…. AVOIDING WHAT REALLY CAUSES INFLATION

When do we realise that RBA cash rate increases assist to crash the economy, not to deter cost-push inflation?

It seems counter-intuitive, but an 18% mortgage rate certainly didn’t deter borrowers–nor escalating land prices–towards the 1989 real estate peak (before the 1991/92 recession); nor a still quite heavy 8% in 2007 (before the GFC).

Meanwhile at the RBA: “We’re meeting today, folks, to decide whether tweaking our cash rate will do anything productive, other than satisfying, or not satisfying, mainstream economists & financial journalists.”

Future generations will look upon this period of financial entrapment with wonder. Here we are in the 21st century still believing that we’re at economics’ leading edge.

Unfortunately, the Henry Tax Review’s recommendation for an all-in land tax molders on a shelf somewhere or other.