https://www.news.com.au/finance/economy/interest-rates/mark-bouris-warns-australia-now-on-the-verge-of-a-fullblown-recession/news-story/5a48192f86ce6a2c569373d3b664224b


Mark Bouris warns Australia now on the ‘verge of a full-blown recession’

One of Australia’s top finance experts has issued a grim warning about the economy -
and shared a telling clue about what’s to come.

Mark Bouris
3 min read
December 11, 2024

https://m3.gab.com/preview_cards/images/051/560/472/original/05d423b8126b08be.jpeg
Mark Bouris



But now, the negative impacts of high interest rates outweigh the benefits.
High interest rates have slowed the economy to the point whereby we’re on the verge of a full-blown recession.
High interest rates are killing household budgets because the cost of servicing mortgages has skyrocketed.
As a result, households are spending less money at the shops.
That means businesses are seeing their sales tank at the same time as their costs rise.
If the situation gets any worse for businesses, bosses will have to cut their costs.
That means they’ll have to let go some of their workers, which will drive unemployment and see people forced onto the dole.
This is a recipe for disaster, and the Reserve Bank can’t let it happen as a result of its one-dimensional anti-inflation crusade.

By the way, the situation out there is worse than the economic figures out from the RBA and the Australian Bureau of Statistics suggest. Because the economy is being propped up by government policies.
First of all, record-high immigration is artificially inflating economic growth.
That’s hiding the full extent of the pain households and businesses are feeling at the moment.
The same goes for public sector spending.
The majority of new jobs being created at the moment are in the public sector.
The taxpayer is paying for all of that.

Meanwhile, the private sector is struggling.
Business investment is down.
New private sector jobs aren’t being created.
But the boom in the public sector is hiding this.
It’s making things look better than they really are in the economic data published by the ABS.
The RBA must take this into account, just as it has to take into account the supply side of the economy.
You may be led to mistakenly believe that the only way to kill inflation is to hike interest rates.
But that’s not true.

One of the core drivers of inflation at the moment is electricity bills.
But high interest rates won’t bring down power prices.
The only thing that will bring down power prices is building more baseload power stations and increasing domestic gas supply.

The same goes for grocery prices.
One of the reasons grocery prices are so high is because the supermarket system in Australia is a duopoly.
Woolworths and Coles control most of the market.
That means they can charge high prices without losing customers to competition offering lower prices.
Again, interest rates won’t do anything to boost competition in the supermarket sector.
That’s a job for the Australian Competition and Consumer Commission (ACCC).

This is why the RBA should hand down a rate cut in February, especially considering the rest of the world is already doing it.
In New Zealand and Canada, rates have already come down by 1.25 per cent.
In the EU, rates have come down by 1.1 per cent.
In the US and Switzerland, they’ve come down by 0.75 per cent.
In the UK and Korea, they’ve come down by 0.5 per cent.
Let’s hope the Reserve Bank follows in February.
Because if they don’t, we’ll trade high inflation for a recession.

And Albo thinks he'll win the next election in a few months.   ::)

Oh, dearie, dearie, me, you're such a Troll, Bobby.  Tsk, tsk, tsk... ::) ::)

Bobby. wrote on Dec 13^th, 2024 at 9:52am:

And Albo thinks he'll win the next election in a few months.   ::)

Albo thought that the Voice to Free Rides was a "necessary" step in the right direction. If only he thought about what he was doing and what would have been achieved had it been a successful vote for the VtFR, he would have understood that the country is sick of being taken advantage of by 1% of the country's population.

You can hear it in Albo's voice that he does not have a clue about what is right for the country. We are nearly at the halfway point of the 2020s. The 1980s ended 35 years ago. It is time that we consider the $40 billion in funding over the last 30-something years to be ended and Australia bought and owned by the Australian taxpayer.

Quote:

High interest rates have slowed the economy to the point whereby we’re on the verge of a full-blown recession.

He's got it all backwards. Interest rates are nearly always high before a big recession, if the reserve bank is doing it's job right.

freediver wrote on Dec 13^th, 2024 at 2:46pm:

Quote: High interest rates have slowed the economy to the point whereby we’re on the verge of a full-blown recession. He's got it all backwards. Interest rates are nearly always high before a big recession, if the reserve bank is doing it's job right.

Well actually - the RBA printed all the money that caused the high inflation.  :-[

UnSubRocky wrote on Dec 13^th, 2024 at 1:47pm:

Bobby. wrote on Dec 13th, 2024 at 9:52am: And Albo thinks he'll win the next election in a few months.   ::) Albo thought that the Voice to Free Rides was a "necessary" step in the right direction. If only he thought about what he was doing and what would have been achieved had it been a successful vote for the VtFR, he would have understood that the country is sick of being taken advantage of by 1% of the country's population. You can hear it in Albo's voice that he does not have a clue about what is right for the country. We are nearly at the halfway point of the 2020s. The 1980s ended 35 years ago. It is time that we consider the $40 billion in funding over the last 30-something years to be ended and Australia bought and owned by the Australian taxpayer.

Yes - his VOICE nonsense cost us about $400 million -  Albo keeps wasting money.  ::)

Albo voice nonsense real cost was a waste of a year in government.

Something labor will deeply regret.

Daves2017 wrote on Dec 13^th, 2024 at 8:55pm:

Albo voice nonsense real cost was a waste of a year in government. Something labor will deeply regret.

Albo seems to make up policy on the back of a beer coaster.   :-[

Oh, dearie, dearie, me, you're such a Troll, Bobby.  Tsk, tsk, tsk... ::) ::)

Oh, dearie, dearie, me, you're such a Troll, Brian.  Tsk, tsk, tsk... ::) ::)

Oh, dearie, dearie, me, you're such a Troll, Bobby.  Tsk, tsk, tsk... ::) ::)

Bobby. wrote on Dec 13^th, 2024 at 4:14pm:

freediver wrote on Dec 13th, 2024 at 2:46pm: [quote]High interest rates have slowed the economy to the point whereby we’re on the verge of a full-blown recession. He's got it all backwards. Interest rates are nearly always high before a big recession, if the reserve bank is doing it's job right.

Well actually - the RBA printed all the money that caused the high inflation.  :-[/quote]

No they did not.

The inflation is caused by the heard mentality of people borrowing to invest seeing only good times ahead. The reserve bank does not cause the high inflation by printing money. It does the opposite. It effectively prints money in a recession. It increases interest rates (the opposite of printing money) when there is high inflation.

This used to be a problem before we had independent reserve banks, but since we have had them, they have always acted to reduce inflation when it is high, and make it easier to borrow to invest when there is a recession. People who say otherwise just cannot get their head around the details, or are too lazy to bother.

Look at the ASX 200 plot. One person might look at that and have a fear of missing out and want to jump on the bandwagon. I look at that and think it is time to sell.

Hi FD,
they order the money to be printed:


https://www.abc.net.au/news/2022-09-25/did-the-reserve-banks-money-printing-cause-inflation/101471028


Did the Reserve Bank's money printing cause inflation? The bank says it's complicated

By business reporter Gareth Hutchens
Topic:Economy



Sunday 25 September 2022



Do you remember how the Reserve Bank printed a huge amount of money in the pandemic?

Have you been wondering if it's responsible for the inflation we're seeing?

The RBA says it's a complicated question to answer, and it's trying to encourage people to think more deeply about money itself.

Here's what that means.

The bond-buying program
In late 2020, the RBA began buying hundreds of billions of dollars worth of government bonds.

It was an emergency stimulus measure.

The program ran from November 2020 to February 2022, and saw the RBA buy $281 billion of federal, state and territory government bonds.

Last week, the RBA published a review of the program which found it broadly helped to support economic activity during the crisis.

However, there were a few passages near the bottom of the review that were very interesting.

They had to do with money printing.

RBA official says outlook for global economy is worrying

RBA deputy governor Michelle Bullock warns of risks in the global economy, but says the RBA's ability to create money helped Australia's economy through the pandemic

See, the RBA's bond buying was an exercise of "money printing"
because the bank was creating money to buy the bonds.

To be more precise, it was waiting for Treasury to sell the government bonds to authorised investors (ie institutional banks), then it would buy the bonds from those banks.

And when it bought the bonds, it would pay for them by simply electronically crediting the accounts that those banks had at the RBA.

For example, let's say the RBA bought $100 million worth of bonds from a particular bank.

It would say to that bank, 'Here you go, we've gone to the computer and added an extra $100 million to your exchange settlement account. Thanks for the bonds."

Been in recession for years now and abject poverty staved off by one after another short-term fix at the hands of the economic executioners who are killing the country.

May I say again - a family bringing in $530k pa gets childcare handout - WTF brings in 265k pa?

Childcare is inflationary .... so are all the other handouts that create rising costs.....

Bring in masses of people to cater for construction and aged care... when they settle they create the demand for MORE construction while creating further rises in housing costs all round and thus contributing to inflation - and when they AGE they create the need for MORE aged care.... and so it never ends and more and more will be living in tin shanties and tent cities.

