RBA gets it wrong again

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The RBA has put rates up now on the belief that the finan­cial cri­sis is behind us, and it has to return to its estab­lished role of con­trol­ling infla­tion.

That this deci­sion was likely was flagged by the speech by Anthony Richards last week, which implied that the RBA, hav­ing ignored the house price bub­ble cre­ated by pri­vate credit growth in the pre­ced­ing two decades, was wor­ried about the renewal of the bub­ble ini­ti­ated by the Government’s First Home Ven­dors Boost (I refuse to call it by its offi­cial name, since the money clearly went to the ven­dors, while the buy­ers copped only higher prices).

Need­less to say I am all for try­ing to con­tain the house price bub­ble, which I regard as a dis­guised Ponzi scheme that has sucked Aus­tralian house­holds into unsus­tain­able debt lev­els. It is quite pos­si­ble that the increase in inter­est rates (which is sure to be fully passed on by lenders and will add $20 a week to the ser­vic­ing costs of a now com­mon­place $400,000 home loan), com­bined with the phas­ing out of the Ven­dors Boost, will be enough to prick the bubble–especially if it is fol­lowed by another rise next month.

But the RBA is doing this in the belief that the econ­omy will return to nor­mal after the recent mild recession–normal mean­ing grow­ing at about 3% per annum in real terms, and faster than that as it rebounds from the reces­sion.

Unfor­tu­nately “nor­mal” in our post-War expe­ri­ence has  also involved a return to a ris­ing pri­vate debt to GDP ratio. Every reces­sion has involved a fall in debt-dri­ven demand, and every recov­ery has involved a return to debt ris­ing faster than income. As the global finan­cial cri­sis has made many peo­ple realise, this is sim­ply a for­mula for avoid­ing a cri­sis now by hav­ing a big­ger one in the future.

I doubt that the RBA appre­ci­ates this even today. It is still mired in a neo­clas­si­cal way of think­ing about the econ­omy, which myopi­cally ignores the impact of debt-dri­ven demand on the econ­omy. This is why it can put up rates now in the belief that this will merely fine tune the economy’s performance–reducing the like­li­hood of infla­tion in the future.

I think it is likely that the RBA will achieve far more than it intends. The last time the RBA put rates up to attempt to con­trol an asset price bub­ble that was already out of hand was back in 1989. That exac­er­bated the eco­nomic down­turn that was already in train as the debt bub­ble of the 1980s started to col­lapse. I expect the out­come of this rate rise will be sim­i­lar: a down­turn that is already in train as a debt bub­ble bursts will be made worse by this increase in rates at a time of greatly height­ened finan­cial fragility.

The prob­lem this time is I believe far worse than 1990. Then the house­hold sec­tor had a rel­a­tively low level of debt–the mort­gage debt to GDP ratio was a com­par­a­tively triv­ial 18 per­cent, com­pared to its now record level of 87.5%. It was there­fore pos­si­ble for the finan­cial sec­tor to lend willy-nilly to house­holds, some­thing neo­clas­si­cal econ­o­mists facil­i­tated by their enthu­si­as­tic dereg­u­la­tion of the finan­cial sec­tor.

Who is there to lend to today? All sec­tors of the econ­omy except the gov­ern­ment are car­ry­ing record lev­els of debt. Thus while the Ven­dors Boost and other entice­ments encour­aged some addi­tional bor­row­ing by the already mas­sively lever­aged house­hold sector–and gave us a house­hold debt to GDP ratio that now exceeds America’s–I sim­ply can’t imag­ine who (apart from the gov­ern­ment) the finan­cial sec­tor can now sell debt to.

As a result, I doubt that we will see any sus­tained accel­er­a­tion in the debt to GDP ratio, with the con­se­quence that the debt-financed com­po­nent of aggre­gate demand will be anaemic at best. Since that has been the major source of growth in aggre­gate demand for many years now, I expect that eco­nomic growth will be sub­stan­tially less than the RBA antic­i­pates.

