Card-carrying RBA sock-puppet, Terry McCrann:
Yes, the “3 Rs” might have fallen out of favour in our schools, but is it too much to ask that the esteemed members of our economentariat might have at least some crude understanding of simple ‘rithmetic, to say nothing of the basics of economics 101?
We have seen an extraordinary, almost across-the board, eruption of hyperventilating hysteria over the Reserve Bank’s official interest rate rises.
In a crowded field of hyperbole, the two most egregious standouts are arguably the boys at the MacroBusiness website describing the RBA as the “lunatic RBA” and the AFR’s idiosyncratic columnist Christopher Joye calling the RBA “unhinged”.
All for, my goodness, raising its official cash rate by a shuddering 1.25 percentage points in just two months (over three meetings).
That’s the “fastest tightening cycle” not just this century, but in almost 30 years! has been the almost universal headline in both media and “expert” commentary.
Well, two rather fundamentally important, if somewhat awkward, contexts have gone missing from these “observations”.
Where the RBA was starting from – just 0.1 per cent or effectively zero. So this shudderingly savage tightening cycle has taken the rate all the way up to, well, 1.35 per cent.
You want me to give you a real tightening cycle? Well, how about a cash rate of 18 per cent, as it was in 1990, and so a typical home loan rate of 17 per cent?
Or indeed, the tightening through 2008 which took the cash rate to 7.25 per cent and home loan rates close to 10 per cent.
The second context is inflation. Even using the 5.1 per cent published CPI for the year to the March quarter, this means the RBA have moved its real cash rate from minus 5 per cent to minus 3.75 per cent.
Gee, it’s become slightly less super-stimulatory, but on what planet in which universe would a minus 3.75 per cent real policy rate be considered restrictive, I’d be intrigued to know?
Good on you, Tezza, for your willingness to engage with MB. Tez has done so before and it is refreshing in an MSM paralysed by brainless parrots.
There are issues with Tezza’s attack (it is the rate of change in rates that matters not levels, and the failure to cite the fixed-rate mortgage reset) but let’s not dwell on such.
The question is, why is Tezza wasting column inches on interest rates? His privileged seat upon the RBA fist should be put to better use!
Instead, Tezza should bring his tremendous powers of scorn to bear upon Australia’s suicidal energy settings. It fits with his modus operandi to do so:
- Albo’s cowards are doing NOTHING to lower energy costs.
- The need for cheaper gas and coal fits with long-term decarbonisation skepticism.
- Tezza fashions himself after a bourgeois contrarian.
- The fist in his butt needs his help desperately.
That is, pressuring Albo’s cowards to install super-profit taxes, export levies or domestic reservation on gas and coal will do far more to tame Tezza’s inflation than his puppetmaster’s rate hikes ever can.