Soon, very soon, we will be living in the same Shythole cities as India ... do not worry!  Soon Hong Strathfield will create need for aircraft to arrive over high rise.....  ;)

Grappler Truth Teller Feller wrote on Dec 13^th, 2024 at 10:39pm:

Soon, very soon, we will be living in the same Shythole cities as India ... do not worry!  Soon Hong Strathfield will create need for aircraft to arrive over high rise.....  ;)

This is what Albo caused with his uncontrolled mass immigration -
Albo has brought Calcutta to Australia:


https://www.noticer.news/international-students-hot-bedding-10-per-room/

International students in Australia are ‘hot bedding’ in squalid apartments
where 10 people share a bedroom.


Rental costs have hit record highs across Australia – in Sydney, for example, tiny two-bedroom apartments can fetch weekly rents well beyond $700.

The housing crisis is forcing some people into an impossible choice: homelessness or sharing not just an apartment but a bedroom with strangers.

“Hot bedding” – sharing the same beds in overcrowded rooms – has become a common reality for some tenants.

For marginalised populations, these housing arrangements become a survival strategy.

People living in severe overcrowding are considered to be a homeless group in Australia.

But what happens when shared housing, marketed as an affordable solution, fails to meet tenants’ basic needs and creates serious health and safety risks?


Ever heard of hot-bedding?
Well over 20,000 international students are doing it in Australia.

Hot-bedding is exactly what it sounds like; students share beds available to them for only some hours of the day or night so others can use them the rest of the time.

A recent survey of more than 7,000 international students renting privately in Sydney and Melbourne, was recently undertaken by researchers from @UTSengage + @SydneyUni_Media. If this sample is representative of the 758,154 international students in Australia in December 2019, about 22,750 students are hot-bedding.

Life under the rule of Albo:

https://www.thegatewaypundit.com/2024/12/australias-homelessness-crisis-outpaces-california-12-1-10000/

Australia’s Homelessness Crisis Outpaces California by 12-to-1:
10,000 Australians Become Homeless Each Month
Amid Housing Shortages and Rising Immigration

by Guest Contributor Dec. 12, 2024

https://www.thegatewaypundit.com/wp-content/uploads/2024/12/depositphotos_138901750_s.jpg



Australia’s national peak body and advocate for homelessness released a scathing report this week on the dire state of housing and the number of people becoming homeless each month.

The extraordinary figure of 10,000 people per month becoming homeless was reported.
To put that in context, I researched the homeless figures in California. Being an Australian, it was my immediate connection as their problems have been pretty much highlighted here.

The article, “California’s homeless population rose 5.8% in 2023, while U.S. rate surged 12%,“ states that between 2022 and 2023, an estimated increase of 10,000 people became homeless over a 1-year period.

One would think this would make national headlines in Australia when you consider that, as a country of just over 27 million, we are outpacing California in poverty by a 12 to 1 ratio, but it is “cricket” season down here right now.

My grandfather was a Federal Member of the Australian Labor Party who was expelled; he then formed the Democratic Labour Party (an anti-communist party). I have taken the time to write letters to my local council, state government, and federal government, to no avail.

You will find numerous articles online regarding the rental shortage, like 100 people applying for the same property, but for some reason, the Australian Labor Party (ALP), which won the 2022 election, keeps increasing the immigration numbers. It is impossible to find an exact number, but estimates are between 1.2 and 1.7 million in that short time.

The ALP was also elected due to a promise to fix the housing supply crisis. Online, you will find over 200,000 properties for sale Australia-wide, but they are so expensive that most people cannot afford them, hence 10,000 more homeless per month. Property prices are starting to drop and have even affected the Prime Minister Albanese.

Prime Minister of Australia, Anthony Albanese, snagged a seaside mansion for $300,000 less than what the owners paid for it in 2021.

Bobby. wrote on Dec 13^th, 2024 at 4:45pm:

Yes - his VOICE nonsense cost us about $400 million -  Albo keeps wasting money.  ::)

I do not see it as that way. The Voice to Parliament referendum put forward the idea that we should discuss ending the special treatment that indigenous Australians receive. I have no problem with extra funding in medical treatment for indigenous Australians. I don't even mind the extra help indigenous people get with job searches. But, I draw the line with the idea that indigenous people don't have mutual obligations to fulfill, or getting more welfare, or having granted low-interest rates on loans. There is also an issue about needing to start holding indigenous Australians responsible for their criminal activity.

Daves2017 wrote on Dec 13^th, 2024 at 8:55pm:

Albo voice nonsense real cost was a waste of a year in government. Something labor will deeply regret.

Albo went quiet after the referendum was defeated. I was surprised that the vote was only 61 to 39 against. Perhaps it is because a lot of city slickers have no real concept of what indigenous people go through or why they are not respected in greater percentages.

Brian Ross wrote on Dec 13^th, 2024 at 9:33pm:

Oh, dearie, dearie, me, you're such a Troll, Bobby.  Tsk, tsk, tsk... ::) ::)

What do you care? You have retired from life and are waiting to die. I have to work the next 30 to 35 years before I decide that I can retire. I doubt that I will live long enough to be retired for long.

Bobby. wrote on Dec 13^th, 2024 at 9:50am:

https://www.news.com.au/finance/economy/interest-rates/mark-bouris-warns-australia-now-on-the-verge-of-a-fullblown-recession/news-story/5a48192f86ce6a2c569373d3b664224b Mark Bouris warns Australia now on the ‘verge of a full-blown recession’ One of Australia’s top finance experts has issued a grim warning about the economy - and shared a telling clue about what’s to come. Mark Bouris 3 min read December 11, 2024 https://m3.gab.com/preview_cards/images/051/560/472/original/05d423b8126b08be.jpeg Mark Bouris But now, the negative impacts of high interest rates outweigh the benefits. High interest rates have slowed the economy to the point whereby we’re on the verge of a full-blown recession. High interest rates are killing household budgets because the cost of servicing mortgages has skyrocketed. As a result, households are spending less money at the shops. That means businesses are seeing their sales tank at the same time as their costs rise. If the situation gets any worse for businesses, bosses will have to cut their costs. That means they’ll have to let go some of their workers, which will drive unemployment and see people forced onto the dole. This is a recipe for disaster, and the Reserve Bank can’t let it happen as a result of its one-dimensional anti-inflation crusade. By the way, the situation out there is worse than the economic figures out from the RBA and the Australian Bureau of Statistics suggest. Because the economy is being propped up by government policies. First of all, record-high immigration is artificially inflating economic growth. That’s hiding the full extent of the pain households and businesses are feeling at the moment. The same goes for public sector spending. The majority of new jobs being created at the moment are in the public sector. The taxpayer is paying for all of that. Meanwhile, the private sector is struggling. Business investment is down. New private sector jobs aren’t being created. But the boom in the public sector is hiding this. It’s making things look better than they really are in the economic data published by the ABS. The RBA must take this into account, just as it has to take into account the supply side of the economy. You may be led to mistakenly believe that the only way to kill inflation is to hike interest rates. But that’s not true.

So far so good, except both public sector and private sector jobs are necessary for a well-functioning economy, because the latter create winners and losers in competitive free markets

"Markets are good servants, but a bad master, and a worse religion". Amory Lovins. 


Quote:

One of the core drivers of inflation at the moment is electricity bills. But high interest rates won’t bring down power prices. The only thing that will bring down power prices is building more baseload power stations and increasing domestic gas supply.

Yet renewables plus storage is said to be the cheapest form of new energy. In any case, the transition will require government subsidies for lower income groups, to avoid more people plunging into poverty.


Quote:

The same goes for grocery prices. One of the reasons grocery prices are so high is because the supermarket system in Australia is a duopoly. Woolworths and Coles control most of the market. That means they can charge high prices without losing customers to competition offering lower prices. Again, interest rates won’t do anything to boost competition in the supermarket sector. That’s a job for the Australian Competition and Consumer Commission (ACCC).

OK...but I own Woolies shares because I hope they can pay a better dividend than the competition - silly of me, greed-based capitalism is full of contradictions.


Quote:

Let's hope the  Reserve Bank follows in February. Because if they don’t, we’ll trade high inflation for a recession.

 

Hey, that'll mean I earn less on my bank savings....ouch.

