It's Government spending that's part of the problem. All that money they threw at people during the pandemic.

Me and my bogan middle income mates have pulled the plug on spending

psychojoe said..
Here's a reasonable video on the subject.

I don't like it when people blame the RBA. Sure, they are the ones that set the rates, but only if the goverment has dropped the ball and it is needed.

The video talks about the government, past and present, but it looks like nothing is going to be done there.

I hate the whole reliance on house prices we seem to have here as its screwing people in the short term and then the country in the long term, but how do we get out of that one? People don't want to feel that their houses lose value even if they only have the one they live in.

From the looks of things interest rates are going to keep going higher but if the majority of people have already spent up on their houses and bought all the TVs and cars that they need, how is that going to lower inflation if its the prices that suppliers are setting?

Thing is......it isn't really "inflation".

Its the Consumer Price Index, a shopping basket of items considered representative of how Aussie consumers spend.

And about 25% of it is "housing", made up of cost of new house / mortgage costs, rent and cost of major refurbishments / building work.

So the easiest way to affect the statistical measure is in the cost (supply / demand) of "housing".

Transport, health, financial services then make up about another 25% of the total shopping basket.


Hence somewhere more than 50% of the measure in the statistic doesn't really have anything to do with retailers / manufacturers jacking up prices or individuals going shopping at the mall on a Saturday morning.

Mortgage rates and insurance premiums have a bigger single effect on the inflation rate than groceries and consumer goods.

FormulaNova said..
I was wondering, are people buying more things or is it that prices for everything have gone up?

If we aren't buying more things, and it is prices that have gone up, are interest rates really going to dampen down our supply much until we get to rock bottom?

Are people out there consuming more than they were 4 years ago?

I was just wondering if increased interest rates are going to have much effect on inflation if the fundamental cause is just companies jacking up prices because they can.

If I remember you were a fierce supporter of lockdowns, borders closed and all the other draconian actions by AU and other governments that messed up royally w the natural forces of the market, from the productive side of things.
Add the above w a lot of money printing and handouts by all governments = inflation

Our inflation is a fraction of what the larger economies are going through the moment (US, Euro even China). People are dreaming if they been sold interest rates will go down anytime soon. They will stay at the current levels for years.

Just came back from a trip to US and was trully shocked w the prices I saw (from groceries, food, building materials). Not even counting the forex, everything a lot more expensive than here (apart from fuel).

Economy is just playing catch up after almost 3 years from been dormant, and people have cash to spend (thanks to the QE actions).

myscreenname said..

They were throwing hundreds of millions of dollars in the form of job keeper to big businesses like Harvey Norman who were making enormous profits during the pandemic.

www.theguardian.com/australia-news/2021/mar/18/australias-biggest-companies-pocketed-hundreds-of-millions-in-jobkeeper-despite-positive-earnings

It's not really about the little guys. I reckon it's much more about the big guys seeing an opportunity and gorging as much as they can.

Australia is far less egalitarian than it was 3 years ago.

That view is prevelant, but it doesn't quite get the reality. Jobkeeper was a payment to keep jobs when lockdowns shutdown businesses. If it wasn't paid people would have been sacked or stood down without pay. All payments had to go to a worker and the company had to prove a significant drop in revenue.

Companies "pocketed" none of it, it had to be paid to a worker. That said, I am sure many managed to have salaries covered that perhaps they would not have let go. How you police that I have no idea. It was hastily done and a clumsy approach. If it wasn't done it would have caused significant hardship to large amounts of people.

Don't blame the companies and employees that recieved it, blame the government decisions that made it necessary.

If you supported the lockdowns and border closures during covid you have no platform to complain about the consequences that flowed from it. Bear in mind both major parties supported all this and the oppostion at the time wanted it to go further.

FormulaNova said..
... in places like the US where they didn't have border lockdowns?...

eh ?

Whatcha talkin' 'bout Willis ?



The US was one of the first places to impose border restrictions. Trump banned people from China early on.

He got called racist, then he got called out by the same people for not shutting down sooner and harder.

