# RBA cash rate



## grandia3 (25 January 2011)

G'day people 

with RBA meeting due next Tuesday,
any takers on what their cash rate decision will be?

IMO, taking into account the recent flood, increase in cash rate is unlikely
but, economists sometimes surprise us


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## c-unit (25 January 2011)

I'll say 25bp rise, as inflationary expectations are over 4%


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## tothemax6 (25 January 2011)

My prediction for Tuesday: no change.


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## Julia (25 January 2011)

grandia3 said:


> but, economists sometimes surprise us



I can't think of many predictions of economists that have actually been right over the last few years.  I'm a bit surprised that, after their multiple failures, they're still so keen to put their forecasts out there.\
Imo there's no chance of an increase in rates at the Feb meeting.
But just wait until the increased food prices have happened in earnest, and the building recovery after the floods is in full swing, and whacko, up they will go again.
Miners will probably also be functional again by this time.

Tough on the so called Aussie battler who will be facing increased cost of living plus likely another rise in mortgage payments.


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## drsmith (26 January 2011)

No change.

One reason to me could the RBA waiting see the government's fiscal management strategy in relation to flood recovery.


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## grandia3 (27 January 2011)

drsmith said:


> the government's fiscal management strategy.




true, rebuilding after the flood could cause inflation 
I'm expecting the cash rate will raise eventually


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## tothemax6 (1 February 2011)

As predicted, no change. Bets on when next change will occur?


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## jbocker (3 May 2011)

With the AUD going past $1.10US, what effect would an interest rate rise (today) have on the AUD? 
There was some talk a week or two ago that there could be a cash rate rise  with the inflation numbers, but I think it is very unlikely now.
The banks may independently drop the rates too was a report I saw a little while ago too, but maybe I was dreaming.
Additionally the pending budget would quell any decision to change the rate.

Maybe Glenn Stevens will cancel the meeting.


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## jbocker (3 May 2011)

no real surprise...

At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per cent. And the reasoning can be found here...
http://www.rba.gov.au/media-releases/2011/mr-11-07.html


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## drsmith (31 July 2011)

The RBA faces a difficult decision on Tuesday.

http://www.businessspectator.com.au...une-qtr-pd20110727-K63B2?OpenDocument&src=hp2

Do they throttle further an already weak domestic economy or abandon their 2-3% underlying target ?


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## tinhat (31 July 2011)

To a certain degree they will blame it on the price of bananas (ie, abnormal cost pressures due to the natural disasters).

Nostro-stannum says... No change this week!!!


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## jbocker (1 August 2011)

Likely to be no change, after thoughts there could be a drop earlier in the month.
I like checking on this site! ...

http://www.asx.com.au/sfe/targetratetracker.htm


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## drsmith (2 August 2011)

If the RBA does not raise rates today, it's commentary will make for interesting reading given June quarter inflation was worse than expected.



> RESERVE Bank governor Glenn Stevens delivered some hugely important messages yesterday. Ahead of this morning's inflation figures, on which next week's RBA interest rate decision pivots.
> 
> The most immediate message he delivered is that the collective you - Australian households - might just have saved yourself out of a rate rise. Absent some (unlikely) shockingly high inflation number.






> Simply and brutally, that the RBA would have to slow the rest of the economy in order to "make way" for the huge investment spending of the resources boom. And it would do so, by raising rates.




http://www.heraldsun.com.au/busines...-americans-spend/story-e6frfig6-1226102302851


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## drsmith (2 August 2011)

The RBA held off raising the cash rate citing uncertainty in global financial markets over recent weeks.



> At today's meeting, the Board considered whether the recent information warranted further policy tightening. On balance, the Board judged that it was prudent to maintain the current setting of monetary policy, particularly in view of the acute sense of uncertainty in global financial markets over recent weeks. In future meetings, the Board will continue to assess carefully the evolving outlook for growth and inflation.



They won't be able to hold that line for long, unless that uncertainty in global financial translates into the global economy itself going pear shaped.


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## tothemax6 (2 August 2011)

So inflation hits 3.8% and they leave the cash rate steady. What the hell kind of metric is 'we feel there is uncertainty in financial markets' when your rules dictate keep inflation below 3%? 
If even the AUD is not to be trusted I will have to increase my gold holdings.


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## drsmith (4 December 2012)

Another cut today of 0.25% to a cash rate of 3%.

Something our political leaders should note,



> Key commodity prices for Australia remain significantly lower than earlier in the year, though trends have been more mixed over the past few months. The terms of trade have declined by about 15 per cent since the peak, to a level that is still historically high.




http://www.rba.gov.au/media-releases/2012/mr-12-36.html


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## Joules MM1 (4 December 2012)

drsmith said:


> Another cut today of 0.25% to a cash rate of 3%.
> 
> Something our political leaders should note,
> 
> ...




and another one
http://www.theaustralian.com.au/bus...127ac30f051b51127a63c7d2#.UL1yF-SHv-E.twitter


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## Julia (4 December 2012)

One of many similar comments on various websites following today's rate cut:


> The RBA only has one instrument ie interest rates and the bad news is that in this environment it just isnt an effective tool. Firstly only a modest percentage of households have significant variable mortgages. When rates fall, they dont rush out and spend the savings, they sensibly simply maintain the repayments to pay down quicker and save interest (tax free). Their numbers are probably offset by the retirees who depend on interest income and suffer an effective "drop in pay" and are forced to spend less.




Low interest rates don't seem to have been particularly effective for the US or Japan.


