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Phil Lowe Builds A Cubby House!

Some of you may remember a photo of Scott Morrison building a cubby house for his teenage daughters. While most of the social media comments centred on how they were too big for a cubby, followed by people attacking them for body shaming, followed by people explaining that the “too big” comments were about age, following by abusive comments, one person – who clearly was a bit of a handyman – pointed out that most absurd thing about the photo was that Morrison was holding a hammer while the cubby was being put together with screws.

I was reminded of this photo by the RBA decision to lift interest rates yet again. Phil Lowe, it seems to me, is using a hammer to belt in the screws and when anyone points out that a screwdriver would be better, the response is that a hammer is the only tool that he has.

Of course, this is an interesting way of looking at things. There are all sorts of decisions which can be justified with this simple logic. For example, “I didn’t do the dishes because I didn’t have any detergent so instead I let the dog lick them clean” or “We don’t have any anaesthetic, we’re just going to knock you unconscious with this brick”.

Now I do know that Phil the Inflation-slayer is pretty single-minded when it comes to getting things in the 2-3% target range. I mean we all understand that it would be the end of civilisation as we know it if the figure didn’t come down before September when Mr Lowe is looking more and more likely to be without a job. However, I’m yet to hear an explanation for why this figure is so much more important than an unemployment rate of under five percent or why we need to cause a recession in order to take it down so quickly. Would it really destroy the economy if it were, say 3.83% next year? And when I say destroy the economy, I mean would it lead to things like mass unemployment and slow growth and… You know – all those things that seem preferable to an inflation rate outside the Reserve Bank’s target range.

While I lack the economic expertise of economists who manage to accurately predict what the Reserve Bank will do each month on at least two or three occasions out of fourteen (to be fair, it IS a lot harder now they’ve stopped leaving them on hold every month!), it seems to me that we have a number of factors driving inflation:

  1. A problem with supply chains due to Covid, floods and associated problems. Interest rate rises may send some firms with loans out of business, exacerbating supply problems. I think we can all agree that rising interest rates will not fix these problems, although a hammer might be useful if that’s the tool that you haven’t been able to access due to a breakdown in the supply chain.
  2. Energy prices. Apart from the war in Ukraine, the lack of replacement for some of the aging coal-fired power stations which are being shut down before they break down is causing some spikes and this is another problem that will only be partially solved by rising interest rates. Once more of us are homeless and having to move in with others, houses will be so crowded that we’ll all be toasty warm, just from the human bodies all crowded into the same bed… Although this may be a problem in summer.
  3. Petrol prices. Some minimal relief when people lose their job and don’t have to travel to work, although this probably won’t be enough to bring inflation into that magic number of 2-3%.
  4. Housing supply. Of course, if interest rates go up, less people can afford to build and developers are less inclined to build new houses. This worsens the housing supply rather than improves it.

And, just to be fair, I did hear Michaelia Cash on the radio a couple of days ago telling us that it was important to get real wages moving but not at a rate faster than inflation because if you did that, you’d just get more inflation and Tony Burke is insulting employers by suggesting that some of them use labour-hire companies to pay people less and Labor’s proposal of equal pay would push up inflation because they’d have to pay people the same rate. Or something like that. I find it very hard to understand what she’s saying a lot of the time. Something to do with pitch and the human ear.

Like I said, I’m no economist. So if you can get a professional to explain the flaws in my logic, they’d be most welcome to write me a simple thesis on how this can all be blamed on a refusal to accept whatever economic theory they’ve been espousing for years. And when I say “a refusal to accept”, I don’t mean by governments. No, it’s often that reality stubbornly refuses to accept the wisdom of excellent economic theory.

Even if the Reserve Bank is using a hammer, the fact is that it’s really only those with mortgages and loans that are being screwed.


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  1. Konn

    Rossleigh, following on from point #4, here are 3 more:
    #5 – a Banking System that creates debt out of thin air (fiat system) to help inflate property prices.
    Banks throw more fuel on the credit fire in co-ordination with a tax system that encourages investors to buy up homes with interest-only loans, etc. The best example I heard of recently was a few weeks back on Q&A when a Greens politician mentioned one investor was paying off 362 properties. Any one person only ‘needs’ one home, any more is ‘a want or desire’, not a need. The tax system or the banks could intervene and limit this market distortion and return to treating properties as homes, not tax shelters for investors or permanent income streams of interest-only loan repayments for banks – but they don’t;
    #6 – a Tax System that advantages investors in numerous ways to the detriment of new entrants to the home market;
    #7 – a ridiculous Immigration Intake Quantum, uncapped, that has (i) never matched the existent infrastructure (ii) is currently predicated on filling a “skills shortage”.
    Labor never seems to be able to qualify the current “skills shortage” as being caused by vaccine mandates for an experimental product with no long term safety study results, a regime of mandates that caused 10s of thousands, if not 100k+ nurses, doctors, teachers, aged care workers, pilots & airline staff, council workers, etc to leave the workforce under coercive pressure. The Federal govt could have stepped in and banned mandates, but they didn’t. The fact that the govt excluded itself from mandates says it all.