If so, just as it killed a dragon that wasn’t there by its infla­tion-fight­ing rate rises up until March of 2008, it may be tam­ing a lion that is sound asleep with its rate rises now. If eco­nomic growth does in fact stay well below lev­els that reduce unem­ploy­ment in the com­ing two years, then there will be very good grounds for revok­ing the inde­pen­dence that the RBA has had in set­ting mon­e­tary pol­icy. We may as well hand it back to the politi­cians, if the alter­na­tive is to leave it with neo­clas­si­cal econ­o­mists who don’t under­stand the dynam­ics of our credit-dri­ven econ­omy.

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  • Mechan­i­calEngi­neer


    Deductabil­ity of mort­gage inter­est will inflate the bub­ble higher as any mort­gage amount’s repay­ment becomes more afford­able due to the tax deduc­tion achieved. 

    As I under­stand it the US had home loan inter­est as a tax deduc­tion. This just drove peo­ple to refi­nance homes to con­sume on the tax deductable equity in the home. This is clearly a bad idea.

  • debtjunkies

    But ME their bub­ble did inflate to the level that ours has so there­fore based on your argu­ment maybe it is the tax deductibil­ity of inter­est that kept their mar­ket from over inflat­ing to lev­els ours are cur­rently at.

    Seri­ously thou, if you then tax the cap­i­tal gain made on hous­ing then this will reduce the level of cap­i­tal that con­tin­ues to roll over in the prop­erty mar­ket inflat­ing it fur­ther.

    If you give peo­ple a lit­tle each year (via a tax deduction)they may use it to boost sav­ings, reduce debts or they may even choose to use it to con­sume, but if you give that same per­son an untaxed $100K profit from a sale that will get rolled into the new trans­ac­tion bid­ding up the price.

    I think if you fol­low Steves idea of ensur­ing ser­vice­abil­ity and deposit stan­dards then you can mit­i­gate the unre­stricted bid­ding up of prop­erty as it is restricted by the bor­row­ers ongo­ing capac­ity to ser­vice the loan (the inter­est tax deduc­tion should not form part of the loan ser­vice­abil­ity assess­ment).

  • hbl


    You can zoom any web page in or out to suit your font size pref­er­ence (View menu -> Zoom on both IE and fire­fox, or Con­trol — / Con­trol + key­board short­cuts). Per­son­ally I like the cur­rent default size on this site.
    Or if you meant the size of the text entry box, you can type else­where and copy/paste into the form.

  • ozmal

    Hi Steve,
    RE RBA and Inter­est Rates.
    While I find your web site very inter­est­ing and valu­able for its infor­ma­tion I am not really a blog­ger.
    I just want to say that Elliott Wave Inter­na­tional have pro­duced a chart of the Aust 3 Month Trea­sury Bill mar­ket rate and super­im­posed a line show­ing the RBA’s inter­est rate move­ments. The cor­re­la­tion is amaz­ing. The same thing occurs with vir­tu­ally all cen­tral banks. Cen­tral Banks fol­low the mar­ket rate. They do not lead the mar­ket, they do not set or con­trol inter­est rates!
    My ques­tion is if this is true why do we have to con­tinue with the delu­sion that cen­tral banks have any seri­ous role to play?
    If all they do is fol­low the mar­ket rate, what use­ful work do they really do, what does all their so called research and analy­sis amount to?
    Any high­school stu­dent could look at the mar­ket rate chart and say “Gee time for inter­est rates to go up.”
    Hong Kong never had a cen­tral bank and did very well!
    Please keep up the good work.

  • mul­rax


    Mechan­i­calEngi­neer is cor­rect in his state­ment that home loan inter­est (prin­ci­pal res­i­dence) is deductible under US tax law. 

    In the same way that high income earn­ers are often attracted to neg­a­tive gear­ing rental prop­er­ties here in Aus­tralia, US tax­pay­ers main­tain large amounts of home loan debt as a sim­ple, main­stream, tax min­imi­sa­tion strat­egy.