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## Country Lad (5 December 2012)

Julia said:


> Low interest rates don't seem to have been particularly effective for the US or Japan.




Nor here by the looks of it.  As soon as the cut was announced, the market fell and the dollar went up - go figure.


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## Dona Ferentes (4 February 2020)

rates on hold, at 0.75%.

Markets are pricing in a 50% chance of cut in March (!?)


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## fergee (4 February 2020)

Dona Ferentes said:


> rates on hold, at 0.75%.
> 
> Markets are pricing in a 50% chance of cut in March (!?)



RBA is unlikely to cut in March IMO unless their is major fall in housing prices and/or the stock market.


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## greggles (3 March 2020)

fergee said:


> RBA is unlikely to cut in March IMO unless their is major fall in housing prices and/or the stock market.




RBA slashes interest rates to a record low of 0.5% to counter coronavirus hit.

https://www.abc.net.au/news/2020-03-03/reserve-bank-slashes-interest-rates-over-coronavirus/12020950

We are certainly living in very interesting times. Can anyone recall the last time interest rates were this low?


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## tech/a (3 March 2020)

Lowest they have ever been


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## macca (3 March 2020)

The mob running the RBA now really are the worst we have had for a long time.

Zero rates have been tried for decades in other countries, all it does is stop those with money from spending.

Different if the interest rates are 5% down to 4% but if they really think dropping the rate from .75% to .5% is going to make any difference then they have no idea.

In today's world where so many people have savings (unlike the 50, 60s) when you cut interest rates to virtually nothing people stop spending.

Those with mortgages usually leave their repayments the same to reduce the loan quicker and the nett result is a slow down in spending, Exactly like what has been happening for the past year.


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## qldfrog (3 March 2020)

another nail in the coffin of retirees savings and more worrying sensible risk reward ratio for business


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## moXJO (3 March 2020)

macca said:


> The mob running the RBA now really are the worst we have had for a long time.
> 
> Zero rates have been tried for decades in other countries, all it does is stop those with money from spending.
> 
> ...



Spot on.


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## greggles (3 March 2020)

tech/a said:


> Lowest they have ever been




Yes, I never thought I'd see rates this low. They're almost giving money away now. 

The RBA are not going to be able to raise them much in a very long time, at least not until we get serious wages growth which I can't see happening anytime soon. People are out there getting mortgaged to the hilt with the expectation that interest rates will stay low for many, many years. There will be a lot of pressure on the government to keep them low as people struggle to service those mortgages.

Economic rationalism is dead. Now we have economic populism.


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## tech/a (3 March 2020)

Banks give money away when they can smash you with high rates 
I’ve lived through 18% 
When I couldn’t pay that I was hit with 6% penalty interest 
Pretty smart seeing I couldn’t pay the 18% in the first place!

can’t see interest rates over 5% for at least a generation.


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## greggles (16 March 2020)

Pressure on the RBA to cut rates further after the US Federal Reserve slashes rates by a full percentage point.

https://www.smh.com.au/politics/fed...tral-banks-move-on-virus-20200316-p54adk.html

I'd say an April rate cut is now pretty much a certainty now after the dramatic US rate cut. The only question is will it be a quarter of a percentage point or a half?

With ScoMo handing out $750 in cash to those on government benefits and official interest rates rapidly approaching 0.00%, we appear to be spiraling into a national and global economic crisis.

Where is this all going to end?


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## Gunnerguy (3 May 2022)

RBA Cash rate is in, raised to 0.35%


https://www.rba.gov.au/media-releases/2022/mr-22-12.html


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## wayneL (3 May 2022)

Gunnerguy said:


> RBA Cash rate is in, raised to 0.35%
> 
> 
> https://www.rba.gov.au/media-releases/2022/mr-22-12.html



Whimps.


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## Dona Ferentes (3 May 2022)

So, *15 or 40 pts *in June, after the election?


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## UMike (3 May 2022)

Politics for sure.


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## wayneL (3 May 2022)

Dona Ferentes said:


> So, *15 or 40 pts *in June, after the election?




It really should be 4% as painful as that would be in the short term. Not politically feasible though,  but I don't think the market will like anything less than the .4.


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## wayneL (3 May 2022)

This is how far from reality that we have strayed in this country and across the Western world, where a cash rate increase of 0.25%... ZERO POINT TWO FIVE... is seen as a "MASSIVE BLOW".

I wonder what superlatives the media will have when we are at 5 or 7 percent, (or more)?




			https://www.news.com.au/finance/economy/interest-rates/homeowners-brace-for-pain-as-crucial-rba-interest-rate-decision-looms/news-story/3ae7eab1ec7d3dfc45518ea72cb0694e


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## againsthegrain (3 May 2022)

wayneL said:


> This is how far from reality that we have strayed in this country and across the Western world, where a cash rate increase of 0.25%... ZERO POINT TWO FIVE... is seen as a "MASSIVE BLOW".
> 
> I wonder what superlatives the media will have when we are at 5 or 7 percent, (or more)?
> 
> ...



better then nothing I guess 😔


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## wayneL (3 May 2022)

againsthegrain said:


> better then nothing I guess 😔



I would perhaps call it a shot across the bow... "massive blows" will come later.


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## macca (3 May 2022)

I think it is a reasonable rise, given the huge loans in the cities it will act as a brake on the economy.

Us experienced people know how it works but my neighbour has been a builder for 10 years and can have no idea how quickly work can stop.