Bobby. wrote on Dec 13^th, 2024 at 10:24pm:

Hi FD, they order the money to be printed: https://www.abc.net.au/news/2022-09-25/did-the-reserve-banks-money-printing-cause-inflation/101471028 Did the Reserve Bank's money printing cause inflation? The bank says it's complicated By business reporter Gareth Hutchens Topic:Economy Sunday 25 September 2022 Do you remember how the Reserve Bank printed a huge amount of money in the pandemic? Have you been wondering if it's responsible for the inflation we're seeing? The RBA says it's a complicated question to answer, and it's trying to encourage people to think more deeply about money itself. Here's what that means. The bond-buying program In late 2020, the RBA began buying hundreds of billions of dollars worth of government bonds. It was an emergency stimulus measure. The program ran from November 2020 to February 2022, and saw the RBA buy $281 billion of federal, state and territory government bonds. Last week, the RBA published a review of the program which found it broadly helped to support economic activity during the crisis. However, there were a few passages near the bottom of the review that were very interesting. They had to do with money printing. RBA official says outlook for global economy is worrying RBA deputy governor Michelle Bullock warns of risks in the global economy, but says the RBA's ability to create money helped Australia's economy through the pandemic See, the RBA's bond buying was an exercise of "money printing" because the bank was creating money to buy the bonds. To be more precise, it was waiting for Treasury to sell the government bonds to authorised investors (ie institutional banks), then it would buy the bonds from those banks. And when it bought the bonds, it would pay for them by simply electronically crediting the accounts that those banks had at the RBA. For example, let's say the RBA bought $100 million worth of bonds from a particular bank. It would say to that bank, 'Here you go, we've gone to the computer and added an extra $100 million to your exchange settlement account. Thanks for the bonds."

Did you read the article Bobby?

freediver wrote on Dec 14^th, 2024 at 1:05pm:

Bobby. wrote on Dec 13th, 2024 at 10:24pm: Hi FD, they order the money to be printed: https://www.abc.net.au/news/2022-09-25/did-the-reserve-banks-money-printing-cause-inflation/101471028 Did the Reserve Bank's money printing cause inflation? The bank says it's complicated By business reporter Gareth Hutchens Topic:Economy Sunday 25 September 2022 Do you remember how the Reserve Bank printed a huge amount of money in the pandemic? Have you been wondering if it's responsible for the inflation we're seeing? The RBA says it's a complicated question to answer, and it's trying to encourage people to think more deeply about money itself. Here's what that means. The bond-buying program In late 2020, the RBA began buying hundreds of billions of dollars worth of government bonds. It was an emergency stimulus measure. The program ran from November 2020 to February 2022, and saw the RBA buy $281 billion of federal, state and territory government bonds. Last week, the RBA published a review of the program which found it broadly helped to support economic activity during the crisis. However, there were a few passages near the bottom of the review that were very interesting. They had to do with money printing. RBA official says outlook for global economy is worrying RBA deputy governor Michelle Bullock warns of risks in the global economy, but says the RBA's ability to create money helped Australia's economy through the pandemic See, the RBA's bond buying was an exercise of "money printing" because the bank was creating money to buy the bonds. To be more precise, it was waiting for Treasury to sell the government bonds to authorised investors (ie institutional banks), then it would buy the bonds from those banks. And when it bought the bonds, it would pay for them by simply electronically crediting the accounts that those banks had at the RBA. For example, let's say the RBA bought $100 million worth of bonds from a particular bank. It would say to that bank, 'Here you go, we've gone to the computer and added an extra $100 million to your exchange settlement account. Thanks for the bonds." Did you read the article Bobby?

"It's complicated"....but to make it simple for you both, the RBA doesn't NEED to buy or sell bonds on behalf of Treasury; government  bonds to fund currency-issuing government is  only an outdated convention benefitting  userers.

The proper task for a national Treasury is to ensure supply of goods and services can meet demand, or that demand doesn't exceed supply.

The "independent Reverse Bank" operating to NAIRU dogma is an obsolesence ...

freediver wrote on Dec 14^th, 2024 at 1:05pm:

Bobby. wrote on Dec 13th, 2024 at 10:24pm: Hi FD, they order the money to be printed: https://www.abc.net.au/news/2022-09-25/did-the-reserve-banks-money-printing-cause-inflation/101471028 Did the Reserve Bank's money printing cause inflation? The bank says it's complicated By business reporter Gareth Hutchens Topic:Economy Sunday 25 September 2022 Do you remember how the Reserve Bank printed a huge amount of money in the pandemic? Have you been wondering if it's responsible for the inflation we're seeing? The RBA says it's a complicated question to answer, and it's trying to encourage people to think more deeply about money itself. Here's what that means. The bond-buying program In late 2020, the RBA began buying hundreds of billions of dollars worth of government bonds. It was an emergency stimulus measure. The program ran from November 2020 to February 2022, and saw the RBA buy $281 billion of federal, state and territory government bonds. Last week, the RBA published a review of the program which found it broadly helped to support economic activity during the crisis. However, there were a few passages near the bottom of the review that were very interesting. They had to do with money printing. RBA official says outlook for global economy is worrying RBA deputy governor Michelle Bullock warns of risks in the global economy, but says the RBA's ability to create money helped Australia's economy through the pandemic See, the RBA's bond buying was an exercise of "money printing" because the bank was creating money to buy the bonds. To be more precise, it was waiting for Treasury to sell the government bonds to authorised investors (ie institutional banks), then it would buy the bonds from those banks. And when it bought the bonds, it would pay for them by simply electronically crediting the accounts that those banks had at the RBA. For example, let's say the RBA bought $100 million worth of bonds from a particular bank. It would say to that bank, 'Here you go, we've gone to the computer and added an extra $100 million to your exchange settlement account. Thanks for the bonds." Did you read the article Bobby?

Yes - did you?
Given your previous statement about the RBA not printing money -
you will gain considerable enlightenment.

Bobby. wrote on Dec 14^th, 2024 at 2:32pm:

freediver wrote on Dec 14th, 2024 at 1:05pm: Bobby. wrote on Dec 13th, 2024 at 10:24pm: Hi FD, they order the money to be printed: https://www.abc.net.au/news/2022-09-25/did-the-reserve-banks-money-printing-cause-inflation/101471028 Did the Reserve Bank's money printing cause inflation? The bank says it's complicated By business reporter Gareth Hutchens Topic:Economy Sunday 25 September 2022 Do you remember how the Reserve Bank printed a huge amount of money in the pandemic? Have you been wondering if it's responsible for the inflation we're seeing? The RBA says it's a complicated question to answer, and it's trying to encourage people to think more deeply about money itself. Here's what that means. The bond-buying program In late 2020, the RBA began buying hundreds of billions of dollars worth of government bonds. It was an emergency stimulus measure. The program ran from November 2020 to February 2022, and saw the RBA buy $281 billion of federal, state and territory government bonds. Last week, the RBA published a review of the program which found it broadly helped to support economic activity during the crisis. However, there were a few passages near the bottom of the review that were very interesting. They had to do with money printing. RBA official says outlook for global economy is worrying RBA deputy governor Michelle Bullock warns of risks in the global economy, but says the RBA's ability to create money helped Australia's economy through the pandemic See, the RBA's bond buying was an exercise of "money printing" because the bank was creating money to buy the bonds. To be more precise, it was waiting for Treasury to sell the government bonds to authorised investors (ie institutional banks), then it would buy the bonds from those banks. And when it bought the bonds, it would pay for them by simply electronically crediting the accounts that those banks had at the RBA. For example, let's say the RBA bought $100 million worth of bonds from a particular bank. It would say to that bank, 'Here you go, we've gone to the computer and added an extra $100 million to your exchange settlement account. Thanks for the bonds." Did you read the article Bobby? Yes - did you? Given your previous statement about the RBA not printing money - you will gain considerable enlightenment.

The problem for both of you is the government prints money to purchase interest-bearing  bonds -  which it buys back from the primary dealers to whom the bonds  were originally sold.

"It's complicated" ....and private money lenders - usurers - don't want you to see the ruse.

More on the "complicated" government bond issuance ruse.

google

The primary dealers in the bond market are financial intermediaries that act as a channel between the debt manager (in this case, manager of government debt) and investors in the primary market. The secondary market is where investors buy and sell securities that have already been issued in the primary market.

That is, the primary dealers manage the government's bond issuance program; some government bonds are sold to  private  cirizens in the secondary market, while the government might want to buy back (from the primary dealers)  its own bonds as a method of borrowing without having to  tax,  or sell bonds to private citizens, eg, in an emergency like the GFC and pandemic, to stave off economic collapse.

But it's confusing enough for bobby to think government "money printing creates  inflation", when inflation is the result of supply of goods and services not keeping up with demand, or demand exceeding supply.

And as someone else mentioned, there are other ways to control inflation other than the "independent" unelected Reverse Bank manipulating interest rates.

thegreatdivide wrote on Dec 14^th, 2024 at 4:07pm:

More on the "complicated" government bond issuance ruse. google The primary dealers in the bond market are financial intermediaries that act as a channel between the debt manager (in this case, manager of government debt) and investors in the primary market. The secondary market is where investors buy and sell securities that have already been issued in the primary market. That is, the primary dealers manage the government's bond issuance program; some government bonds are sold to  private  cirizens in the secondary market, while the government might want to buy back (from the primary dealers)  its own bonds as a method of borrowing without having to  tax,  or sell bonds to private citizens, eg, in an emergency like the GFC and pandemic, to stave off economic collapse. But it's confusing enough for bobby to think government "money printing creates  inflation", when inflation is the result of supply of goods and services not keeping up with demand, or demand exceeding supply. And as someone else mentioned, there are other ways to control inflation other than the "independent" unelected Reverse Bank manipulating interest rates.