    I have known US res­i­dents who have talked about the need to buy a big­ger house purely because they are “pay­ing too much tax”. This is an estab­lished prac­tice over there.

    At the same time, unlike here in Aus­tralia, there is no cap­i­tal gains tax exemp­tion in the USA, nor is there any dis­count­ing nor index­ing of cost base with respect to the cal­cu­la­tion of cap­i­tal gains tax lia­bil­i­ties.

    US tax pay­ers are able to, instead, defer the cap­i­tal gain tax lia­bil­ity on dis­posal of real estate almost indef­i­nitely with what’s called a 1031 Tax-deferred Exchange. These are applic­a­ble to all kinds of real estate (not just pri­mary res­i­dence) and work on the premise that so long as the pro­ceeds from real estate dis­posal are directed at one or more sub­se­quent real estate acqui­si­tions then the tax lia­bilty can be deferred.

    The spirit of these tax-defer­reed exchanges is to main­tain the buy­ing power of funds extracted from real estate so that replace­ment prop­erty can be pur­chased. I think this is the sen­ti­ment that moti­vated the Aus­tralian Govt to pro­vide a CGT exemp­tion on the prin­ci­pal res­i­dence too, but the US rules have far wider appli­ca­tion.

    So long as the pro­ceeds from real estate dis­pos­als are always directed at fur­ther real estate acqui­si­tions (of almost any type) the tax can the­o­ret­i­cally be deferred indef­i­nitely — or as a worst case left for their estate to
    pay when they are deceased. 

    By and large, the US tax treat­ment of this is far more per­mis­sive than what we have here. 


  • debtjunkies


    I agree about the tax teat­ment from the US.

    I sup­pose my main point is that what­ever tax arrange­ments we strive for, they should apply to all home­own­ers, occu­piers and investors, that way at least every­one is on the same field and there is no favour­ing of one over the other.

  • @MMitchell 242

    Alan, I per­son­ally think it is use­ful and insight­ful to have peo­ple post views such as your on this site. Typ­i­cally oth­ers here are kind enough to pro­vide thought­ful feed­back, how­ever, I do not think that one can expect any more than this from these posts, as this is not a polit­i­cal activist site, and oth­ers have sug­gested organ­is­ing polit­i­cally in the past and it has fallen flat (I am not sure that would work any­way). How to take ideas of reform and act on them seems to be an ongo­ing issue for many of the ideas pre­sented here. Steve is work­ing in one impor­tant area against large odds, but wider mean­ing­ful change is pos­si­bly beyond him and his blog. I think many peo­ple believe that sig­nif­i­cant change will not hap­pen until things can­not con­tinue as they are any longer, that said the least likely peo­ple to drive sub­stan­tial change are those tied to main­stream inter­ests and par­ties.”

    I agree with you fully here. I do not expect replies to some of my poignant state­ments. I am here at this moment since I dis­cov­ered Steve via Max Keiser’s video “On the Edge with Steve Keen.” It was the last actions of Steve dur­ing this inter­view that made me admire him. Steve words were “to stop these finan­cial bas­tards from doing what they did, this time around, ever again.”

    Dur­ing my sojourn here on this blog, if I am able to shake the cobs web loose and allow crit­i­cal think­ing to occur by some, then I will be very sat­is­fied. I fell com­fort­able among het­ero­dox econ­o­mist. Being a loner with no one to com­mu­ni­cate with is frus­trat­ing. My father is the most accept­ing of my views but at the age of 79 he says that he does not want to have any more wor­ries so he demises what he agrees with.

    Some say igno­rance is bliss. Some say the answer to 1984 is 1776.
    Change is com­ing at a rapid pace of knots. This is a rev­o­lu­tion (of great change) but few are unaware of the early stir­rings. As Ger­ald Celente says, “when peo­ple lose every­thing, they lose it.” This is some­thing which I hope will never hap­pen but I am not igno­rant to the fact that this is the direc­tion where things seem to be head­ing. This is laid out clearly by Max Keiser’s lat­est inter­view though he doesn’t talk highly of the US pub­lic abil­ity to see the obvi­ous.