The US had closed borders for about 18 months from April / May 20 to Nov 21.

The US only dropped the requirement for international arrivals to show proof of vaccine a week ago. One of the last places to lift border restrictions.

Tequila ! said..

FormulaNova said..

Tequila ! said..
If I remember you were a fierce supporter of lockdowns, borders closed and all the other draconian actions by AU and other governments that messed up royally w the natural forces of the market, from the productive side of things.
Add the above w a lot of money printing and handouts by all governments = inflation

Our inflation is a fraction of what the larger economies are going through the moment (US, Euro even China). People are dreaming if they been sold interest rates will go down anytime soon. They will stay at the current levels for years.

So the inflation we are seeing here that was caused by internal** border lockdowns is a different type of inflation to the one in places like the US where they didn't have internal** border lockdowns?

I think that blows your point apart about border closures being an issue.

Hang on, you say it is worse in other countries? Does that imply that our 'draconian measures' here were better? Wow, who would have argued that at the time?

** for those retarded enough to not try and understand the context.

Isnt you king going more than once OS to lick the balls of UK tradies, nurses even policemen there trying to lure them here now? So that policy didnt disrupt the market here?

We stayed closed longer than everyone else.

Formulaclown's mentality fuelled inflation.

You don't even seem to understand what you yourself wrote. You wrote here some claim that border lockdowns here, clearly the WA one that you were whingng about at the time, led to inflation. Yet you then claim that the inflation outside of Australia is higher.

How does that work? If the border closure was 'bad' than why is the US worse?

The WA border closure kept WA running extremely well. People inside had very little disruption to life and the economy inside wasn't as affected as it would have been if there had been an open border.

As for a broader claim that Australia is seeking overseas recruits for positions here, it is Australia wide and either a result of the pandemic (i.e. global) or a lack of training here. I am not sure which.

Whichever way you want to re-write what you have already claimed, border closures internal to Australia seem to have not made inflation worse if you use that as a measure against the USA.

Is your life complete now you were able to go to the USA. Why did you return to this terrible country with inept state premiers? Surely it is better anywhere else for you?

If it helps the discussion, inflation in Australia is not lower than the US or elsewhere. It is worse.

The US is running at around 5%. Australia is over 7%.

Border controls do not cause or effect inflation directly. Qantative easing, or stimulous policies resulting in government spending more than it earns on a sustained basis is what causes inflation.

It is not hard people.

Paradox said..
If it helps the discussion, inflation in Australia is not lower than the US or elsewhere. It is worse.

The US is running at around 5%. Australia is over 7%.

Border controls do not cause or effect inflation directly. Qantative easing, or stimulous policies resulting in government spending more than it earns on a sustained basis is what causes inflation.

It is not hard people.

Go to the US and see w your own eyes. They are still the largest world economy and still red hot w minimum unemployed numbers, meaning inflation will go longer.

Paradox said..

Tequila ! said..

Go to the US and see w your own eyes. They are still the largest world economy and still red hot w minimum unemployed numbers, meaning inflation will go longer.

I didn't say inflation was going to stop any time soon. Only that contrary to the above claims, Australia's inflation is no better and currently a lot worse.

My view is the recent dip in the US CPI figures to 5% is transitory and it will climb back up to the 7-8% or higher. Just as we will. Both countries have governments that currently have policies of significant budget deficits.

These policies will continue to fuel inflation higher. Reserve banks will either continue to ratchet up interest rates to try to reign it in, and in doing so cause significant damage to economies. Or inflation will stay high and effectively tax the poor to pay for the overspend. Either way significant damage is coming due to reckless spending.

Agree 100%

The original creator of this thread is wrong in the title of the thread due the fact of the two main reasons (disrupted offer + QE) are ignorantly omitted.

Paradox said..

Tequila ! said..

The original creator of this thread is wrong in the title of the thread due the fact of the two main reasons (disrupted offer + QE) are ignorantly omitted.

The question in the title is certainly misinformed. Higher prices are causes by high demand and low supply.