I have tried to tell him to be a bit wary but he says I have 30 jobs on my books, if that drops below 20 then I will accept your advice


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## The Triangle (3 May 2022)

wayneL said:


> This is how far from reality that we have strayed in this country and across the Western world, where a cash rate increase of 0.25%... ZERO POINT TWO FIVE... is seen as a "MASSIVE BLOW".
> 
> I wonder what superlatives the media will have when we are at 5 or 7 percent, (or more)?
> 
> ...



_If passed on in full by banks, the rate rise will add $65 a month to repayments on a $500,000 mortgage, and double that on a million-dollar loan._

If you can afford a $500,000 mortgage - you can afford an additional $65/month.   But I (we all) doubt the rate increases are stopping here so when that number creeps up into the hundreds each month - what will be the outcome?     Probably the lower income defaulting and the higher income ending up getting cheap houses.  

I would not want to be the incoming government - but I would love to be in the media with all the scare pr0n they're going to be publishing on this topic.


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## divs4ever (3 May 2022)

By James Glynn and David Winning

SYDNEY -- The Reserve Bank of Australia raised its benchmark interest rate for the first time in more than a decade, acting to tame elevated inflation that is threatening the country's economic recovery from the Covid-19 pandemic.

The RBA lifted the cash rate to 0.35%, from 0.10%, and signaled further increases are likely as it seeks to bring long-term inflation back toward its 2%-3% target. It represents a significant gear shift by the RBA, which as recently as March had been signaling patience even as other global central banks laid Fthe groundwork for aggressive moves to tighten monetary policy.

The Federal Reserve has signposted a rapid series of interest-rate increases as U.S. inflation runs at its fastest pace in decades and the labor market remains extremely tight. The Bank of Canada recently lifted its target for the overnight rate by a half-percentage point from 0.50% to 1.0%, its biggest rate increase in over two decades. The Reserve Bank of New Zealand raised its policy rate by a half-percentage point last month, and left the door open to another similar oversize increase at its May meeting.

Australia shows how inflation can become a problem even while an economy benefits from higher prices of key exports, such as iron ore and coal, as the war in Ukraine heightens concerns around shortages of key commodities and Covid-related lockdowns in the key manufacturing hub of Shanghai disrupt supply chains.

The consumer-price index rose 5.1% on year in the first quarter, with core inflation also soaring above the RBA's inflation target at 3.7% on year. Economists noted that quarterly inflation has only been higher once in the past three decades: when Australia introduced a 10% goods and services tax in July 2000.

"The board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time," RBA Gov. Philip Lowe said in a statement explaining the central bank's decision on Tuesday. "This will require a further lift in interest rates over the period ahead."

Mr. Lowe forecast core inflation of around 4.75% this year, with headline CPI of around 6%. The RBA expects both inflation measures to return to around 3% by the middle of 2024, he said.

Australian businesses are having a tough time riding out the impact of elevated inflation, while surveys suggest consumers are increasingly downbeat and tightening budgets. The RBA's interest-rate rise also comes at a sensitive time politically, with the rising cost of living becoming a key issue in Australia's national election later this month.

Cleanaway Waste Management Ltd., which collects household trash in cities including Sydney, on Tuesday warned that rising fuel prices and labor shortages meant it was likely to miss expectations for annual profits. Recent flooding in Australia's east coast has also pushed up costs by damaging property, vehicles and equipment while forcing a landfill site to close temporarily.

Joshua Phipps said he is having to offer bigger wages to retain staff at MarketMakers, the small residential blinds and curtains supplier that he co-founded in southwest Sydney. At the same time, shipping costs for imported supplies from factories in China have quadrupled, he said.

"The talk that there hasn't been wage rises is garbage as far as I'm concerned," said Mr. Phipps, 51. "We've paid all staff 5% for the last two years."

Still, he said business is booming for now and the company has been able to pass on some of the increased costs to customers.

Higher borrowing costs will test the stability of Australia's housing market, which is one of the most indebted in the developed world. The RBA last raised interest rates in November 2010. Around one million homeowners with mortgages across the country have never experienced a time when interest rates were going up.

Emma Edmonds is one of them. The 30-year-old got a first foothold on the property ladder around a decade ago and took on a mortgage of 700,000 Australian dollars, equivalent to $494,000, three years ago when moving to the South Sydney home where she lives with her family, including three children.

"Having not seen a rate rise in the 11 years of having a mortgage you get comfortable and you do forget that it could always go up at any second," she said.

Ms. Edmonds said she knows many people with several credit cards from different banks who are vulnerable to rising borrowing costs. "I know that if the rates go up, they are going to be not comfortable at all," she said.

Market bets suggest the RBA could raise interest rates by around 2.5 percentage points by December, inclusive of Tuesday's increase.

While many people have used the extended period of record-low interest rates to get ahead in their mortgage repayments, others could become increasingly stressed financially. The impact could be amplified if house prices fall in response to rising rates and people curb their spending because they feel less wealthy.

The RBA last month sounded a warning that the housing market is looking more fragile, as more households have taken on high levels of debt relative to their incomes. Its modeling suggests a two-percentage-point rise in the benchmark interest rate would lead to house prices falling by 15%.

