Australia is about to get its first woman PM

[ricketyclik]

You ****ing ****, you've misunderstood the difference between cause and effect.

Idiot.

No darling, you've misunderstood what I said.

Pinstriped pockmark.

[ricketyclik]

BTW, Zevico's surprisingly reasonable point was the the monetary authority in Australia is currently tightening. If the fiscal authority attempts to further inject money by issuing debt and spending then the monetary authority will not soak the debt up; they are attempting to tighten, and any excess spending by government will cause them to tighten faster.

Duh.

It was tightening from a stimulatory setting to a neutral one. They are not attempting to slow the economy with interest rates, they are pre-empting an overheating by having interest rates too low. Read the Reserve Bank meeting minutes if you don't believe me.

[KrazyHorse]

It's impossible to "understand" anything you say, you ******. Nonsense has that quality.

[ricketyclik]

I find on this occasion I must agree with KH.
Australia's economy was strong, not subject to any financial crisis at home and therefore would never have gone into severe recession. The scaremongering of double digit unemployment if there was no stimulus is not based on any economics. Without stimulus it may have risen to 7%, no more, stimulus kept it to 5.7% at its peak. But what the stimulus has also done is kept inflation high at around 3%. Things would be better going forward if a mild recession was allowed to bring inflation back to around 2% or less so we could have a long sustained recovery that would bring unemployment down sustainably for the long haul. Now however with the inflation demon threatening we cannot sustain growth into the future at a level that will reduce unemployment significantly.
A sustainable economy into the future is better than short term pump priming which brings benefits briefly but causes damage long term when inflation is already high.

I can see the merits of this argument, given where we are now, but one has to remember that at the beginning of the GFC everyone was ****-scared about what would happen. Consumer and business confidence were at an all-time low, until the announcement that a technical recession had been avoided, at which point they rebounded nicely. One can speculate about how severe the feedback would have been had the technical recession not been avoided, but I agree, it really is just speculation.

[ricketyclik]

It's impossible to "understand" anything you say, you ******. Nonsense has that quality.

Yeah yeah, go tell it to your mummy, wall-eyed walrus.

[KrazyHorse]

It was tightening from a stimulatory setting to a neutral one. They are not attempting to slow the economy with interest rates, they are pre-empting an overheating by having interest rates too low. Read the Reserve Bank meeting minutes if you don't believe me.

Is this some sort of joke?

Central banks in the modern age (outside extraordinary moves like those made in the recent past by the Fed and the ECB) have precisely one move each time they meet to decide policy: they buy and sell short-dated government securities (printing money when necessary to do so).

The Australian central bank has demonstrated that it feels inflationary pressure is building (not that "the economy is overheating", you ****ing idiot). It DOES NOT FEEL STUCK IN A LIQUIDITY TRAP OR ELSE IT WOULDN'T BE TALKING ABOUT THIS.

The REACTION of the monetary authority to large deficit spending by the fiscal authority will therefore be to TIGHTEN IN IMMEDIATE RESPONSE. If the monetary authority felt that its actions were constrained, then it might have no reaction (it would print money to pull excess government securities off the market and maintain its target interest rates).

What sort of fantasy world do you live in in which the fiscal authority is NOT counteracted by the monetary authority in normal regimes?

[KrazyHorse]

I can see the merits of this argument

You would, because it's pretty much the same type of nonsense you're speaking.

[KrazyHorse]

Is there something in your past which gives you the urge to make a fool of yourself by commenting on **** you don't even understand on a basic level, ricketyclick?

[notyoueither]

How far along in your PhD were you, KH, when you discovered that most everything you thought you knew about economics should be tossed in the trash can?

[KrazyHorse]

Unlike most people here my basic problem with economics wasn't that I didn't understand the theory in any meaningful way, nye.

It was therefore not a question of tossing away knowledge.

[notyoueither]

I didn't say you had knowledge. Quite the contrary. You were a loon who thought you did.

I intimated that you consider yourself quite a clever bunny, and until relatively recently your opinions about politics and economics were several watts short of lighting the bulb.

I'll posit that you are still a loon, but like many other self-considered reformed loons you've swung from one extreme to another.

You are in no position to throw rocks at other people.

[SlowwHand]

He still is a raving loon.

[ricketyclik]

Is this some sort of joke?

Central banks in the modern age (outside extraordinary moves like those made in the recent past by the Fed and the ECB) have precisely one move each time they meet to decide policy: they buy and sell short-dated government securities (printing money when necessary to do so).

The Australian central bank has demonstrated that it feels inflationary pressure is building (not that "the economy is overheating", you ****ing idiot). It DOES NOT FEEL STUCK IN A LIQUIDITY TRAP OR ELSE IT WOULDN'T BE TALKING ABOUT THIS.

The REACTION of the monetary authority to large deficit spending by the fiscal authority will therefore be to TIGHTEN IN IMMEDIATE RESPONSE. If the monetary authority felt that its actions were constrained, then it might have no reaction (it would print money to pull excess government securities off the market and maintain its target interest rates).

What sort of fantasy world do you live in in which the fiscal authority is NOT counteracted by the monetary authority in normal regimes?

Stimulus starts rolling into households: March 2009

1st interest rate rise: December 2009

Quite an IMMEDIATE RESPONSE there, no?

Also note that interest rates are currently below the average of the last 10 years. Would you call this a move by an authority who thinks that the economy has too much money availability in it?

[trev]

1st interest rate rise: December 2009

This is wrong, I believe it was Oct 09, maybe a month earlier. The major stimulus effect, the building projects were only seriously winding up by about Oct, so reaction from Central Bank was fairly rapid. If you question my knowledge of its impact, I will let you know I work in the construction industry and my employer has benefited from the spending, so I do know when the serious impact of the stimulus started to hit. It does take a number of months for building projects to commence and begin employing increased numbers of employees.
The Central Bank believed there was too much money in it, otherwise interest rates would have been left unchanged. The fact they raised them proves my point.

[ricketyclik]

The Central Bank believed there was too much money in it, otherwise interest rates would have been left unchanged. The fact they raised them proves my point.

There is no way in the world that the RBA would have ever dreamt of maintaining interest rates at 3% in a healthy economy. They're at 4.5% now, a relatively low rate by historic standards. The interest rate rises do not in any way prove your point, they prove that the Bank thinks the economy is going well. If they thought there was too much money they'd have rates up around 6.5 - 7%.

Look at the graph of historic rates above.