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Byron Shire
May 22, 2024

Devil or scapegoat?

Latest News

Fatal crash near Coffs

Three people have been involved in a horrifying crash today, leaving two dead and one in critical condition, police said. 

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Reality check on the Reserve Bank

Outgoing Reserve Bank Governor, Philip Lowe.
Photo wikicommons

Is the outgoing Governor of the Reserve Bank, Philip Lowe the devil incarnate, as the media has portrayed, or the convenient scapegoat for the appalling performance of politicians?

Government ignored Lowe’s request for fiscal action, leaving the Reserve Bank with the heavy lifting of managing the economy through a global deflation and pandemic. Without that assistance, the official cash rate plummeted to 0.01 per cent. It certainly didn’t help when Lowe stated that interest rates weren’t expected to rise until 2024. What, ‘free money for all’? It was a ‘mullet run’ with some people investing and speculating in realty and equities. Inflation sky-rocketed in those sectors of the economy.  

Lowe has stated that there is no link between monetary policy and the housing crisis; people made choices. It’s a hard swallow, but he is correct, people did make choices. They took the ‘free money’ and put it into housing. 

However, there is another perspective the media appear reluctant to report on with such vigour. There has been a conscious determination by the central banks to keep to the principles of neoliberalism’s deregulation – that has been in play for the last 30–40 years.

Inflation inevitable 

In recent times, central banks embraced quantitative easing and flooded economies with liquidity using ‘unconventional monetary tools’. 

They knew inflation was inevitable but the central bankers will not admit to what they have done. As a global group they seem immune from scrutiny. Alternatively, to talk about what they have been doing is dismissed as ‘conspiratorial’.

Opaque decisions

Then, here in Australia is a little-known group of powerful players called the Council of Financial Regulators. Its deliberations and decisions are opaque. It is made up of Treasury, the Reserve Bank, APRA and ASIC. 

The result was that the Reserve Bank, acting at the macro level, has increasingly distanced itself from the reality of what households were experiencing at the micro level, particularly as interest rates have risen. 

Price-gouging

However, the Reserve Bank, like central banks elsewhere, is on a continuing mission to suck the excess liquidity they consciously injected into the economy, out of it. 

And in the mix, one cannot ignore or downplay the price-gouging of corporations, fuelling inflationary figures. There ought to be national outrage at this behaviour.

In the meantime Australia’s banks are the most profitable in the world. And if you want to track the transfer of wealth that’s in progress then look no further than the profit reports of corporate Australia and its dividend payments, including those of the banks.

In the meantime, I continue to be appalled at the blatant evilness of the financial industry post deregulation while politicians remain submissive to the powerful banking lobby!  


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