lend money it does not have.

Shadow,

I agree that the RBA is not a great lender, and this IMO is a policy flaw that should be rectified. But the reason that interest rates in the banks dropped slower than the RBA lending rate is that the banks borrowed from overseas at rates LOWER than the RBA rate but then the Australian dollar rose so it worked out more expensive.

Reserve banks around the world could not function effectively as lenders of last resort if they could only lend what they had borrowed.