  • mul­rax

    Here’s some­thing that may be of inter­est.

    To illus­trate how far the shift­ing sands of the ecconomy can move, here is an arti­cle that sug­gests that Aus­tralians are about (or cur­rently) return­ing to their prof­li­gate ways.

    I think the title should have been : “More Aus­tralians ‘look­ing to increase debt’” but I’m preach­ing to the con­verted on that.


    One won­ders why, even if the ecconomy was really on the up, after hav­ing such a close call with dis­as­ter peo­ple aren’t throw­ing them­selves into reduc­ing their debts while rates are still rel­a­tively low and things are look­ing rel­a­tively rosy. 

    Also, there is a grow­ing sen­ti­ment that the ris­ing AUD is a good thing. Check this arti­cle out.


    I should point out that most of Julia Lee’s arti­cles degen­er­ate into ref­er­ences to trend analy­sis tech­niques which I don’t approve of, but the mes­sage she sends is sure to be rep­re­sen­ta­tive of what main­stream finan­cial advi­sors are telling their clients so it’s worth using this as an early warn­ing for investor behav­iour etc.

    The short story is that the strong AUD is great if you are:

    * pay­ing down for­eign debt
    * mak­ing con­trac­tual pay­ments or import­ing goods
    * pur­chas­ing for­eign assets, includ­ing com­modi­ties that are denom­i­nated in USD (pro­vided the AUD depre­ci­ates against for­eign cur­ren­cies again in the future).

    But there is no free lunch. The flip side of all of this is:

    * local debts will increase from their already high lev­els to ser­vice con­sump­tion at these ‘bar­gain’ prices
    * con­sumers will increas­ingly spend money on imported goods or over­seas reduc­ing local demand in some indus­try sec­tors (the travel agents and air­lines could do well out of it though)
    * the moti­va­tion to out­source to for­eign coun­tries will increase at the expense of local indus­try and employ­ment
    * exporters (eg: resources com­pa­nies) will have lower rev­enues but the same over­heads if they con­tinue pro­duc­tion at cur­rent lev­els. It’s true that these com­pa­nies usu­ally engage in cur­rency hedg­ing to man­age the risk that the AUD will appre­ci­ate but they are rarely fully hedged because of the costs involved.
    * a cow­pat is still a cow­pat no mat­ter what coun­try you buy it from, so you need to pay cow­pat prices to make it at all worth­while (and have a use for a lot of fer­tiliser).


  • scottmuz

    Hi Steve,

    I am an Aus­tralian liv­ing in the UK, mar­ried to an Eng­lish­woman.

    You are doing Aus­tralia a great ser­vice by try­ing to high­light the mas­sive Aus­tralian hous­ing and credit bub­ble.

    I am shocked when I talk to my fam­ily, about their level of com­pla­cency about this. I sus­pect this is fairly typ­i­cal in Aus­tralia. Although the UK seems to be in an even greater credit fueled mess, there is in the UK a grow­ing real­iza­tion that there is going to a tough cou­ple of decades to get out of this.

    So to my request, I for some­time have been try­ing to get a good analy­sis of pri­vate debt to GDP ratios across a large range of coun­tries. So I won­der if you would be able to put together an arti­cle com­par­ing and con­trast­ing pri­vate debt to GDP across the west­ern nations. I sus­pect it would attract lots of read­ers as I have not been able to find any­thing about this on the web.

    Could you also explain clearly for non-econ­o­mists about what causes pri­vate debt to GDP to rise? Is it run­ning a per­sis­tent cur­rent account deficit in excess of GDP growth? Or is it sim­ply due to a mis-pric­ing of credit? 

