Comments on: John Howard Has No Control Over Interest Rates in Australia

By: Anon

Anon — Sun, 30 Sep 2007 01:30:37 +0000

It has more to do with where we are on the K-wave, than which government is in power at the time. Interest rate is like a 'front door' policy many take interest in. Broad money supply is the 'backdoor' policy. Looking at the broad money supply figures over 10%pa for the most recent liberal term in office, it appears that Australia's 'prosperity' was largely bought on credit. Sadly, the reserve bank doesn't have control of banking regulation in Australia - that is left to a separate department - APRA. In order to make holistic monetary policy, the two would be better off unified, like they were before 1998.

By: kage

kage — Fri, 28 Sep 2007 06:22:02 +0000

“The Australian jobless rate is certainly on track for more record lows and we may even see the unemployment rate with a three in front of it” - gee I think an election might be imminent.

The greatest con is that everyone thinks the government can and should set interest rates. Price fixing always ends badly.

kayle,
If you want to see something scary, copy and paste the following link into your browser, go to page 8 and gaze upon chart L.

Be warned this is very graphic and could scare the kiddies. The electorate on the other hand, doesn't see the problem ..... yet....

http://www.debtdeflation.com/blogs/wp-content/uploads/policy/KeenHouseRepsEconomicCommitteeHousingLoans.pdf

By: kayle

kayle — Fri, 28 Sep 2007 04:53:00 +0000

1) The nominal highs on the Dow, a result of the recent Fed cut with promises of more to come, are IMO a bull trap - timed with the scent of bonus money at year-end. I bet the real effect of the deflating credit bubble on the stock market will show up in Q1 08. 2) I think Howard made that promise foreseeing that citizens would focus all their attention on INTEREST RATES, rather than on PRICES. In a credit bubble, it's a lot easier to keep interest rates low (which is partly what creates the bubble) than it is to lower bubble-prices. What Howard didn't foresee was the bubble deflating in his term of office. NOW he may regret the timing of his term of office, rather than the promise itself. 3) Interesting to me that Australians are now, similarly, focused on the "unemployment rate" rather than on WAGES. Once again, the hounds go baying up the wrong tree. If you pay 1,000 people ten bucks a day, it's a lot easier to keep unemployment low than if you pay 1,000 people (or 500 of them) a living wage. But a living wage would mean that Australians wouldn't need to rely on debt for a "living", and what would that do to a bubble economy? The bubble economy ("strong" or "booming" as it may be) is the great worker-con of this generation. Howard is not the only leader complicit in it.