10-year bond: The yield for an Australian 10-year government bond is 4.36%

That is much less than the inflation rate on housing.
A suburb I looked at went up 27% in one year for Units -
that was June 2022 to June 2023.

Quote:

Given your previous statement about the RBA not printing money -

That's not what I said Bobby.

freediver wrote on Dec 14^th, 2024 at 5:17pm:

Quote: Given your previous statement about the RBA not printing money - That's not what I said Bobby.

You said




freediver wrote on Dec 13^th, 2024 at 10:16pm:

Bobby. wrote on Dec 13th, 2024 at 4:14pm: freediver wrote on Dec 13th, 2024 at 2:46pm: [quote]High interest rates have slowed the economy to the point whereby we’re on the verge of a full-blown recession. He's got it all backwards. Interest rates are nearly always high before a big recession, if the reserve bank is doing it's job right. Well actually - the RBA printed all the money that caused the high inflation.  :-[/quote] No they did not. The inflation is caused by the heard mentality of people borrowing to invest seeing only good times ahead. The reserve bank does not cause the high inflation by printing money. It does the opposite. It effectively prints money in a recession. It increases interest rates (the opposite of printing money) when there is high inflation. This used to be a problem before we had independent reserve banks, but since we have had them, they have always acted to reduce inflation when it is high, and make it easier to borrow to invest when there is a recession. People who say otherwise just cannot get their head around the details, or are too lazy to bother. Look at the ASX 200 plot. One person might look at that and have a fear of missing out and want to jump on the bandwagon. I look at that and think it is time to sell.

Bobby. wrote on Dec 14^th, 2024 at 7:21pm:

freediver wrote on Dec 14th, 2024 at 5:17pm: [quote]Given your previous statement about the RBA not printing money - That's not what I said Bobby.

You said




freediver wrote on Dec 13^th, 2024 at 10:16pm:

Bobby. wrote on Dec 13th, 2024 at 4:14pm: freediver wrote on Dec 13th, 2024 at 2:46pm: [quote]High interest rates have slowed the economy to the point whereby we’re on the verge of a full-blown recession. He's got it all backwards. Interest rates are nearly always high before a big recession, if the reserve bank is doing it's job right. Well actually - the RBA printed all the money that caused the high inflation.  :-[/quote] No they did not. The inflation is caused by the heard mentality of people borrowing to invest seeing only good times ahead. The reserve bank does not cause the high inflation by printing money. It does the opposite. It effectively prints money in a recession. It increases interest rates (the opposite of printing money) when there is high inflation. This used to be a problem before we had independent reserve banks, but since we have had them, they have always acted to reduce inflation when it is high, and make it easier to borrow to invest when there is a recession. People who say otherwise just cannot get their head around the details, or are too lazy to bother. Look at the ASX 200 plot. One person might look at that and have a fear of missing out and want to jump on the bandwagon. I look at that and think it is time to sell.

poor FD, making a habit of (or suffering from short term memor loss) of denying what he said a few post back...oh dear. 

Australia is not on the edge of a Economic Recession.

IT IS IN A SELF SUFFICIENT POPULATION RECESSION THOUGH.

FACT

thegreatdivide wrote on Dec 15^th, 2024 at 4:48pm:

Bobby. wrote on Dec 14th, 2024 at 7:21pm: freediver wrote on Dec 14th, 2024 at 5:17pm: [quote]Given your previous statement about the RBA not printing money - That's not what I said Bobby. You said freediver wrote on Dec 13th, 2024 at 10:16pm: Bobby. wrote on Dec 13th, 2024 at 4:14pm: [quote author=freediver link=1734047441/4#4 date=1734065207][quote]High interest rates have slowed the economy to the point whereby we’re on the verge of a full-blown recession. He's got it all backwards. Interest rates are nearly always high before a big recession, if the reserve bank is doing it's job right. Well actually - the RBA printed all the money that caused the high inflation.  :-[/quote] No they did not. The inflation is caused by the heard mentality of people borrowing to invest seeing only good times ahead. The reserve bank does not cause the high inflation by printing money. It does the opposite. It effectively prints money in a recession. It increases interest rates (the opposite of printing money) when there is high inflation. This used to be a problem before we had independent reserve banks, but since we have had them, they have always acted to reduce inflation when it is high, and make it easier to borrow to invest when there is a recession. People who say otherwise just cannot get their head around the details, or are too lazy to bother. Look at the ASX 200 plot. One person might look at that and have a fear of missing out and want to jump on the bandwagon. I look at that and think it is time to sell.

poor FD, making a habit of (or suffering from short term memory loss) of denying what he said a few post back...oh dear. 

Unless he was referring to the RBA not creating inflation, as opposed your assertion re the RBA printing money.

Regarding which, note this from the MMT thread (#1032):

How to Avoid Hyperinflation

Alarmed economists contend that a Weimar-style hyperinflation is the inevitable outcome of government-issued money. But as Michael Hudson points out, “Every hyperinflation in history has been caused by foreign debt service collapsing the exchange rate. The problem almost always has resulted from wartime foreign currency strains, not domestic spending.”

Issuing the money directly will not inflate prices if the funds are used to increase the domestic supply of goods and services. Supply and demand will then go up together, keeping prices stable. This has been illustrated historically, perhaps most dramatically in China. The People’s Bank of China manages the money supply by a variety of means including just printing currency . In 28 years, from 1996 to 2024, China’s money supply (M2) grew by 52 times or 5,200%, yet hyperinflation did not result. Prices remained stable because the funds went into increasing GDP, which went up along with the money supply.

Hopefully China DID print some of that vast increase in money supply, as asserted above,  othwise interest on government debt will cripple the economy - which Western economists have  been forecastig for two decades,  incorrectly. 

Thanks TGD,

so

the RBA printed all the money that caused the high inflation.


so why isn't the RBA apologizing and promising not to do it again?

Bobby. wrote on Dec 15^th, 2024 at 5:08pm:

Thanks TGD, so the RBA printed all the money that caused the high inflation. so why isn't the RBA apologizing and promising not to do it again?

Sorry to inform you bobby, the RBA didn't cause ALL of Oz's inflation by printing money (just like the PBofC money printing hasn't  caused inflation in China in the last 3 decades).

Yes the RBA sold and repurchased "printed" bonds (explained previously... "it's complicated") to raise funds to support laid-off workers in the covid locked-down economy; some of these funds  were badly directed into increasing the purchasing power of people who didn't need the funds (eg Harvey Norman...) which resulted in excess demand when the pandemic ended.

But the main source of the inflation wasn't the RBA, rather it was war; and  broken supply chains and reductions in the available workforce due to the lingering effects of the pamdemic.

FD has his own version for the causes of the post pandemic inflation, beyond the Reverse Bank; he blamed it on workers who couldn't restrain their spending. 

thegreatdivide wrote on Dec 15^th, 2024 at 5:34pm:

Bobby. wrote on Dec 15th, 2024 at 5:08pm: Thanks TGD, so the RBA printed all the money that caused the high inflation. so why isn't the RBA apologizing and promising not to do it again? Sorry to inform you bobby, the RBA didn't cause ALL of Oz's inflation by printing money (just like the PBofC money printing hasn't  caused inflation in China in the last 3 decades). Yes the RBA sold and repurchased "printed" bonds (explained previously... "it's complicated") to raise funds to support laid-off workers in the covid locked-down economy; some of these funds  were badly directed into increasing the purchasing power of people who didn't need the funds (eg Harvey Norman...) which resulted in excess demand when the pandemic ended. But the main source of the inflation wasn't the RBA, rather it was war; and  broken supply chains and reductions in the available workforce due to the lingering effects of the pamdemic. FD has his own version for the causes of the post pandemic inflation, beyond the Reverse Bank; he blamed it on workers who couldn't restrain their spending.

OK so what if the RBA had refused to print money? -

Do you still think we would have had such high inflation? -
especially property prices.

Bobby. wrote on Dec 15^th, 2024 at 5:47pm:

thegreatdivide wrote on Dec 15th, 2024 at 5:34pm: Bobby. wrote on Dec 15th, 2024 at 5:08pm: Thanks TGD, so the RBA printed all the money that caused the high inflation. so why isn't the RBA apologizing and promising not to do it again? Sorry to inform you bobby, the RBA didn't cause ALL of Oz's inflation by printing money (just like the PBofC money printing hasn't  caused inflation in China in the last 3 decades). Yes the RBA sold and repurchased "printed" bonds (explained previously... "it's complicated") to raise funds to support laid-off workers in the covid locked-down economy; some of these funds  were badly directed into increasing the purchasing power of people who didn't need the funds (eg Harvey Norman...) which resulted in excess demand when the pandemic ended. But the main source of the inflation wasn't the RBA, rather it was war; and  broken supply chains and reductions in the available workforce due to the lingering effects of the pamdemic. FD has his own version for the causes of the post pandemic inflation, beyond the Reverse Bank; he blamed it on workers who couldn't restrain their spending.  OK so what if the RBA had refused to print money? -

If the RBA had refused to print money at the start of the pandemic, then locked-down workers and benefits recipients without bank savings  would have starved to death in their homes.


