RBA Watch: Savers demand a seat at the RBA table

A story that appears in the AFR today and was noted by Macrobusiness concerns a call by Doug Turek, managing director of Professional Wealth, for more representation, on the Board of the RBA, of the interests of retirement savers who have been suffering  as the RBA and APRA desperately try to keep the economy floating on growing private debt – mostly household – by setting ultra low “bait” rates.160518 - RBA Board2

It is excellent that we are now seeing some real lobbying for seats on the RBA board as that indicates that finally the political nature of what the RBA does is being understood by the community.

It is not surprising that groups are starting to realise that if they want to influence the Macro-Political activities of the RBA they need a seat at the table. It will not be long before they understand they also need to influence the credit control, allocation and price setting role of APRA.

Even better would be to completely rewrite the charter of the RBA and limit it to the following. Continue reading

Deflating the Australian deflation pandemonium

You might have thought we had more than enough”scare campaigns” this election festival what with Malcolm and Morrison prowling the streets of our cities spinning yarns of doom, gloom and desperation if the public even dare think about handing the reins of economic management to anyone else.

Which is not exactly a positive message to be selling…

 “Hey if you think the economy is a bit stinky now just imagine how much worse it could be

..but then fire and brimstone is natural territory for the conservative end of the political spectrum.

However, there is a new scare in town that is growing in spooky power day by day.

Deflation!!!!   – Quick run for the hills the prices are falling ! Continue reading

Auction Action: Election Time – RBA supplies the bubbles?

On Tuesday night Mr Scott Morrison held his 2016  “Hot Autumn Nights” Budget party.

While guests were not required to bring presents, it appears that the message did not get through to the RBA Board who turned up early with a beautifully gift wrapped 0.25% cut to the target rate.  Plus the Big Banks went “in” on the present for Scott as well and announced they would pass on all of the cut straight away. There is nothing worse than not being able to play with a present at your party because no one thought to give you the batteries.

What is a party anyway without some self appointed “Masters of the Punch Bowl” spiking the fruity concoction and shaking up all the champagne bottles so party-goers get sprayed with foam?    The RBA guys know how to have a good time! Continue reading

RBA Watch: Will new RBA Gov. Mr Lowe make a difference?

Probably not.

Here is a box of old speeches by Mr Lowe for Central Bank “twitchers” to peruse between now and September 2016 when Mr Lowe’s appointment as RBA Governor commences.

http://www.rba.gov.au/speeches/list.html#lowe

The Glass Pyramid  doesn’t expect any deviation from the current approach of the RBA as most of it is baked into the current regulatory and supervisory model for monetary creation in Australia where:

1. Money creation by the government – is frowned upon.

Despite what most people think, most money is not created by the government.

Instead it is created by authorized deposit “making” institutions  (banks) when they create deposits which are treated by law as equivalent to money created by the government.

Yes! – when a bank extends you a loan it is effectively creating money.

Even though the idea of giving private profit driven organisations the power to create money is simply a barbaric accident of 19th century history, people have been brainwashed to believe that this makes more sense than to have their elected representatives do so.

Even though almost all booms and busts are the product of private banks creating too much “money” and then panicking and creating too little.

To ensure that government provides as little competition to the banks as possible (inflation is the limit to how much money is created in total by the banks and government) their army of media friendly employees (aka bank economists) and ideological warrior buddies (neoliberals) – rave on endlessly that government should not run deficits and instead must act like a household.

What they really mean is that they don’t want government money creation to cramp the money creation by the private banks.  If the government is politically blocked from creating money for education, health, tax cuts for low income earners etc – that means more room for banks to create money by lending for speculation.

You end up in the situation we are now in where we have huge banks making mega profits and a government struggling to rub sticks together.     The private banks have won an effectively monopoly over money creation. Continue reading

Auction Action: Attack of the babies!

A big baby Saturday in Sydney yesterday.

If Sydney first home owners were disgruntled about a  phalanx of grey beard speculators out bidding them at auctions, they are now petrified by a new foe advancing through the post codes of Sydney – an army of babies hell bent on speculation and becoming the ‘bub with the most buy-to-let toys’ at day care.images

The Prime Minister unleashed this horde on Sunday last week with the implied announcement that under his government, if re-elected, no baby would reach the age of 5 without at least 1 investment property and possibly one for their future off-spring (no time for childhood when speculation starts young).

As a result pamper clad speculating rug rats have been spotted in all the best suburbs clutching their Fisher Price magic slates calculating rates of depreciation and the risk of being hit with Mr Baird’s new “value capture” concept. Continue reading