    Thanks again,

    Scott Mur­ray

  • mul­rax


    Refer­ring back to your ear­lier post regard­ing the tax treat­ment of debt on prin­ci­pal res­i­dence vs other real estate, I agree that more con­sis­tency in the rules would (if noth­ing else) sim­plify our tax laws and leave less room for mis­in­ter­pre­ta­tion.

    I am not con­fi­dent that the major­ity of home­own­ers would direct the pro­ceeds of any pro­gres­sively applied tax ben­e­fit to pur­poses such as pay­ing down debt, though. They would be more likely to sim­ply add it to their dis­pos­able income and spend it arbi­trar­ily. Even if you or I might use every oppor­tu­nity to reduce lia­bil­i­ties, it’s a cruel fact of life that peo­ple often do not act ratio­nally. If we look at the behav­iours that peo­ple fre­quently share when it comes to invest­ment prop­erty, they are will­ing to gear to such high lev­els that in cash flow terms they are trad­ing at a deficit, purely because there’s a tax deduc­tion that will result. They jus­tify this with the expec­ta­tion of high returns from cap­i­tal growth. In actu­al­ity, because the invest­ment is nei­ther cash flow pos­i­tive or neu­tral they must make a cap­i­tal gain equiv­a­lent of AT LEAST their aver­age cost of car­ry­ing the invest­ment just to break even in sim­plis­tic terms.

    Per­son­ally, I do not object to the idea of peo­ple being able to deduct inter­est expense for income pro­duc­ing activ­i­ties. This puts the rules more or less in line with deduc­tion rules for busi­ness expenses. My con­cern about deductible debt on invest­ment prop­erty is that the deduc­tion is per­mit­ted even when there is no rea­son­able expec­ta­tion of the invest­ment ever becom­ing cash flow pos­i­tive purely because the loan bal­ance is often never reduced (for fear of reduc­ing their deduc­tion enti­tle­ments). For a busi­ness to be able to claim tax deduc­tions there must be a rea­son­able expec­ta­tion that a profit will be made at some stage. To be con­sid­ered a bona fide ‘busi­ness’ in the first place, there are also some other require­ments like min­i­mum rev­enues (as opposed to prof­its) and so on. There are some really annoy­ing rules actu­ally, but the objec­tive is clearly to inhibit peo­ple call­ing par­tic­u­lar activ­i­ties a “busi­ness” purely in order to jus­tify a swag of tax deduc­tions that they would not oth­er­wise be enti­tled to.

    I think any change to the tax treat­ment of the prin­ci­pal res­i­dence in Aus­tralia should encour­age debt reduc­tion, rather than encour­age inter­est expen­di­ture. Allow­ing deductible inter­est on home loans would really be doing the lat­ter.

    To my way of think­ing, inter­est and other deduc­tions on invest­ment prop­erty (and other pas­sive invest­ments) should be sub­ject to sim­i­lar (not exactly the same) rules as those used to qual­ify as a busi­ness — in par­tic­u­lar I think there should be a rea­son­able expec­ta­tion that the invest­ment will be cash flow pos­i­tive (gen­er­ate a profit) within N years to dis­cour­age putting it on the ‘never-never’. This would not exclude peo­ple from ‘get­ting into the mar­ket’ but it would require them to make some con­certed effort to pay down the loan to a rea­son­able level and there­fore lenders may take some inter­est in only lend­ing quan­ti­ties for invest­ment pur­poses that will sat­isfy the deductibil­ity rules.


  • ak


    The Char­tal­ists think that they have the answer to your ques­tion:
    “what causes pri­vate debt to GDP to rise? Is it run­ning a per­sis­tent cur­rent account deficit in excess of GDP growth? Or is it sim­ply due to a mis-pric­ing of credit?”

    Accord­ing to prof Mitchell it is because of bud­get sur­pluses com­bined with the Cur­rent Account Deficit.