Write to James Glynn at james.glynn@wsj.com and David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

May 03, 2022 01:58 ET (05:58 GMT)

this breaks a time honoured tradition that the RBA does not raise rates close to a Federal Election

one MIGHT imply the RBA is in deep distress ( causing it to  break a time-honored tradition )

 now IF the current government is removed at the next election , the RBA will receive much of the blame ( whether they deserve it or not )

 but i am guessing a 3% ( total ) interest rate by December  won't do enough  to slow inflation ,  nor be high enough  to allow significant cuts ,  if our economy implodes ( say , because we really do go to war with China )


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## basilio (3 May 2022)

I think we are in unchartered waters at the moment.  We have never had home loan rates under 2% - until last year. The average home loan is now $500k.  Realistically it's probably more. If we suggest median wages are $80k then these $500 k loans are 6 times yearly earnings. That is historically very high.

However if interest rates do go up by 2% then we will see home loan rates around  4.6- 5% mark .* This will double the loan repayments.*
How  will that scenario play out on stretched  household budgets ?  

It's all in the maths.  A 2% interest hike on a 6% loan is effectively a 33% increase in repayments.
The same  2% increase on a current 2% loan is a 100% increase in repayments.
A 3% increase will  result in a 150% increase  in repayments


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## Smurf1976 (3 May 2022)

basilio said:


> It's all in the maths.



Not wanting to sound elitist but it always amazes me how many are apparently unable to apply really simple maths, early high school level at the most, to real world situations.

There's no need for complex formulas here, just basic math and that's all.  

Edit - note that comment's referring to the general population not to basilio's post.


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## divs4ever (3 May 2022)

basilio said:


> I think we are in unchartered waters at the moment.  We have never had home loan rates under 2% - until last year. The average home loan is now $500k.  Realistically it's probably more. If we suggest median wages are $80k then these $500 k loans are 6 times yearly earnings. That is historically very high.
> 
> However if interest rates do go up by 2% then we will see home loan rates around  4.6- 5% mark .* This will double the loan repayments.*
> How  will that scenario play out on stretched  household budgets ?
> ...



 the compounding problem is  the mortgage repayments will NOT rise alone  , one would expect other costs and fees to rise as well ( but probably not in lock step )

 now GMA ( i do not hold ) might be something to think about here , will it benefit  or be ravaged  in the mid-term  ,  also watch the banks and home-lenders  will they keep the mortgages on the books or package them up as financial products and sell them ( to say super funds )

 i absolutely agree on uncharted waters


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## wayneL (3 May 2022)

... and just chucking in something in for a bit of food for thought, the reserve bank can still raise aggressively for several cycles and we will still have negative effective interest rates.

Is that sustainable?


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## divs4ever (3 May 2022)

Smurf1976 said:


> Not wanting to sound elitist but it always amazes me how many are apparently unable to apply really simple maths, early high school level at the most, to real world situations.
> 
> There's no need for complex formulas here, just basic math and that's all.



 the simple math says many are in trouble  ( SOON ) , the complex math tries to guess how deep is the trouble and can we make a career of persistently guessing wrongly .

 now the savvy investor  is looking for that profitable angle . currently court cases  seem to drag on and on , so i will be ignoring the law firms  , companies buying distressed debt  might have a bright future  ( i hold CCP already up  more than 300% for me ), as might companies that run auctions ( on autos, boats , distressed property , etc ) and don't neglect those banks/home lenders as the carnage unfolds ( assuming they aren't forced to 'bail-in '  , which is now possible )


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## divs4ever (3 May 2022)

wayneL said:


> ... and just chucking in something in for a bit of food for thought, the reserve bank can still raise aggressively for several cycles and we will still have negative effective interest rates.
> 
> Is that sustainable?



 well they seem to be so far behind the curve , they can probably aggressively raise rates  without a positive outcome ( i suggest a negative outcome will arrive eventually  ,  but when will that 'show-stopper occur )

 depending on your opinion  of the GFC and steps taken to ' recover '  is 14 years ( of can-kicking ' ) sustainable in your eyes  ,
 but here we are in a train-wreck pushing up daisies  and comparatively happy about that ( or at least that is the narrative )


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## greggles (3 May 2022)

As interest rates rise this year, I suspect that those who are able will start pulling money out of equities and managed funds to service their mortgages. I further suspect that the first funds to be pulled will be out of those micro investing platforms such as Raiz. All that saved lockdown money that people were going to spend on holidays to Bali will probably end up servicing mortgages.

The real pain will be felt by those who overextended and bought houses that they really couldn't afford. Those on lower incomes will feel the pinch most.


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## divs4ever (3 May 2022)

greggles said:


> As interest rates rise this year, I suspect that those who are able will start pulling money out of equities and managed funds to service their mortgages. I further suspect that the first funds to be pulled will be out of those micro investing platforms such as Raiz. All that saved lockdown money that people were going to spend on holidays to Bali will probably end up servicing mortgages.
> 
> The real pain will be felt by those who overextended and bought houses that they really couldn't afford. Those on lower incomes will feel the pinch most.



 that sounds like a reasonable analysis to me 

 lucky for me i live a low-debt life  and my last overseas trip was in 1990  ( and grew up in a low-income household  and have resisted many modern devices and services  along the way )

 however plenty i know live an affluent life-style  and know how to navigate that choice  ( so far )

 am ready for some forced selling into the market ( to add to the current holdings )  , i just don't know when it will gain traction ( these persistent down days must be getting some margin-lenders nervous )


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## divs4ever (3 May 2022)

Australia Shocks With Bigger Than Expected Rate Hike, As Lowe Admits Embarrassment At Being So Wrong
https://www.zerohedge.com/markets/a...hike-lowe-admits-embarrassment-being-so-wrong

so wrong he has no idea how wrong he is , and isn't as though he wasn't getting indications from outside Australia 

BUT is he embarrassed enough to resign ?? that is the question


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## Smurf1976 (4 May 2022)

divs4ever said:


> Australia Shocks With Bigger Than Expected Rate Hike



Bigger than expected by whom?

