Just now I've found this post on a face book page and I think everyone should see it. It’s a little long but worth the read because it really does explain what’s gone wrong with the Australian economy and for that matter most countries economies.
For rate increases to slow inflation, everyone must hurt, not just the little people. But that’s not happening as the gap between the rich and the poor increases, at the expense of the little people.
I’m really quite sick and tied of seeing so called professionals in government, in control of our future, making decisions that are so obviously wrong, don’t work and show them up as not having a clue as to what they are doing to get the best outcome. Like everything they touch, they are bungling their way through inflation, especially housing, construction, sales/rentals and household expenses. Prices continue to rise, and in doing so, add to the continuing inflation, like a dog chasing its tail.
When the Federal government deregulated the banks, RBA became irrelevant. The RBA has one tool, which has failed, to control inflation with interest rate rises. By keeping rates too low for too long, they’ve set up a formula for disaster. Most people think that the banks have to follow the RBA by law, but they don’t. Because the banks were deregulated, they are able to do as they please, seemingly are following the reserve bank decisions on interest rate rises, which they do but all the time knowing they will make money no matter what the interest rates are. So, are the banks at fault for our current inflation? Yes partly. They gave loans on almost no deposit, to people who really could not afford the loan repayments when rates rose or hardship hit them, as has happened. For the banks – its win some, lose some, it doesn’t matter, as long as the wins are greater than the losses. Looking at the latest profits reports, it looks like its working for them. The governments are happy to see massively over inflated prices in houses because they include the value of real estate in the GDP of Australia and that’s why they were happy with the low interest rates - it’s a false economy
https://www.afr.com/.../why-house-prices-are-sending-a...
With interest rates going up, and hurting every ‘ordinary person’, it seems strange that house prices are continuing to rise, hurting those ordinary people who are barely able to cover their mortgage repayments. We have to ask, who are the people still able to afford buying the houses, pushing prices up, adding to inflation and causing even more interest rate rises? Unlike people on a fixed controlled income the people still affording to spend are those who have been able to increase their own incomes to cover the increasing costs incurred to them by the rate rises. They are companies, self employed trades people, partnership organizations like lawyers and accountants, self employed white collar professionals, manufacturers, importers and suppliers of all sorts of necessities, including supermarket items , basically all those who can determine their own income needs. Unlike those paid a wage by an employer, the self employed facilitate their own wage increases by charging more for their services. We’ve all seen supermarket prices going up more than inflation, why are the increases more than inflation? Why are the workers, on fixed incomes, carrying the burden of the interest rate rises, while those higher up the income chain keep raising their income by raising their prices as needed? It’s so they can keep spending as interest rates increase?
So, who’s to blame? The bottom line is the governments, the biggest bunglers of them all.
They are supposed to be in control, but they are remiss in their jobs of looking after all Australians. All they see is the bottom line, and if it’s at the expense of the little people, then that’s ok, just like it’s OK in countries like India where the gap between the rich and the poor is huge. It doesn’t matter to the government that people are cutting back on essentials like food for the family, and individuals and families are living in tents under bridges and people are losing their homes because they can’t afford to keep them. All those losers are looked at as collateral damage, a survival of the fittest situation, all to keep the economy balanced. It shouldn’t be that way in a resource rich country like Australia, but it is and it’s getting worse and will continue to do so as the gap between rich and poor widens.
For rate increases to slow inflation, everyone must hurt, not just the little people.
But that’s not happening; the gap between the rich and the poor is increasing, at the expense of the little people.
The problems and the solutions are blatantly obvious, but will those in control and still prospering allow the changes needed? I doubt it very much; because they don’t have to.
Wages at the bottom level have been deliberately kept low by the government for over a decade. The self employed award themselves more money as needed which has the very opposite effect on those low wage earners at the bottom. More money paid to the top, means less for those at the bottom, increasing the ever increasing gap between the rich and the poor.
How are interest rate rises going to have any effect on inflation if people at the top constantly give themselves more money to spend to cover the interest rate rises.
These are the solutions:
Control super market prices – freeze the prices on Australian produced products. Stop them rising above the CPI. At this time owners are profiteering.
Freeze rents from rising above a CPI. At this time owners are profiteering.
Control short term accommodation – it is a major reason for the housing price rises and shortage, both rental and for sale. At this time owners are profiteering.
Stop foreigners buying of our real estate. Australians can’t compete with the prices they are able to pay. Foreign buyers get around foreign buyer rules by having friends relatives with Australian citizen ship.
Stop foreigners who hold student visas from buying Australian real estate. The loop hole needs to be closed.
Cut immigration dramatically. I find the term more immigration for a strong economy abhorrent and a total lack of caring and respect for the poor workers at the bottom. Where are those immigrants seeking asylum going to live? Will it be in government supplied accommodations, while Australians live in their car or on the street?
Open up TAFEs to free education in certain industries, especially building industries. In the past decade governments have closed many apprentice courses and charged heavily for the courses they did not limit through the closures. The shortage caused in many industries has allowed those trades to charge exorbitant amounts that just stop all but those who can afford to pay their prices. In the building industry it just adds to the price of housing and once again it hurts mostly the little people on low incomes.
I could go on but what’s the point. I’ve already wasted too much of my time giving advice on things that will never be acted on, by those who just don’t want to hear it.
https://www.afr.com/chanticleer/why-house-prices-are-sending-a-false-signal-20230601-p5dd4b