Quote:

Do you still think we would have had such high inflation? - especially property prices.

No, just more dead bodies....

thegreatdivide wrote on Dec 16^th, 2024 at 12:06pm:

If the RBA had refused to print money at the start of the pandemic, then locked-down workers and benefits recipients without bank savings  would have starved to death in their homes. Quote: Do you still think we would have had such high inflation? - especially property prices. No, just more dead bodies....

The RBA printed money before the pandemic and they are still printing it.  ::)

Re nflation(from MMT #1032
Bobby. wrote on Dec 16^th, 2024 at 1:24pm:

thegreatdivide wrote on Dec 16th, 2024 at 12:06pm: If the RBA had refused to print money at the start of the pandemic, then locked-down workers and benefits recipients without bank savings  would have starved to death in their homes. Quote: Do you still think we would have had such high inflation? - especially property prices. No, just more dead bodies.... The RBA printed money before the pandemic and they are still printing it.  ::)

[Hopefully you agree the government HAD to print money during the pandemic.]

In normal times, governments "borrow money" by selling bonds to dealers and private institutions (and banks)  in the primary market, who on-sell the bonds  to private citizens via the secondary market, in order to avoid raising taxes. (It's all an entirely unnecessary ruse).

Provided the bond-issuance program funds productive activity (in the public or private sector) - and the nation's productive capacity meets demand, then inflation won't eventuate because  there will be no upward pressure on prices, given sufficient supply. 

The greater problem is the demand for government to 'balance the budget', which results in long term market failure like houses being 'priced out of the market' in the absence of sufficient public sector housing.

Re inflation and money printing, see #1032 in the MMT thread:

Issuing the money directly (ie printing it)  will not inflate prices if the funds are used to increase the domestic supply of goods and services. Supply and demand will then go up together, keeping prices stable. This has been illustrated historically, perhaps most dramatically in China. The People’s Bank of China manages the money supply by a variety of means including just printing currency. In 28 years, from 1996 to 2024, China’s money supply (M2) grew by 52 times or 5,200%, yet hyperinflation did not result. Prices remained stable because the funds went into increasing GDP, which went up along with the money supply.

In fact the problem in China currently is DE-flation, happening because timid PBofC economists are frightened to increase government debt, and can't raise taxes on the middle class whose wealth is evaporating in a housing-as-private-investment price slump, meaning private consumption in China is currenty weak despite the so-called "overcapacity"** of Chinese industry.

**The West can't compete with this "overcapacity" eg with more competitve Chinese PVs and EVs, and so the EU and US  are raising barriers to Chinese imports.

   

Australia might be on the verge of a recession, but the news from Germany is even more dire:

(Dagens.com) 

Bosch Announces Plans to Lay Off Up to 10,000 Employees More

Germany’s car industry has long been a global leader, setting standards for innovation and quality. But in recent years, it has faced mounting challenges that threaten its dominance.

Falling car sales, the shift to electric vehicles, and increasing competition from Chinese manufacturers have created a tough environment for German automakers and their suppliers.

“German automakers are facing a severe cost crisis as competition grows and sales decline,” Sell explained.

Tensions are high at Bosch, and there is growing talk of strikes. Sell noted that workers might follow the example of Volkswagen employees, who recently used industrial action to push back against job cuts.

While German firms like Bosch and Volkswagen are tightening belts, Chinese companies like BYD are moving in the opposite direction.

BYD recently hired 200,000 workers in just three months to meet rising demand and plans to shift some production to Europe to avoid tariffs.

Combined with the loss of access to cheap Russian gas, it's not looking good for German industry and consumers.

The solution to the problem is available, but Germans'  historical fear of hyperinflation is preventing the government from increasing government debt, this prevention being the reason for the collapse of the coalition ("ampel") government; Scholz wants more spending on infrastructure and social support, the Conservatives want less spending...same as the Libs in Oz..

Same in France, while the boffins at the ECB (run by Germans) demand adherence by EU governments to  crippling ie inadequate government debt to gdp ratios.   

TGD,

Quote:

In normal times, governments "borrow money" by selling bonds to dealers and private institutions (and banks)  in the primary market, who on-sell the bonds  to private citizens via the secondary market, in order to avoid raising taxes.

So you say -
it's more likely that the RBA buys those Govt. Bonds as no one else wants them.

Bobby. wrote on Dec 16^th, 2024 at 4:27pm:

TGD, Quote: In normal times, governments "borrow money" by selling bonds to dealers and private institutions (and banks)  in the primary market, who on-sell the bonds  to private citizens via the secondary market, in order to avoid raising taxes. So you say -

Not only me: but also in an article to which YOU linked (by Gareth Hutchens), in #13:

The RBA says it's a complicated question to answer, and it's trying to encourage people to think more deeply about money itself.

And Hutchens says: the RBA's bond buying was an exercise of "money printing" because the bank was creating money to buy the bonds"...; and as Ellen Brown says (in the MMT post quoted peviously) the RBA - like any currency-issuing central bank in conjunction with a national  treasury, can do this any time without causing  inflation, provided certain conditions are met. 

I accept all  that is beyond your capacity to comprehend. 

Nevertheless money is (always) created out of thin air, and there are other ways to conrol inflation than by increasing economy-wrecking interest rates.


Quote:

it's more likely that the RBA buys those Govt. Bonds as no one else wants them.

No, there are times when government wants to buy back those bonds, so it can pay the interest accrued on the bonds to itself.....

Bobby. wrote on Dec 14^th, 2024 at 7:21pm:

freediver wrote on Dec 14th, 2024 at 5:17pm: Quote: Given your previous statement about the RBA not printing money - That's not what I said Bobby. You said freediver wrote on Dec 13th, 2024 at 10:16pm: Bobby. wrote on Dec 13th, 2024 at 4:14pm: freediver wrote on Dec 13th, 2024 at 2:46pm: [quote]High interest rates have slowed the economy to the point whereby we’re on the verge of a full-blown recession. He's got it all backwards. Interest rates are nearly always high before a big recession, if the reserve bank is doing it's job right. Well actually - the RBA printed all the money that caused the high inflation.  :-[/quote] No they did not. The inflation is caused by the heard mentality of people borrowing to invest seeing only good times ahead. The reserve bank does not cause the high inflation by printing money. It does the opposite. It effectively prints money in a recession. It increases interest rates (the opposite of printing money) when there is high inflation. This used to be a problem before we had independent reserve banks, but since we have had them, they have always acted to reduce inflation when it is high, and make it easier to borrow to invest when there is a recession. People who say otherwise just cannot get their head around the details, or are too lazy to bother. Look at the ASX 200 plot. One person might look at that and have a fear of missing out and want to jump on the bandwagon. I look at that and think it is time to sell.

Yes Bobby. Can you tell the difference between the two statements?

freediver wrote on Dec 16^th, 2024 at 5:42pm:

Yes Bobby. Can you tell the difference between the two statements?

No - I can't tell the difference -

because -

money printing = inflation.

Bobby. wrote on Dec 17^th, 2024 at 11:34am:

freediver wrote on Dec 16th, 2024 at 5:42pm: Yes Bobby. Can you tell the difference between the two statements? No - I can't tell the difference - because - money printing = inflation.

Can you explain why the RBA always seems to be "printing" more money when inflation is at its lowest? And the least when inflation is highest?

Or is that the extent of your understanding?

freediver wrote on Dec 17^th, 2024 at 12:11pm:

Bobby. wrote on Dec 17th, 2024 at 11:34am: freediver wrote on Dec 16th, 2024 at 5:42pm: Yes Bobby. Can you tell the difference between the two statements? No - I can't tell the difference - because - money printing = inflation. Can you explain why the RBA always seems to be "printing" more money when inflation is at its lowest? And the least when inflation is highest? Or is that the extent of your understanding?

Glad you nailed it; bobby has little understanding of  "complicated" RB monetary operations.  

But blaming people for wanting to buy a house when interest rates are low, while the dummy in charge of the Reverse Bank was telling them "go for it, cheap money is here for at least 2 years",  is a bit unfair...

freediver wrote on Dec 17^th, 2024 at 12:11pm:

Bobby. wrote on Dec 17th, 2024 at 11:34am: freediver wrote on Dec 16th, 2024 at 5:42pm: Yes Bobby. Can you tell the difference between the two statements? No - I can't tell the difference - because - money printing = inflation. Can you explain why the RBA always seems to be "printing" more money when inflation is at its lowest? And the least when inflation is highest? Or is that the extent of your understanding?