Interest rate movements in 0.25% increments have been a standard practice for quite a while now, to the point that any movement by a different amount would be notable.


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## divs4ever (4 May 2022)

APPARENTLY  several analysts  predicted a 0.15% rise to bring the rate to 0.25%

 now personally i was surprised they hiked at all on Tuesday ( yesterday ) since there is a Federal Election campaign in progress 

 normal RBA convention is that the RBA avoids  interest moves during election campaigns  lest they be accused of trying to influence the election outcome ( the RBA tries to appear politically neutral , usually ) , so any move  was unexpected by me ( despite the acceptance that they really need to RUN  to catch up to the current 'official ' inflation )

since there has been a suggestion  the RBA desires to get to 2.5% by December this year  ( or i have seen a 3%  prediction )

 will the rate increase  stay at 0.25%  per rise , or will they go for bigger jumps 

 fun research  would be a quick revisit to the lead up to the 2018 taper tantrum  ( so  2.5% might trigger a massive policy reversal )


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## Dona Ferentes (4 May 2022)

...............
Almost by definition, the RBA will lag the bond yields. It will be interesting to see how high cash rate will go. A high 2 or something in the 3's?

Latest yields, after the RBA announcement

2 year yield: US 2.78% ; Australia *2.72% *
5 year yield: US 3.02% : Australia* 3.19%  * 
10 year yield: US 2.98% ; Australia 3.39%


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## Value Collector (4 May 2022)

basilio said:


> I think we are in unchartered waters at the moment.  We have never had home loan rates under 2% - until last year. The average home loan is now $500k.  Realistically it's probably more. If we suggest median wages are $80k then these $500 k loans are 6 times yearly earnings. That is historically very high.
> 
> However if interest rates do go up by 2% then we will see home loan rates around  4.6- 5% mark .* This will double the loan repayments.*
> How  will that scenario play out on stretched  household budgets ?
> ...



I think the saving grace will be that the majority of people with loans older than say 4 years are ahead in their payments, due to continuing paying their mortgages at the same rate even though their interest rates were dropping.

I might try to find the presentation later, but I remember seeing a CBA presentation that showed over 50% of borrowers were were well ahead on their mortgage (from memory I think it was 3 or 6 months ahead)

What this means is that they might be paying $2500 per month even though their required payments on current interest rates are $1800, and each month that they pay that extra $700 it has been reducing their loan faster and therefore reducing the required payment even more down to say $1799.

But now that interest rates are rising the required payment will rise, but their current payments are already much higher than the required that it won’t change their payment for a fair while.

Eg if they are paying $2500, and the required payment rises from $1800 to $1900 nothing changes for there monthly budget, they continue paying the $2500 and will continue getting ahead just at a slower rate.

As long as interest rates don’t spike to quickly there is a chance their required payment won’t ever rise above $2500.

————————————
Of course if the person reduced their payments as the internet rates reduced, or if they have a young loan of less than 3 years they would have such a large buffer accumulated.


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## Dona Ferentes (4 May 2022)

Value Collector said:


> I think the saving grace will be that the majority of people with loans older than say 4 years are ahead in their payments, due to continuing paying their mortgages at the same rate even though their interest rates were dropping.
> 
> I might try to find the presentation later, but I remember seeing a CBA presentation that showed over 50% of borrowers were were well ahead on their mortgage (from memory I think it was 3 or 6 months ahead)



Yes, I remember something similar, from a few months ago (and I may have even dropped it in a thread  on ASF somewhere - was looking for it).  In fact it may have even been along the lines of something like 70% have some buffer in their offset accounts, of several months. 

Part of the savings were from the Covid-induced changes in spending patterns and part was that blind Freddy could see there was going to be a situation like now happening sometime. Now the action of raising rates has been established, then how far up they will go is the big unknown.


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## Belli (4 May 2022)

To be honest I haven't bothered concerning myself about the effect of an increase in interest rates on borrowers but I thought the lenders factored in the impact of a rate rise on an applicant if rates increased and approved a loan on that basis.  I could be incorrect of course.

Haven't had any debt, not even a credit card, for many years now so on a personal basis I'm in the "don't give a toss" brigade .


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## qldfrog (4 May 2022)

Belli said:


> To be honest I haven't bothered concerning myself about the effect of an increase in interest rates on borrowers but I thought the lenders factored in the impact of a rate rise on an applicant if rates increased and approved a loan on that basis.  I could be incorrect of course.
> 
> Haven't had any debt, not even a credit card, for many years now so on a personal basis I'm in the "don't give a toss" brigade .



But you probably care about inflation, bond TD rates and markets .so you care😊


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## againsthegrain (4 May 2022)

qldfrog said:


> But you probably care about inflation, bond TD rates and markets .so you care😊




Im in both the categories and worry about the inflation,  probably just as much as someone with xxx debt Im somebody with xxx cash have just as much to lose


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## Belli (4 May 2022)

qldfrog said:


> But you probably care about inflation, bond TD rates and markets .so you care😊




You have made incorrect assumptions.


----------



## qldfrog (4 May 2022)

Belli said:


> You have made incorrect assumptions.



