The following was a response to a comment at macrobusiness.com.au (click here)
Yes, that is the core of the problem.
The LNP policy recipe is designed to concentrate wealth and the mechanism is by boosting the value of certain classes of assets. For a long time this was very successful electorally because one of the key asset classes getting a boost was land and about 60-70 % of the population have a direct interest in land.
Lots of voters with an interest in land and property assets thought this was wonderful.
“They are making me rich and I just sit back and smile and eat smashed avocado”
It was so successful as a political strategy that the ALP jumped on board and the Greens did not say a word.
No one had the wit to point out that this ‘magic pudding’ style of economics depended on mortgage rates and other credit rates being driven down with trainloads of exchange rate bloating unproductive capital inflows. Perhaps it was not a lack of wit and was simply ignorance as even now few make this point.
Unfortunately, magic puddings are not real and magic pudding economics must come to an end. That is what we are starting to learn.
Slowly more people are talking about the consequences of these policy choices even if they are not yet fully connecting the dots and explicitly connecting low interest rates, asset price pumping, household debt, foreign debt, taxpayer guarantees, bloated exchange rate with a sick hollowed out economy.
The LNP however are determined to stick to the recipe that once worked so well and will try to ignore the obvious, that the magic pudding is rapidly becoming just a smear on the plate.
That is why Mr Morrison, Mr Taylor and Mr Cormann are:
- Running immigration flat out to keep housing demand running hot.
- Only talking about housing ‘supply’ as the problem – supply will remain a ‘problem’ while ‘demand’ – from immigration and tax driven speculation on capital gains is running hot and out of control.
- Running from a Banking and Monetary system royal commission
- Refusing to talk about our exploding foreign debt
- Ignoring that the unproductive capital inflow bloated exchange rate is killing off local production like car making
- Applauding the fast sell off of assets offshore by every level of government.
This is not just incompetence, this is a desperate attempt to preserve their political bacon by throwing the economic future of the country under the bus.
They must be stopped.
The question is, by whom?