I don't understand it.
I don't see why they keep on printing money other than to cover the arses of the politicians
who spend more money than they have and couldn't give a  bugger about the inflation they cause
which wipes out peoples savings.

I know one Melbourne suburb where Unit prices went up 27% in one year -
approx. - June 2022 to June 2023.
If you would have had money in the bank it
you would have lost 27% of its buying value in one year from all their money printing.
ohh - and the mass uncontrolled, unwanted immigration also put pressure on prices too -
rents went up too in that suburb by 27% in that time.

Inflation is absolutely out of control - it's not 3% or 5% or whatever their bullshit says.
Why doesn't the RBA apologise and say they will stop printing money?
They never accept responsibility for that inflation but they caused it.

It's called macroeconomics 101 Bobby. You should understand it before trying to educate other people about printing money.

freediver wrote on Dec 17^th, 2024 at 1:21pm:

It's called macroeconomics 101 Bobby. You should understand it before trying to educate other people about printing money.

Why doesn't the RBA apologise and say they will stop printing money?

I want to see Michele Bullock - the chief of the RBA to get up on stage
and make a groveling apology to the people of Australia.
I want to see tears run down her face as she takes the blame for people
losing a large percentage of their life savings from inflation and
admit that the RBA caused it while she was a senior employee there and voted for
all the money printing they did and still do.
I want her to admit that the interest rates are high and that is destroying
the lives of millions of mortgage holders as they go without essentials to pay the banks
for their mortgage every month -
some even sell at a loss and owe the banks money.

Then I want her to promise to stop printing money -
which would instantly stop inflation and lower mortgage rates -
she could solve high inflation over night if she wanted to.

Bobby. wrote on Dec 17^th, 2024 at 1:34pm:

freediver wrote on Dec 17th, 2024 at 1:21pm: It's called macroeconomics 101 Bobby. You should understand it before trying to educate other people about printing money. Why doesn't the RBA apologise and say they will stop printing money?

They have no reason to. If the only people demanding they do so do not understand economics, then it is a good thing that they completely ignore them. It is not the RBA's responsibility to teach people who keep talking about something they refuse to understand.

freediver wrote on Dec 17^th, 2024 at 6:17pm:

Bobby. wrote on Dec 17th, 2024 at 1:34pm: freediver wrote on Dec 17th, 2024 at 1:21pm: It's called macroeconomics 101 Bobby. You should understand it before trying to educate other people about printing money. Why doesn't the RBA apologise and say they will stop printing money? They have no reason to. If the only people demanding they do so do not understand economics, then it is a good thing that they completely ignore them. It is not the RBA's responsibility to teach people who keep talking about something they refuse to understand.

https://www.clearfinances.net/countries-without-public-debt/

Most Western countries have grown accustomed to issuing debt to finance their operations.
But that is not a requirement.
We will analyze 10 great countries without any significant public debt.


Switzerland
Sweden
Norway
Denmark
Czech Republic
Estonia
Singapore
Taiwan
South Korea
Russia


Public debt is one of the great problems of our era. The existing debt load is unprecedented. And what is worse, it has been accumulated to finance short-term spending. We have nothing to show for it.

In the past, the only reason a country took on a significant amount of debt was because an exogenous event taking place, such as a world war. And the will to defend their county made governments willing to spend recklessly.

However, the debt governments have taken on in recent decades have mostly been used to finance frivolous spending. In other words, instead of living within our means, we have opted to continually go into debt, not worrying about how that debt would be paid back in the future.

The population has shown a high degree of ignorance and selfishness. And politicians have taken advantage of that, making promises to the public with the only goal of being elected to office.

The result is that virtually all the world’s major economies are in a very vulnerable situation. Many officials try to justify it with the argument that high public debt is the price for having a developed economy. But that could not be further from the truth.

Are you aware that you are changing the topic Bobby?

freediver wrote on Dec 17^th, 2024 at 8:53pm:

Are you aware that you are changing the topic Bobby?

It's the same -
when the Govt creates money via the RBA -  they have to pay it back.

Bobby. wrote on Dec 17^th, 2024 at 1:54pm:

Then I want her to promise to stop printing money - which would instantly stop inflation and lower mortgage rates - she could solve high inflation over night if she wanted to.

Currently - as the Treasurer (Chalmers) noted today (did you watch it?) - government spending is the only reason Oz in not in recession.

Do you know what a recession means for the people who lose their jobs?

btw, the Treasurer said his budget will reduce interest payments on government debt going forward; but not one journalist had the nous to ask why does a currency-issuing government have to borrow from (sell bonds to)  the private sector at all? 

Selling bonds to rich people/institutions who don't need government money in the form of interest payments on their spare cash is immoral, while government still can't "afford" to properly support people forced to live on below-poverty level jobseeker payments (aka ....ironically....as "welfare").

Chalmers properly  defended his budget which was conceived in the rotten financial system he is working under, rebuking the baying dogs from the opposition who demand a massive 'slash and burn' budget which would force many (not their own sorry arses, of course)  into absolute poverty, not just a cost-of-living crisis.   

Bobby. wrote on Dec 17^th, 2024 at 6:34pm:

. We will analyze 10 great countries without any significant public debt. Switzerland Sweden Norway Denmark Czech Republic Estonia Singapore Taiwan South Korea Russia

You want to pay higher taxes? Or receive Russian levels of social payments?



Quote:

The population has shown a high degree of ignorance and selfishness. And politicians have taken advantage of that, making promises to the public with the only goal of being elected to office. The result is that virtually all the world’s major economies are in a very vulnerable situation. Many officials try to justify it with the argument that high public debt is the price for having a developed economy. But that could not be further from the truth.

Certainly the current financial system is dysfunctional.

But how can governments support the losers in the competitive, neoliberal freemarket without increasing taxes or borrowing?

Free markets are not  regulated to ensure everyone can prosper...

thegreatdivide wrote on Dec 18^th, 2024 at 12:09pm:

Bobby. wrote on Dec 17th, 2024 at 1:54pm: Then I want her to promise to stop printing money - which would instantly stop inflation and lower mortgage rates - she could solve high inflation over night if she wanted to. Currently - as the Treasurer (Chalmers) noted today (did you watch it?) - government spending is the only reason Oz in not in recession. Do you know what a recession means for the people who lose their jobs? btw, the Treasurer said his budget will reduce interest payments on government debt going forward; but not one journalist had the nous to ask why does a currency-issuing government have to borrow from (sell bonds to)  the private sector at all?  Selling bonds to rich people/institutions who don't need government money in the form of interest payments on their spare cash is immoral, while government still can't "afford" to properly support people forced to live on below-poverty level jobseeker payments (aka ....ironically....as "welfare"). Chalmers properly  defended his budget which was conceived in the rotten financial system he is working under, rebuking the baying dogs from the opposition who demand a massive 'slash and burn' budget which would force many (not their own sorry arses, of course)  into absolute poverty, not just a cost-of-living crisis.

Does Jim Chalmers even understand how the financial system works?
He's not an economist.


https://en.wikipedia.org/wiki/Jim_Chalmers

He attended Catholic schools before going on to Griffith University,
where he completed the degrees of Bachelor of Arts and
Bachelor of Communication and
attained a First Class honours degree in public policy.[4]
He went on to complete a PhD in political science at the Australian National University,
writing his doctoral thesis on the prime ministership of Paul Keating

Bobby. wrote on Dec 17^th, 2024 at 8:58pm:

freediver wrote on Dec 17th, 2024 at 8:53pm: Are you aware that you are changing the topic Bobby? It's the same - when the Govt creates money via the RBA -  they have to pay it back.

Who to?

freediver wrote on Dec 18^th, 2024 at 1:57pm:

Bobby. wrote on Dec 17th, 2024 at 8:58pm: freediver wrote on Dec 17th, 2024 at 8:53pm: Are you aware that you are changing the topic Bobby? It's the same - when the Govt creates money via the RBA -  they have to pay it back. Who to?

To whoever buys the Govt. Bonds.  -
often the Banks -
I think they are the main customers.

Anything else you'd like to know?
I'm always glad to be of assistance.

The official cash rate is pretty much independent of total government debt. For example, during the Howard years, federal government debt reached fairly low levels, but they still kept the bond market going.

Bobby. wrote on Dec 18^th, 2024 at 1:18pm:

thegreatdivide wrote on Dec 18th, 2024 at 12:09pm: Bobby. wrote on Dec 17th, 2024 at 1:54pm: Then I want her to promise to stop printing money - which would instantly stop inflation and lower mortgage rates - she could solve high inflation over night if she wanted to. Currently - as the Treasurer (Chalmers) noted today (did you watch it?) - government spending is the only reason Oz in not in recession. Do you know what a recession means for the people who lose their jobs? btw, the Treasurer said his budget will reduce interest payments on government debt going forward; but not one journalist had the nous to ask why does a currency-issuing government have to borrow from (sell bonds to)  the private sector at all?  Selling bonds to rich people/institutions who don't need government money in the form of interest payments on their spare cash is immoral, while government still can't "afford" to properly support people forced to live on below-poverty level jobseeker payments (aka ....ironically....as "welfare"). Chalmers properly  defended his budget which was conceived in the rotten financial system he is working under, rebuking the baying dogs from the opposition who demand a massive 'slash and burn' budget which would force many (not their own sorry arses, of course)  into absolute poverty, not just a cost-of-living crisis.    Does Jim Chalmers even understand how the financial system works? He's not an economist.