Good on you if you can be inflation proof👍


----------



## Belli (4 May 2022)

qldfrog said:


> Good on you if you can be inflation proof👍




It isn't that actually.  A number of the components (education, white goods, alcohol & tobacco, house purchase, etc) in the CPI do not apply to me.  For the others such as fuel costs or groceries, any actual monetary increase is minor - about $400 pa combined I estimate - and is easily accommodated within my finances and so I have no need to care about it.


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## againsthegrain (4 May 2022)

Belli said:


> It isn't that actually.  A number of the components (education, white goods, alcohol & tobacco, house purchase, etc) in the CPI do not apply to me.  For the others such as fuel costs or groceries, any actual monetary increase is minor - about $400 pa combined I estimate - and is easily accommodated within my finances and so I have no need to care about it.




Sounds like you have a very reasonable wife/kids (can only dream) or none 😂


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## wayneL (4 May 2022)

I'm pretty much in the same boat as Belli, well, except for alcohol 

We will be growing most of our own food and virtually off the grid (still connected to power and water but almost zero imported usage of each).

It could still be a long run before we kick the bucket so am concerned about inflation/currency debasement and trying to invest accordingly (but apart from PMs and a moderate HODL position in crypto, largely on the sidelines at the moment)

My biggest regret is not shorting Bonds when I knew I should have


----------



## Belli (4 May 2022)

againsthegrain said:


> Sounds like you have a very reasonable wife/kids (can only dream) or none 😂




I am a widower and have been so for a number of years.  My children are adults but I still fling them funds where I view those surplus to my needs and wants.


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## JohnDe (4 May 2022)

"What about the remaining two thirds of households? Well, higher interest rates actually help households with cash savings – such as in term deposits – which can include renters aspiring to be first home buyers, but mostly comprise retirees. Higher interest rates boost the disposable incomes of such households."


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## wayneL (4 May 2022)

JohnDe said:


> "What about the remaining two thirds of households? Well, higher interest rates actually help households with cash savings – such as in term deposits – which can include renters aspiring to be first home buyers, but mostly comprise retirees. Higher interest rates boost the disposable incomes of such households."



Well, technically true if  interest rates are positive in real terms, otherwise savers/retirees are just going backwards less quickly.


----------



## JohnDe (4 May 2022)

wayneL said:


> Well, technically true if  interest rates are positive in real terms, otherwise savers/retirees are just going backwards less quickly.




As Belli points out "_It isn't that actually. A number of the components (education, white goods, alcohol & tobacco, house purchase, etc) in the CPI do not apply to me. For the others such as fuel costs or groceries, any actual monetary increase is minor - about $400 pa combined I estimate - and is easily accommodated within my finances and so I have no need to care about it_." I know quite a few people in the same position.


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## StockyGuy (4 May 2022)

wayneL said:


> Well, technically true if  interest rates are positive in real terms, otherwise savers/retirees are just going backwards less quickly.




Welp at least they're not having having to pay the bank to leave they're savings in the bank... it was a remote possibility for a while in Aus.  But yeah it's much much of a muchness when inflation so high - you're still effectively paying to leave money as cash.


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## Belli (4 May 2022)

wayneL said:


> retirees are just going backwards




Some aren't.  Never feel sorry for anybody who is on a defined benefit pension which is indexed to the CPI.  I know a few of them but I'm not one of them having my funds rolled over to the SMSF.

Quick way to calculate their notional worth.  Divide the annual pension by the RBA cash rate.  That's how much you'd need in the bank earning that interest rate to receive the equivalent amount.  Even a "modest" $25k pa equates to approximately $7m.  Thank God, I'm now out of the industry dealing with some of the blighters.


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## wayneL (4 May 2022)

JohnDe said:


> As Belli points out "_It isn't that actually. A number of the components (education, white goods, alcohol & tobacco, house purchase, etc) in the CPI do not apply to me. For the others such as fuel costs or groceries, any actual monetary increase is minor - about $400 pa combined I estimate - and is easily accommodated within my finances and so I have no need to care about it_." I know quite a few people in the same position.



Yep.

But eventually I'm going to have to buy a new bogan ute... maintenance on the pile of bricks, replace the bore pump, buy a new pair of RM Williams boots, etc.

I'm up for cataract surgery sometime in the future and probably hearing aids, not to mention mobile phones which I manage to destroy with monotonous regularity.

And let's not mentioned the occasional culinary extravagance

All are affected by inflation over the long-term... 10, 20, 30 years henceforth.

I watched my mother's wealth (because she refused to do anything other than term deposits) from over a million dollars (when that was actually a shytload of cash) to 50k when she died, over 30 year period.

Hopefully, if I get to 90, I will be able to pay a nubile young lady to cut my wagyu beef up into small enough pieces to chew


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## wayneL (4 May 2022)

Belli said:


> *Some* aren't.



Quite true, but it does still require some financial nouse.

That's the point of this conversation is that you still have to figure out how to hedge against the continuous debasement of currency.


----------



## Belli (4 May 2022)

Only my opinion but one method is to continue to invest and spend less than your income.  As I've been doing both for many, many years it has now become ingrained so much so the only time I take much notice of my holdings is when I am going to place funds.  As I hold only some LICs and ETFs, the decision making isn't difficult for me and has the added benefit I am now able to ignore the gyrations of the markets.

Each has to approach it in their own way of either aiming to live off investment income, drawn down of capital on a total return concept or a combination of both.

I feel it is those who chose not to invest in the share market or don't have sufficient funds to do so will find their futures somewhat fraught and stressful.