    We often read that the appro­pri­ate fis­cal stance is to bal­ance the fed­eral bud­get over the busi­ness cycle. Some econ­o­mists claim the goals should be to run a sur­plus on aver­age over the cycle allow­ing for deficits in extreme down­turns.

    Both goals would be fis­cally irre­spon­si­ble in Australia’s sit­u­a­tion where our cur­rent account is typ­i­cally in deficit. If the gov­ern­ment bal­anced the bud­get on aver­age and the cur­rent account deficit was in deficit over the busi­ness cycle then the pri­vate domes­tic sec­tor would on aver­age be in deficit (dis-sav­ing) over that cycle. The decreas­ing lev­els of net pri­vate sav­ings financ­ing the gov­ern­ment sur­plus increas­ingly lever­age the pri­vate sec­tor. The dete­ri­o­rat­ing debt to income ratios which result will even­tu­ally see the sys­tem suc­cumb to ongo­ing demand-drain­ing fis­cal drag through a slow-down in real activ­ity. In other words, adopt­ing a growth strat­egy that relies on increas­ingly lever­ag­ing the pri­vate sec­tor is unsus­tain­able.

    The only way the pri­vate domes­tic sec­tor can save if there is a cur­rent account deficit is for the gov­ern­ment sec­tor to run deficits up to the desired pri­vate sav­ing. Gov­ern­ment deficits “finance” pri­vate sav­ing by ensur­ing that aggre­gate spend­ing is suf­fi­cient to gen­er­ate the level of out­put and income that will bring forth the pri­vate desired sav­ing lev­els.”


  • Vfe

    You have to hand it to the agents for push­ing the bound­aries. Is it any won­der Mel­bourne and to a lesser degree Syd­ney are ‘boom­ing’.


  • mul­rax


    That was well spot­ted. As Ben­jamin Dis­raeli is attrib­uted to have said (but pop­u­larised by Mark Twain), “There are three kinds of lies: lies, damned lies, and sta­tis­tics.”

    Most forms of ‘mar­ket info­ma­tion’ seem to rep­re­sent all three!

    It’s remark­able how rad­i­cally sta­tisi­cal results can change when the sam­ple is taken from a less than rep­re­sen­ta­tive pop­u­la­tion. Even more remark­ably, oth­er­wise sound sta­tis­ti­cal infor­ma­tion can be inter­pret­ted in rad­i­cally dif­fer­ent ways depend­ing on what side of the fence the com­men­ta­tor sits on.

    The old (cyn­ics) rule of thumb is that a real estate agent will always think of a rea­son why it’s a good time to buy prop­erty, a stock bro­ker will do the same with stocks, and so on. And every­one is happy with them­selves while the self-ful­fill­ing prophecy holds true, except that it never lasts.

    Some of the pop­u­lar dogma about invest­ing kicks into play and we hear burned investors con­sol­ing them­selves with “It’s okay, I’m invest­ing for the long term”. How long is a piece of string?

    As J.M. Keynes said, “In the long run we are all dead. Econ­o­mists set them­selves too easy, too use­less a task if in tem­pes­tu­ous sea­sons they can only tell us that when the storm is past the ocean is flat again.”

    And of course the finance indus­try has a clas­sic which they must state as a legal require­ment, after jus­ti­fy­ing why invest­ing in their prod­uct is a good idea based on a cho­sen win­dow of past per­for­mance they say that “past per­for­mance is no indi­ca­tion of future per­for­mance.”

    (Appar­ently I’m in a quot­ing mood today)

    Dis­torted infor­ma­tion, like that you drew every­ones atten­tion to, sim­ply serves to muddy the waters fur­ther, so it’s a shame that more peo­ple in the gen­eral com­mu­nity aren’t aware of this farce.


  • Skim­ick­_99

    The one point peo­ple seem to be miss­ing is that the RBA is a pri­vate for profit bank, the same as the Fed­eral reserve bank in Amer­ica. The burn­ing ques­tion is WHY do we “bor­row” from a pri­vate bank that sim­ple cre­ates “credit” out of THIN AIR and lends it to us, and charges us INTEREST? Top econ­o­mists out there are try­ing to fix a prob­lem that can never be fixed from within, because the “sys­tem” is cor­rupt right from the start. 

