The Australian Dollar keeps on rising and if it is not rising it
remains far above what our trade performance warrants -floating on a torrent of unproductive and predatory capital inflows.
Below is an interesting graph claiming to show the relative ‘expensiveness’ of currencies
Check out the $AUD.
It is in contention for the gold medal as the world’s most expensive currency. Look at Japan – super cheap – no wonder they still have a car industry!
This suggests (confirms might be more accurate) that Australian attempts to fight the currency wars with interest rates alone has been a failure – even if you assume that the RBA has been trying to do so – which of course they have not as they consider mother nature’s invisible fist to be at work in the international FX markets and they don’t believe in intervening in the operation of something as ‘organic’ as FX.
The RBA are the international babes in the woods in that regard as the central banks of our major trading partners have been working very hard to use interest rate policy and their far greater economic heft to drive their currencies down and our currency up since the GFC.
It is time for a national conversation about regulating and restricting the worst forms of predatory and unproductive capital inflows that drive up our exchange rate and kill off our domestic industries from car making to fruit canning – one by one.
Unfortunately, we remain in the grip of globalist free capital flow fanatics and there is no real discussion of:
1. APRA directing the banks to reduce offshore borrowing to support mortgage operations over existing property to zero (over a few years if necessary).
Hundreds of billions of dollars of off shore borrowing that is driving up our exchange rate and driving our industries out of business.
2. Heavily restrict the sale and ownership of government securities by foreign central banks and others.
This means no more custodial/trustee holdings on behalf of foreign parties either. All those SMSF would welcome the opportunity to ‘lend’ to the government at a reasonable rate of return plus when they do so (rather than currency manipulating foreign central banks and plunder funds) they do not drive up the exchange rate. Plus it might mean that SMSF feel less need to speculate on the great Australian housing debt / foreign debt bubble.
3. Restrictions on mere transfer of title offshore of major capital assets.
If we need more brains to run our major capital assets, infrastructure, industries or agricultural land – hire them – there is no need to flog 100% of the assets to off shore buyers. Few if any of our trading partners are stupid enough to allow their major assets and industries to be sold off completely. Smart countries seek joint ventures and skill and technology transfers as a condition for any foreign investment.
Penny Wong’s vision of an “Open Australia” ignores unregulated unproductive speculative capital inflows
It is sad that Senator Penny Wong’s major speech yesterday calling for an “Open Australia” showed little if any understanding that, when it comes to capital flows, there is a world of difference between productive and unproductive capital inflows and that the latter must be carefully regulated as they are tools of economic manipulation by foreign central banks and nation states.
Implying that every form of capital inflow is an ‘investment’ is simply false.
It suggests that every form of inflow is productive when the vast majority of daily flows are nothing more than speculative bets on exchange rate movements or involve the acquisition of government securities or IOUs related to domestic speculation on house prices.
As a result Senator Wong is unable to understand the forces that are producing a strong reaction in populations across the planet and the extreme / radical political movements that feed on them.
Dismissing them as a bunch of uncouth ignorant deplorables who should just suck up what the neoliberal free capital flow model dishes out ignores the real damage that model is causing.
To put it more simply – If you think that greater freedom for people to trade and move between nations is a good thing – and the Glass Pyramid does – then you must take seriously the damage that unregulated unproductive and speculative international capital flows are doing to the level of support from the general public for that objective.
Though of course it is quite possible that Senator Wong does not understand how the neoliberal free capital flow model works and causes so much damage and economic imbalances across the globe.
She often talks about “free trade” in goods, services and the movement of people but she completely ignores the almost completely unregulated flows of international capital that have been sloshing around the globe for the last 25+ years. Or when she does talk about them she just refers to them all as ‘investment’ like some media stooge from the banking / finance sector.
We cannot afford an opposition (especially one that claims to represent workers) that is clueless or naive as to how the modern international political economy works.
If anyone was in any doubt about the need to get up to speed on the issues the recent BREXIT Plus aka election of Donald Trump as President Elect should remove any lingering traces.
The major parties, especially the ALP need to change direction and quickly.