Just my view for what it is worth.


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## JohnDe (4 May 2022)

wayneL said:


> Yep.
> 
> But eventually I'm going to have to buy a new bogan ute... maintenance on the pile of bricks, replace the bore pump, buy a new pair of RM Williams boots, etc.
> 
> ...




There are no more Ute's for me, so I'll be keeping the one I picked up in 2014 until the day that I can't drive


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## Belli (4 May 2022)

JohnDe said:


> There are no more Ute's for me, so I'll be keeping the one I picked up in 2014 until the day that I can't drive
> 
> View attachment 141240




Meh.  My previous car had a love affair with a kangaroo one morning out Tarago way and left me so I had to settle for a used Toyota 2011 sedan.


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## Dona Ferentes (4 May 2022)

Smurf1976 said:


> Bigger than expected by whom?  ... Interest rate movements in 0.25% increments have been a standard practice for quite a while now, to the point that any movement by a different amount would be notable.



The RBA action yesterday was interesting for a couple of reasons

It happened during an election campaign = tricky / delicate.
It carried the rate up to 0.35% by lifting 25 bips from 0.10%
lifting to 0.25% would have been inconsequential, while lifting to 0.50% would have been too political.
Now as @Smurf1976  states, a standard interest rate movement is 25 bips, and so we have an aberration. My prediction, for what it's worth, is that the next, post-election, lift will be 40 bips, to take it to 0.75%. Then the RBA could raise further in the normal increments. And possibly to be in the 2's sometime next year.

And for what it's also worth, pundits who get paid to prognosticate are positing further out.


> Economists at the four major banks agree the cash rate will exceed 1 per cent by Melbourne Cup day, after the Reserve Bank took a decisively hawkish turn at Tuesday’s policy meeting, and stepped up the fight against inflation.



- _CBA and NAB are going for 1.35% by  end of  November_
_- Westpac is forecasting a move of 40 basis points in June on the way to a benchmark rate of 1.75 per cent by the end of the year._
_- ANZ sits in between, anticipating the cash rate at 1.50 per cent by the end of the year._


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## againsthegrain (4 May 2022)

has any bank passed anything yet into deposit rates?


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## peter2 (4 May 2022)

Dona Ferentes said:


> pundits who get paid to prognosticate



Are overpaid.


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## qldfrog (4 May 2022)

Belli said:


> It isn't that actually.  A number of the components (education, white goods, alcohol & tobacco, house purchase, etc) in the CPI do not apply to me.  For the others such as fuel costs or groceries, any actual monetary increase is minor - about $400 pa combined I estimate - and is easily accommodated within my finances and so I have no need to care about it.



Really, no insurance, no water, no electricity, no car, no taxi no transport you get internet?
the CPI is a BS under estimate of real cost inflation.And whatever wealth you have had is getting eaten
inflation as I need to pay more for xxx is nothing for investors vs the real depreciation of FIAT
Inflation is the most generic tax you can inflict on a population..at least it is not just the middle class paying it;-)


----------



## qldfrog (4 May 2022)

againsthegrain said:


> has any bank passed anything yet into deposit rates?



ROL...


----------



## divs4ever (4 May 2022)

againsthegrain said:


> has any bank passed anything yet into deposit rates?



 i was busy elsewhere today  , but i would be ASTOUNDED  if one( or some ) did 

 i notice my main bank  ( a small one ) is DECIDING on the response to the RBA hike   , i assume on loans , first 

 CBA seems to have adjusted variable rate loans promptly 

 i haven't looked elsewhere but assume most will raise by the end of the week ( on variable rate loans )

 the tardiness  on raising rates made for deposits   , mirrors occurrences i experienced in earlier years ( 1970's  and 1980's )


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## PZ99 (4 May 2022)

Dona Ferentes said:


> The RBA action yesterday was interesting for a couple of reasons
> 
> It happened during an election campaign = tricky / delicate.
> It carried the rate up to 0.35% by lifting 25 bips from 0.10%
> ...



I can't see rates going that far without crashing the economy. They could even go down again by that point


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## Dona Ferentes (4 May 2022)

peter2 said:


> Are overpaid.



Well, they do tend to over-prognosticate


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## divs4ever (4 May 2022)

qldfrog said:


> Really, no insurance, no water, no electricity, no car, no taxi no transport you get internet?
> the CPI is a BS under estimate of real cost inflation.And whatever wealth you have had is getting eaten
> inflation as I need to pay more for xxx is nothing for investors vs the real depreciation of FIAT
> Inflation is the most generic tax you can inflict on a population..at least it is not just the middle class paying it;-)



 that CPI BS has been a progressive thing  ( more and more unrealistic  over the decades  , not just recently )

 even using numbers from Shadow Stats  has it's flaws  ( but less inaccuracy than official figures )


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## divs4ever (4 May 2022)

PZ99 said:


> I can't see rates going that far without crashing the economy. They could even go down again by that point



the RBA THINKS they can lift rates to 2.5% by December 2022 ( i think i saw a 3% estimate as well )

 using the 2018 Taper Tantrum  as a guide   i will find the attempt  to hike  ,that high will be entertaining  ( and yes i expect to be the nasty end of the pain  it the plan succeeds )

 IF we rise to 2.5% by December will the hikes continue ( or will the markets collapse )

 BTW  this is NOT an Australia  problem but one shared by several developed nations ( and one collapse could trigger others )


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## PZ99 (4 May 2022)

If we get to 2.5% by December it might be a good idea to stay off the roads because hit and runs will go through the roof with people driving unregistered / uninsured cars to save their house. Petrol stealing has already increased around here - might have to use blind headed bolts on my rego plates


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## Value Collector (4 May 2022)

againsthegrain said:


> has any bank passed anything yet into deposit rates?