  2. Harry Lime

    Phil, the overpaid rates whisperer is behaving like a high priest of economics with only one (1) religious tenet: smite those who are struggling the most.Phil and the RBA board must sit around in private chanting “Inflation must be killed,and damn the consequences”.Where is our latter day Jesus to upend this failed economic model? Has nobody got any imagination?Is our current government going to take all this nonsense lying down.?
    I have two (2) predictions…we’re going to have a recession,and Phil the unfabulous has got zero(0) chance of keeping his job.
    Chalmers needs to step up and knock this bullshit into the long grass…no more weaselese,no more Liberal Lite…Are you there, Jim?

  3. New Bruce

    The “desired/required inflation rate of inflation” seems to me a lot like an enemy spy plane. It’s up there somewhere.
    Our phil is going to get it before it gets him, and bugger the poor fools on the ground who might get struck by the wreckage when his stray shot hits. While everyone with even half an opinion carries on about the pros and cons, or even the mere existence, of target x , phil and his buddies man the guns and blast away into the night sky, hoping that one time they might get lucky.
    I don’t know about a cubby hut, but it strikes me that the rba board might be more like a Tool-Set, and with a busted phillips-head doing the screwing.

    “We’ll all be ‘rooned”

  4. Terence Mills

    A number of economists have pointed out that the banks do not need to pass on Reserve Bank increases to punters holding existing loans and mortgages.

    Indeed, it used to be the case that a federal Treasurer would take the banks to task if they chose to pass on Reserve Bank interest increases. Because, it is a discretionary choice that the banks make and, as we all know, if the banks pass on those increases to borrowers as they are wont to do, the extra money goes straight to the banks’ bottom line and into the well lined pockets of shareholders – it doesn’t affect inflation at all.

    The Reserve Bank tell us that the only tool they have is interest rates to dampen demand and curtail borrowing so why not be honest and demand that existing mortgages be left alone and unaltered ?

  5. Harry Lime

    Terence,because those “too big to fail” banks have governments scared shitless…same as those big bogeymen mining wallahs.No need to wonder why the government fiddles at the edges.the pursuit of money trumps everything,even the fate of the planet,never mind those poor mortgagees being put to the sword.Most of us were looking for real change after the criminally incompetent previous mob,but it looks like all we’re getting is more bullshit.

  6. New England Cocky

    Rossleigh, you have done it again. Getting readers to question the infallibility of the RBA clown prince drawing a comfortable salary package reported as about $1 MILLION per year plus perks. What the hell would he know about the rising cost of living, finding rental accommodation in a scarce market, or feeding families with rapidly reducing disposable income???
    The real beneficiaries of this ”unfortunate policy” are the corporate banks, the greedy landlords & their rapacious agents, and the profit absorbing bosses blame shifting for this profit induced inflation.
    Reforms are required in the real estate industry – remove negative gearing on used residential properties, remove Australian citizenship inducements for North Asian persons bringing $5 million into Australia and staying 160 nights over four (4) years, & set maximum of two investment properties for all landlords.
    The beneficiaries of these changes would be working persons, the ”losers” would be the many professional persons legally minimising their taxable income via negative gearing. Well, it is good to pay taxation, so the professionals, many trained during the Whitlam free university period, may just have to be socially responsible in this matter ….. and governments could also reduce/eliminate government funding to private schools.

  7. paul walter

    A refreshing snapshot of the now out of control Ponzi that so exercises the minds of many naive Australians and commercial interests.

    AIM has the capacity to make Phil’s doggy-do look like chocolate, but the impression I get is that the sheep are now in and being fleeced. Labor has only had time to treat some of symptoms of a decade of barely restrained neolib alibiing and theft and after being rejected by Ute-Man, I suppose you can’t blame them for caution.

    And of course on this and tax cuts, perhaps Labor leaders may now find it tempting to go with the flow.

  8. Topenda

    Meanwhile, ordinary Aussies who’ve managed to scrape together some minor savings are expected to use them up for survival while the big companies continue to vampirically suck every cent possible from the bottom rungs of society for the sake of ever higher record profits for the mostly very well to do.

    It is absolutely sickening.

    Priority one should be overhauling corporations law so profits for shareholders are not the primary legal obligation of big business.

  9. andyfiftysix

    I cant believe the outright ignorance and incompetance of mr Lowe. He has been there for how many years? He says today, interest rates is the only tool available. It begs the question, WTF have you been doing all this time? You have known that interest rates was the only tool available. You have known that its blunt and not very accurate for the longest time. Why have you not researched to find tools that are appropriate and then argued for their implementation?

    You know why? He is a reactionary turd. He is stuck in an ideological loop and no amount of head butting is going to increase his IQ. He and the board are ivory tower dwellers who prefer to work in the dark because being transparent would make them face up to the people, who rightly want to tar and feather them.

