This comment was made at Macrobusiness  (link may be locked – but there is a free trial available)

All that international capital seeking a home and bidding up the dollar is allowing Mr Swan to run up cheap (for now) public debts and the RBA to run a low interest rate strategy. They are hoping the littler battler stays on the tips of his toes. Of course that is pure short term thinking and will do plenty of long term damage to several sectors of the Australian economy.

But as we discovered yesterday any questioning of the low interest rate strategy and using household debt to drive the economy is the province of driveling Utopians, socialists and the naive. 

If you want to control the dollar you have to be prepared to relax your white knuckle grip on the precious interest rate / debt lever.

Which of course would be no problem provided you are prepared to let fiscal policy do any ‘stimulation’ work that needs to be done and leave the job of monetary policy to stomping on inflation.

With 5.4% unemployment there probably remains some room for the need for any stimulation to be debated.

…and this

• Pfh007

  February 21, 2013 at 2:57 pm

  I was actually quite impressed that I could argue against centralised state manipulation of the economy and the redistribution of income using interest rates and debt AND still be a Utopian socialist.

  Next week I will be rejoining the vegetarian collective with a leg of lamb tucked under my arm.

  

  • Houses and Holes

    I think you might have taken on some comments aimed at others…
  • Pfh007

    February 21, 2013 at 3:12 pm

    Yes – but I liked them…..