    All the politi­cians are LYING or stu­pid. We can end all of Aus­tralias prob­lems tomor­row sim­ply by cre­at­ing out own money. Now, idiots out there will say “oh no inflation”.….wrong, gov­ern­ments would rise and fall based on their abil­ity to man­age the money sys­tem, which is THE MOST IMPORTANT ROLE a gov­ern­ment has. Right now ALL MONEY is bor­rowed from banks and must be paid back plus inter­est, but where does the inter­est come from? IT MUST BE BORROWED! Imag­ine if the money just went round and round to ser­vice the nation! Right now money is sucked out of the coun­try in inter­est pay­ments. When the banks stop “lend­ing credit” the nation grinds to a halt, when they give money away the nation booms, and infla­tion soars. The banks do this on pur­pose because they KNOW when they will row the econ­omy and place their bets in the stock mar­ket (casino). It is a RIDICULOUS SYSTEM for we Aus­tralians to be liv­ing under. Even­tu­ally the bankers own every­thing, and we become noth­ing but slaves to them (if we are not already).
    Google “Money as debt 2, promises unleashed” and watch the video.
    No mat­ter how you try to jug­gle the econ­omy as it is, you will never win. The sys­tem MUST BE CHANGED per­ma­nently and for­ever. Inter­na­tional bankers should have NO SAY in how we run our coun­try. Any­one work­ing against a tru­ely Aus­tralian owned and oper­ated money sys­tem should be seen as a trai­tor to Aus­tralians.
    Don’t be fooled, we DO NOT OWN OUR MONEY SYSTEM, no mat­ter what garbage they try to tell you. The fact is our gov­ern­ment BORROWS money when we could cre­ate it our­selves. Why should “bankers” be able to make money out of noth­ing then lend it to us? Maybe its the threat of TERROR by the banks against us if we ever try to break away? Is that the dirty secret? Is that why politi­cians talk tough to bankers but never do any­thing? Are they put there by bankers to ensure that their lit­tle scam is kept safe?
    Kevin Rudd said very clearly before being elected that “I will fight to keep the reserve bank inde­pen­dent!!”.….
    The road we are on right now is a DEAD END. The only way to keep it mov­ing for­ward is mass immi­gra­tion so new suck­ers out there can get house loans and the coun­try gets more in debt. Thats the plan. Thats why they announced Aus­tralia will have 50 mil­lion peo­ple by 2050.
    Aus­tralia is a BUSINESS, owned by bankers, and you are the slaves.

    Lets kick out the bankers and take our coun­try back!

  • Kar­maisk­ing

    They are lying.

  • The Out­back Ora­cle

    ak…chicken and egg…cause and effect…logic and fun­da­men­tal good sense tell us they have the cart before the horse! Well we didn’t ALWAYS run a CAD. It is CAUSED by some­thing.
    Just thought I’d mix up a few metaphors.

    I keep won­der­ing why the heck all these sages think Aus MUST run a Cur­rent Account deficit. The RBA, the Trea­sury and the Char­tal­ists all take this as a given. You had Assis­tant Gov­er­nor of the RBA, Philip Lowe, yes­ter­day say­ing the CAD is CAUSED by the fact we have to bor­row money form exter­nal Banksters! Great Scot!!!
    Aus has run a CAD for 50 years because the Credit and result­ing Debt lev­els here are so badly man­aged at all levels…including Gov­ern­ment Fis­cal pol­icy, the RBA and the Banks. I think it takes the work of a lot of geniuses together to take a coun­try, which is prob­a­bly the rich­est in the world in terms of resources, and turn it into one of the most indebted nations on the planet.
    Let’s not for­get the Acad­e­mia role in this…present com­pany excluded!!!

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