He's certainly doing  his best to stay onside with Bullock who IS an economist (for what it's worth - not).

But you have revealed (in this thread) that that question coming from you is hilarious.....

Bobby. wrote on Dec 18^th, 2024 at 2:00pm:

freediver wrote on Dec 18th, 2024 at 1:57pm: Bobby. wrote on Dec 17th, 2024 at 8:58pm: freediver wrote on Dec 17th, 2024 at 8:53pm: Are you aware that you are changing the topic Bobby? It's the same - when the Govt creates money via the RBA -  they have to pay it back. Who to? To whoever buys the Govt. Bonds.  - often the Banks - I think they are the main customers.

News flash, the banks don't need to buy government bonds; they create money out of thin air when credit- worthy customers ask for a loan. 

So that leaves wealthy individuals and institutions who want a secure return on their investment...

Though sometimes the government wants to increase bank liquidity eg, via QE in a recession - which is like pushing on a string: if bank customers don't want to borrow even cheap money,  they won't. 


Quote:

Anything else you'd like to know? I'm always glad to be of assistance.

{......}

Anything else you'd like to know?

I'm always glad to be of assistance.

I’d like the winning lotto numbers please!

Daves2017 wrote on Dec 18^th, 2024 at 9:00pm:

I’d like the winning lotto numbers please!

LOL,
I heard on ABC news radio today -
we have been in a per capita recession for the last  4 years.
The Govts only avoided an actual recession from mass immigration
and large Govt spending based on borrowed money.

We're doomed:

https://www.abc.net.au/news/2024-12-19/asx-markets-business-live-news/104744692

Markets live: Australian dollar sinks to 24-month low,
US Federal Reserve cuts interest rates, ASX to fall

by business reporter David Chau
Topic:Financial Markets

2 hours ago

The Australian dollar has fallen below 62.4 US cents,
its weakest level since October 2022.

It comes after the US Federal Reserve cut interest rates by 0.25 percentage points, but indicated there would be fewer rate reductions next year as it forecasts inflation will stay higher for longer.

Aren't we going to hit a trillion dollars of debt whilst we handed out our resources to every tom dick and harry for peanuts ?? They should have slapped a super profits tax like Norway did but now they are going to make us pay for their inactions :(

Sir lastnail wrote on Dec 19^th, 2024 at 8:54am:

Aren't we going to hit a trillion dollars of debt whilst we handed out our resources to every tom dick and harry for peanuts ?? They should have slapped a super profits tax like Norway did but now they are going to make us pay for their inactions :(

yep - it's around $1 trillion now.

https://www.afr.com/policy/economy/decade-of-deficits-to-sparke-debt-interest-surge-20240513-p5jd4w


gross debt is forecast to leap above $1 trillion in 2025-26
before surging to $1.06 trillion in 2026-27 and
above $1.1 trillion a year later.

Bobby. wrote on Dec 18^th, 2024 at 4:40pm:

Anything else you'd like to know? I'm always glad to be of assistance.

I'd like to know why you haven't acknowledged the error in your assertion printing money = inflation. 


Obviously in a recession the government has to print money, or risk a full-blown depression, as happened during the GD which only ended when governments  started printing money, to win the war....

Meanwhile Biden printing money to fund the IRA etc, has been accompanied by falling inflation. 

freediver wrote on Dec 13^th, 2024 at 10:16pm:

Bobby. wrote on Dec 13th, 2024 at 4:14pm: freediver wrote on Dec 13th, 2024 at 2:46pm: [quote]High interest rates have slowed the economy to the point whereby we’re on the verge of a full-blown recession. He's got it all backwards. Interest rates are nearly always high before a big recession, if the reserve bank is doing it's job right. Well actually - the RBA printed all the money that caused the high inflation.  :-[/quote] No they did not. The inflation is caused by the heard mentality of people borrowing to invest seeing only good times ahead. The reserve bank does not cause the high inflation by printing money. It does the opposite. It effectively prints money in a recession. It increases interest rates (the opposite of printing money) when there is high inflation. This used to be a problem before we had independent reserve banks, but since we have had them, they have always acted to reduce inflation when it is high, and make it easier to borrow to invest when there is a recession. People who say otherwise just cannot get their head around the details, or are too lazy to bother. Look at the ASX 200 plot. One person might look at that and have a fear of missing out and want to jump on the bandwagon. I look at that and think it is time to sell.

Called it.

Sir lastnail wrote on Dec 19^th, 2024 at 8:54am:

Aren't we going to hit a trillion dollars of debt whilst we handed out our resources to every tom dick and harry for peanuts ?? They should have slapped a super profits tax like Norway did but now they are going to make us pay for their inactions :(

Yes the fossil companies have the Oz government by the short and curlies - the losers. 

But re the government's  trillion dollar debt hit during the pandemic, to whom does that debt have to be repaid?

Don't we need an alternative arrangement regarding government debt accumulated in pandemics or recessions?

eg if another pandemic hit us next year, then Oz govt. debt would soon be $2 trillion... and the interest on the debt would be so large that taxpayers - on the hook for the  interest bill -  would be deprived of government  funds needed to fund vital government services.

By the way, re "taxpayer money":

https://billmitchell.org/blog/wp-content/uploads/2024/12/Season_2_9_promo.png

1st speaker: " It is the taxpayers' money that we are using".

2nd speaker: "Sorry to interrupt, but the government issues the money that taxpayers use".

There's a clue for an alternative arrangement for avoiding  issuing government debt, we already know government money printing doesn't cause inflation if certain conditions are met (in short, if supply of goods and services meets demand).

And during the pandemic, the  government should have only paid - using  free money issued by the government (see the cartoon linked above) - the essential  bills of locked down workers,  not send money to the bank accounts of  people who didn't need it (as you said), which was partly responsible for post-covid inflation (by increasing demand post lockdowns) - and also exacerbated  by supply problems relating to lingering illness  and the Russian war, Ukraine and Russia beng major global suppliers of food and fossil fuels, respectively.    



 

freediver wrote on Dec 19^th, 2024 at 12:31pm:

I look at that and think it is time to sell. Called it.

Yep - looks like a stock market crash.

ASX  down  1.86% today.

DOW down  2.58%


https://www.afr.com/markets/equity-markets/asx-to-drop-a-plunges-on-fed-s-revised-rate-outlook-20241219-p5kzjl


https://edition.cnn.com/business

Bobby. wrote on Dec 19^th, 2024 at 2:14pm:

freediver wrote on Dec 19th, 2024 at 12:31pm: I look at that and think it is time to sell. Called it. Yep - looks like a stock market crash. ASX  down  1.86% today. DOW down  2.58% https://www.afr.com/markets/equity-markets/asx-to-drop-a-plunges-on-fed-s-revised-rate-outlook-20241219-p5kzjl https://edition.cnn.com/business

Such is the power of bond traders who demand higher interest rates when a government runs up debt which they think might be difficult for the government to pay back (eg they forced Lizz Truss out in the UK when she proposed lower taxes, without cutting spending).

Also heard on the ABC today: interests rates are rising in Brazil because the Leftwing government wants to deficit spend, to help reduce inequality (which is vicious in Brazil)  instead of reducing government debt as demanded by bond traders.

Vicious, private-sector thugs destroying democratically elected governments....

Currency-issuing governments should not be borrowing at all, they should ensure supply meets demand - a different metric.

Anyway, according to Paul Krugman (who is no MMTer):

(Raw Story)

Trump handed basic math lesson as Nobel prize winner takes apart policies

An Oz share market crash will be the least of the world's problems if your hero Trump, influenced by Musk - head  of the DOGE, has his way.....

At least Trump, back in 2016,  knew currency-issuing governments can print money without ill effect, provided supply (the nation's output)  meets demand.

 

Dear TGD,
do you have any links?

if Wall Street gets a cold we get the flu:


https://edition.cnn.com/2024/12/18/economy/dow-10-day-losing-streak/index.html

Dow plunges more than 1,100 points and marked its longest losing streak since 1974.


New York
CNN
—
The Dow plunged Wednesday on a disappointing outlook from the Federal Reserve. In the process, the blue-chip index extended its losing streak to 10 days — the longest such stretch since Gerald Ford was president.

The Dow Jones Industrial Average ended the day down about 1,123 points, or 2.6%, after the Fed indicated in a policy statement that it is forecasting just two interest rate cuts in 2025, not the previously projected four. The Fed now anticipates inflation will remain stubbornly above its target range for longer than it had initially expected.