Both are symptoms of inflation, not causes.

I forget sometimes that some people here are retarded and cannot extrapolate simple things to understand the intent. Maybe I should have written something about 'inflation figures' or 'measured inflation' but I sort of assumed that people would understand what I was getting at.

If people buy 'more' then it increases demand. If prices are pushed up, and its an inelastic demand, then costs go up, leading to higher inflation figures.

Try to explain that to me in relation to whatever you were trying to correct me on. High school economics was so long ago for me.

Please try not to use crayons.

FormulaNova said..

Paradox said..

Tequila ! said..

The original creator of this thread is wrong in the title of the thread due the fact of the two main reasons (disrupted offer + QE) are ignorantly omitted.

The question in the title is certainly misinformed. Higher prices are causes by high demand and low supply.

Both are symptoms of inflation, not causes.

I forget sometimes that some people here are retarded and cannot extrapolate simple things to understand the intent. Maybe I should have written something about 'inflation figures' or 'measured inflation' but I sort of assumed that people would understand what I was getting at.

If people buy 'more' then it increases demand. If prices are pushed up, and its an inelastic demand, then costs go up, leading to higher inflation figures.

Try to explain that to me in relation to whatever you were trying to correct me on. High school economics was so long ago for me.

Please try not to use crayons.

FormulaNuevas stimulated inflation.

Get the thread title correct next time Mr. Professor.

Tequila ! said..

FormulaNova said..

Paradox said..

Tequila ! said..

The original creator of this thread is wrong in the title of the thread due the fact of the two main reasons (disrupted offer + QE) are ignorantly omitted.

The question in the title is certainly misinformed. Higher prices are causes by high demand and low supply.

Both are symptoms of inflation, not causes.

I forget sometimes that some people here are retarded and cannot extrapolate simple things to understand the intent. Maybe I should have written something about 'inflation figures' or 'measured inflation' but I sort of assumed that people would understand what I was getting at.

If people buy 'more' then it increases demand. If prices are pushed up, and its an inelastic demand, then costs go up, leading to higher inflation figures.

Try to explain that to me in relation to whatever you were trying to correct me on. High school economics was so long ago for me.

Please try not to use crayons.

FormulaNuevas stimulated inflation.

Get the thread title correct next time Mr. Professor.

What's the name of that effect where people are smart and then realise how much they don't know about a particular area? Yeah, you don't have that. (Well, it's the opposite of that and I think you might actually have it, but what do I know?)

In Economics, increased money supply does not always lead to inflation. In a depressed economy it will tend to increase savings and decrease spending. You can try and stimulate the economy all you want by pumping tonnes of money in, but if the person in the street thinks that they are going to lose their job tomorrow or that their house is at risk, they will save and not spend outside of what they have to.

So the question stands; are people buying more or are prices going up?

To make it simple for someone recently arrived from America that saw inflation that was higher than here but then retracted it when someone else argued otherwise, if there is a bunch of extra money injected into the economy, are people buying more things or are the prices of the things they are buying going up?

If we look at it simply, if 23% of the basket of goods and services is 'housing' then these tend to be an inelastic demand. It sounds like higher interest rates then push this up, making a bit of a feedback loop. But it is not necessarily an inelastic demand either.

If health care and other services are also inelastic, then it must be the prices of these going up as well that is leading to higher rates of inflation.

If food and clothing demand is not going up, and its just prices that are going up, then this adds to these increases in the rate of inflation.

Nah, who needs to understand that crap; "It's just the government printing money"... Bloody government!

Paradox said..
If it helps the discussion, inflation in Australia is not lower than the US or elsewhere. It is worse.

The US is running at around 5%. Australia is over 7%.

Border controls do not cause or effect inflation directly. Qantative easing, or stimulous policies resulting in government spending more than it earns on a sustained basis is what causes inflation.

It is not hard people.

I was wondering how long it would take for someone to mention foreign currency.
Currently at .66US, the RBA could be ignoring local matters and just aiming for a historically typical .70US

How come the THB is doing so well, I want a cheap holiday.