    I would have thought the RBA would have done its own research on what other things it can do to maintain a stable society. You know, try to guide the economy rather than react to any hic up. Not once have we heard them say that the government was fucking things up, and as we hear every week, the libs certainly had intentions of buying their victories. By its silence, the RBA by defacto became a puppet of the government. Its like they were scratching each other’s backs.

    They should all be sacked on the spot. Incompetance on this scale should never be tolerated.

  10. New England Cocky

    Commonsense would put the people at the bottom of society as the first receivers of government support, rather than the profiteering foreign owned multinational corporations, many of which already pay no taxation thanks to generous tax minimisation provisions and ”corrupt” accountancy practices.

    As suggested above by others, the LABERAL government could;
    1) legislate for an International Financial Transaction tax on foreign money movements @ $0.01 per $10,000 that would comfortably fund a $40 per week increase in government payments to unemployed, aged & other government supported taxpayers;
    2) restrict self-funding multinational corporations from transferring profits disguised as interest payments on monies ”borrowed” from the entity or a linked foreign subsidiary to the appropriate deemed Australian interest borrowing rate for taxation purposes;
    3) abolish the Scummo Stage 3 tax cuts for pollies, judges and indeed every current beneficiary;
    4) the list is longer than this reply allows, but imagination includes taxing gas corporations for the CSG being exported.
    That is just 5 minutes of suggestions ….. now can I have the about $1 MILLION per year pay scale reported for the RBA Dill Lowlife?

  11. GL

    If we didn’t have little and poor people at the bottom of the pile to gouge for cash whenever things look grim the gubmint might be forced to lean on the corporations and the 1% to…gasp…pay taxes. The horror, the horror.

  12. Terence Mills

    We are told that inflation is too high at 7%. We are told that roughly half our inflation is imported largely in the form of oil and petroleum products.

    In the meantime the Saudis and OPEC are engaged in restricting production to force up the global price of petroleum products and thus fuel global inflation.

    so the RBA increases interest rates to ‘dampen demand’ i.e. to curtail spending by making money more expensive and thus slowing economic growth in the economy : they want people to have less money to spend on discretionary things like eating out, wearing apparel and luxuries but they attack mortgage rates.

    Supermarket goods are transported by road over vast distances using largely diesel trucks,paying penalty prices for diesel at the pump – the increased costs of transportation forces the price of supermarket products up and this impacts the punters and contributes to inflation. .

    There is something wrong with the economic rationale of the RBA.

    Discuss !!

  13. andyfiftysix

    Terence, its simple, they are nut cases. They are the Dr Strangloves of the economic world. Even their rational for what they do paints them as reactionary turds. Its what you do when you are so focused on your shoe laces, you go over the cliff. Can’t see the wood from the trees.

    “My role is to adjust interest rates. I dont give a fig if i make mistakes. I dont give a fig if i cause immence hardship, it will only get worse if i dont. I get paid to adjust interest rates, I dont get paid to think”

    Lowe is so focused on inflation control that he fails to see that interest rates is an economic killer for everyone with a mortgage. He has tied both hands behind his back and says, look i cant use my hands. Petrol prices go up and interest rates is the only solution. Natural disasters happen and the only solution is raising interest rates. Wages have gone backwards the last 30yrs and interest rates must go up. Like a mad man who only has one solution for everything. I can hear him muttering to himself, i must raise interest rates, i must raise interest rates……..

    There are so many threads of insanity running through the RBA, i can do this all night long.

  14. andyfiftysix

    Terence, You have to understand the mind set of these freaks. They are so embeded in the ideology that they have tunnel vision.
    For too long governments have been scared to reign them in because of the so called perceived backlash it would generate. Albo is no different. But like everything else, the ideals for having an independant RBA have been largely corroded away by the disgracefull behaviour of our past governments. Death by a thousand cuts has never been so true. If the government isnt willing to revolutionise the RBA, maybe it should come back under government control. Its not 1950 anymore so maybe , just maybe we need to get rid of all those “air tools” and look for more useful modern ones.

  15. wam

    put the medicare levy on gross earnings and make visiting the doctor free.

  16. New England Cocky

    @ wam: Naughty wam, next you will be proposing that the government introduce a Universal Basic Income (UBI) for the chronically unemployed that would reduce their demand for medical services and be paid for by the savings to health budgets. THAT is what happened in Canada ….. until the conservative Harper misgovernment closed down the research to insure that bosses could rely upon starvation as a motive for working.

  17. Brandane

    The RBA held the local rates excessively low for many years and promoted the property boom based on cheap money.
    Now they have increased the interest rate by 4000% in 12 months.
    Nobody could borrow at 0.1% but the cost of borrowed money has tripled.
    So with the great unwashed previously having a mortgage at about 30% of income, it does not take an economic genius to work the devastating effect on society.
    But after 40 years of monetarism, the whole of Lowe’s career, we must understand there is no such thing as Society, just the Economy.
    No wonder Lowe is bewildered by the reaction to his “classic” use of his rate hammer.

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