The Dow has fallen for 10 days in a row, the first time it has had a losing streak that long since September 20 through October 4, 1974, when the index fell for 11 sessions in a row.

Bobby. wrote on Dec 19^th, 2024 at 2:49pm:

Dear TGD, do you have any links?

https://www.rawstory.com/paul-krugman-trump-2670479246/

thegreatdivide wrote on Dec 19^th, 2024 at 3:34pm:

Bobby. wrote on Dec 19th, 2024 at 2:49pm: Dear TGD, do you have any links? https://www.rawstory.com/paul-krugman-trump-2670479246/

Thanks - scary stuff:


Krugman then predicts that a widening trade deficit could lead Trump to pressure the Federal Reserve to drastically slash interest rates, which would likely reignite inflation.

"I don’t think markets are properly pricing in the likely inflationary consequences of Trump’s coming war on arithmetic," he concludes.

THE FED JUST CRASHED THE STOCK MARKET...

 
Streamed live 6 hours ago
FED Just CRASHED The STOCK MARKET...

Governments Around The Would Are Collapsing All At Once...


https://www.youtube.com/watch?v=mpPyZtFnn_I

ALERT: CHRISTMAS RALLY CANCELLED - MARKETS IMPLODE IS THE CRASH BEGINNING?


https://www.youtube.com/watch?v=f4qBbjGaXKw

Bobby. wrote on Dec 19^th, 2024 at 3:40pm:

thegreatdivide wrote on Dec 19th, 2024 at 3:34pm: Bobby. wrote on Dec 19th, 2024 at 2:49pm: Dear TGD, do you have any links? https://www.rawstory.com/paul-krugman-trump-2670479246/ Thanks - scary stuff: Krugman then predicts that a widening trade deficit could lead Trump to pressure the Federal Reserve to drastically slash interest rates, which would likely reignite inflation. "I don’t think markets are properly pricing in the likely inflationary consequences of Trump’s coming war on arithmetic," he concludes.

Yes, that's the mainstream economists' conclusion (of which Krugman is one).

So, we are stuffed either way, with Trump's and Musk's non-economist policies,  or mainstream orthodoxy's policies.

The wealthy will ofcourse sail through any financial crisis, as always;  I'm sure Musk has a cool couple of $billion safely stashed away...

thegreatdivide wrote on Dec 19^th, 2024 at 4:47pm:

Yes, that's the mainstream economists' conclusion (of which Krugman is one). So, we are stuffed either way, with Trump's and Musk's non-economist policies,  or mainstream orthodoxy's policies. The wealthy will ofcourse sail through any financial crisis, as always;  I'm sure Musk has a cool couple of $billion safely stashed away...

The question is -

will 4 years of Biden leave Trump with a wrecked economy?

Bobby. wrote on Dec 19^th, 2024 at 5:07pm:

thegreatdivide wrote on Dec 19th, 2024 at 4:47pm: Yes, that's the mainstream economists' conclusion (of which Krugman is one). So, we are stuffed either way, with Trump's and Musk's non-economist policies,  or mainstream orthodoxy's policies. The wealthy will ofcourse sail through any financial crisis, as always;  I'm sure Musk has a cool couple of $billion safely stashed away... The question is - will 4 years of Biden leave Trump with a wrecked economy?

Obviously not, US unemployment is low,  inflation and interest rates are falling, despite the ever-increasing US deficits and debt - actually in common with  Trump's previous  term maintaining spending while cutting taxes on the wealthy (apparently the US can get away with it - the advantage of possessing the global reserve currency, and the most 'financialized' economy in the world. )

Proving just how sick our financial system is, requiring government to sell bonds to private sector  investors:

(News Wire)

ASX plummets after US reserve’s pivot

Following the announcement by US Federal Reserve chair Jerome Powell, bond yields rose on the prospects of less rate cuts, while shares fell due to having an inverse relationship with bonds.

Mr Powell said: “With today’s action, we have lowered our policy rate by a full percentage point from its peak and our policy stance is now significantly less restrictive. We can therefore be more cautious as we consider further adjustments to our policy rate.”

ie bond buyers are demanding higher yields because they think interest rates wil stay higher for longer - because (according to them)  the government is over-spending.

Deplorable - "over-spending" in a cost of living crisis which is badly affecting the least well-off.

The derivatives warriors will have a field day in a recession; one John Paulson pocketed $2billion during the GFC when millions of people lost their homes.

Greed rules.....

[derivatives:  "financial weapons of mass destruction" according to Warren Buffett.]

Update.

DOW closed flat   +0.04%

ASX  down  0.79%


https://www.marketindex.com.au/asx200

Bobby. wrote on Dec 20^th, 2024 at 9:36am:

Update. DOW closed flat   +0.04% ASX  down  0.79% https://www.marketindex.com.au/asx200

No crash in the US, then....

Meanwhile Trump wants to increase the debt ceiling while Musk wants to slash government spending (see the latest MMT post #1037).

Who is more.... likeable?  :-?

thegreatdivide wrote on Dec 20^th, 2024 at 9:45am:

Bobby. wrote on Dec 20th, 2024 at 9:36am: Update. DOW closed flat   +0.04% ASX  down  0.79% https://www.marketindex.com.au/asx200 No crash in the US, then.... Meanwhile Trump wants to increase the debt ceiling while Musk wants to slash government spending (see the latest MMT post #1037). Who is more.... likeable?  :-?

I don't understand it.
It looks like they are delaying the inevitable.




thegreatdivide wrote on Dec 20^th, 2024 at 8:54am:

The conflict between Trump, who wants to increase the debt ceiling (and wants Biden to do it now....), compared with Musk who wants to slash government spending despite hurting the people who rely on it (....what does this say about the morality of th world's richest man?) Raw Story) Trump lashes out at 'nasty trap' laid by Democrats in lengthy screed President-elect Donald Trump took to his Truth Social platform on Wednesday to complain about the state of the omnibus spending deal — and demand that no deal pass without raising the debt ceiling for next year. The debt ceiling, which can force the United States to default on payment obligations it already made, was extended to 2025 after a month of furious negotiation last year by then-House Speaker Kevin McCarthy (R-CA), who tried to squeeze draconian cuts to social spending out of the deal, and the Biden administration. At the time, some Republicans were opposed to raising the debt ceiling at all. Now on the hook if the nation defaults and blows up the world economy, Trump is complaining that the debt ceiling was timed by Democrats to be a "trap" against him. "Sounds like the ridiculous and extraordinarily expensive Continuing Resolution, PLUS, is dying fast, but can anyone imagine passing it without either terminating, or extending, the Debt Ceiling guillotine coming up in June?" asked Trump. "Unless the Democrats terminate or substantially extend Debt Ceiling now, I will fight ‘till the end," he continued. "This is a nasty TRAP set in place by the Radical Left Democrats! They are looking to embarrass us in June when it comes up for a Vote. The people that extended it, from September 28th to June 1st, should be ashamed of themselves. It was political malpractice!" Trump added: "Also, the Communist Global Engagement Center, a project of Crooked Hillary Clinton, should not in any way, shape, or form be extended and, the shielding of the very corrupt J6 Unselect Committee of Political Losers and Thugs would be suicidal for any Republican approving it. Likewise, this is not a good time for Congress to be asking for pay increases. Hopefully, you’ll be entitled to such an increase in the near future when we, 'MAKE AMERICA GREAT AGAIN!'" All of this comes as one of Trump's closest allies and strategist, tech billionaire Elon Musk, blew up GOP support for the resolution and threatened primary challenges against any Republican who votes for it — a development that upended the whole process. ..... A right royal mess, all because Musk is beholden to the balanced budget/debt and deficit myth.

Bobby. wrote on Dec 20^th, 2024 at 9:48am:

I don't understand it. It looks like they are delaying the inevitable.

That's because mainstream economists have led everyone astray,  hence you are beholden to the mainstream debt and deficit myth.


But it all seems to be coming to a head; governments in Canada, France and  Germany are in chaos because their finance ministers are preaching government austerity in the face of a cost of living crisis; and now the world's biggest economy is grappling with the same fake deficit and debt mythology.

Most likely we will see Congress kick the debt and deficit can down the road again next Saturday...stay tuned. 

thegreatdivide wrote on Dec 20^th, 2024 at 10:04am:

Bobby. wrote on Dec 20th, 2024 at 9:48am: I don't understand it. It looks like they are delaying the inevitable. That's because mainstream economists have led everyone astray,  hence you are beholden to the mainstream debt and deficit myth. But it all seems to be coming to a head; governments in Canada, France and  Germany are in chaos because their finance ministers are preaching government austerity in the face of a cost of living crisis; and now the world's biggest economy is grappling with the same fake deficit and debt mythology. Most likely we will see Congress kick the debt and deficit can down the road again next Saturday...stay tuned.

yes -

update

ASX down 1.37%
https://www.marketindex.com.au/asx200

$A to $US  0.62

https://www.xe.com/currencyconverter/convert/?Amount=1&From=AUD&To=USD