Interest rates on Plenti have gone up by 0.50% in the 3 year market.


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## Belli (4 May 2022)

qldfrog said:


> Really, no insurance, no water, no electricity, no car, no taxi no transport you get internet?
> the CPI is a BS under estimate of real cost inflation.And whatever wealth you have had is getting eaten
> inflation as I need to pay more for xxx is nothing for investors vs the real depreciation of FIAT
> Inflation is the most generic tax you can inflict on a population..at least it is not just the middle class paying it;-)




Already built in to the forward provisioning of household overheads on a rolling basis.    Simple task if rates are now $2.5k provision for double that.  Same deal with insurances.  Always build in a lot of fat.  Doesn't everybody do that sort of thing?

Anyway as the SMSF has a large amount in accumulation phase as well as pension phase.  In addition to personal holdings.  So being over 70 I will run out of funds or it will be depreciated to zero if I live another 70 or so years according to the FP.  So no I don't care in the least.


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## againsthegrain (4 May 2022)

divs4ever said:


> the RBA THINKS they can lift rates to 2.5% by December 2022 ( i think i saw a 3% estimate as well )
> 
> using the 2018 Taper Tantrum  as a guide   i will find the attempt  to hike  ,that high will be entertaining  ( and yes i expect to be the nasty end of the pain  it the plan succeeds )
> 
> ...



What are the alternatives tho? We are in a hole keep digging down?


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## wayneL (4 May 2022)

againsthegrain said:


> What are the alternatives tho? We are in a hole keep digging down?



Creative destruction.

We basically have to choose between death by a thousand cuts, or crucifixion and subsequent resurrection.

I'll take the Austrian solution thanks.


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## qldfrog (4 May 2022)

Belli said:


> Already built in to the forward provisioning of household overheads on a rolling basis.    Simple task if rates are now $2.5k provision for double that.  Same deal with insurances.  Always build in a lot of fat.  Doesn't everybody do that sort of thing?
> 
> Anyway as the SMSF has a large amount in accumulation phase as well as pension phase.  In addition to personal holdings.  So being over 70 I will run out of funds or it will be depreciated to zero if I live another 70 or so years according to the FP.  So no I don't care in the least.



So yes lucky you...and never trust a FP


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## bluekelah (4 May 2022)

divs4ever said:


> the RBA THINKS they can lift rates to 2.5% by December 2022 ( i think i saw a 3% estimate as well )
> 
> using the 2018 Taper Tantrum  as a guide   i will find the attempt  to hike  ,that high will be entertaining  ( and yes i expect to be the nasty end of the pain  it the plan succeeds )
> 
> ...




It could very well end up like the 1970s, post unpegging of USD to gold, where there was high inflation from RAMPANT creation of monetary supply and the FED tried to hike then economy went into recession/stagflation. inflation got so bad, around 14.8% (which coincidentally using olden day measures, is around what USA/the world is experiencing now) , that they  finally had a proper FED chair that just hiked from 11.2% (1979) to 20%(1981) to finally overcome inflation. However this caused MASSIVE unemployment >10% and recession. and of course Australia got our recession during that time in 1982 as well.

GOLD went from $40USD to $650+USD during the 70s high inflation decade. It only went back down to 260 over next 2 decades due to positive real rates and lack of "inflation panic" but its now at 1800 another 2 decades post 2000 dotcom boom and massive "money printing"

Hyperinflation is already here NOW. We can see it in food prices/ car prices/ goods/ services/rents/property prices, dont have to be a genius to see it. (you know inflation is really bad when RBA is hiking before an election. probably so in case things go sideways with hyperinflation, they can say 'hey we did start hiking when everyone else in the world was hiking' even before the elections, so dont blame us and say we were too slow to start hiking, etc..etc...)

3% will be a joke vs 10%+ inflation, it will fail like 1970s, BUT most countries swimming in debt wont be able to service anything higher than 3% or so,  otherwise they default.

S**T is about to hit the fan. I would think at least 10%-20% in PM is prudent as well as 6months store of food/TOILET PAPER, when everything tanks, at least that 10%-20% might 10x over the next decade as another "inflation panic" sets in again.


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## wayneL (5 May 2022)

Gerome over in the US had his girly panties on too, especially in the language.


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## divs4ever (5 May 2022)

againsthegrain said:


> What are the alternatives tho? We are in a hole keep digging down?



 MAYBE we shouldn't have started digging there in the first  place ( let the 'free-market '  work undistracted )

 but the government/RBA like to pretend they are in control ( and not just annoying meddlers 

 given RBA rates rises are NOT over-taking REAL inflation , there MIGHT be an argument that these ( too ) late rises are only boosting perceived inflation  , with tax indexation ( CPI-adjusted rises ) and a GST  to amplify that  .. and THEN you also have the probability of 'bracket creep ' 


take the nice little earner fuel-excise will make for Treasury  as just one example 

 maybe we should stop digging and pray it DOESN'T rain 

 after all there is a theory  that the best cure for higher prices is higher prices ( the prices  will exceed what the consumer will pay  and therefore face a reduction in demand )


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## divs4ever (5 May 2022)

bluekelah said:


> It could very well end up like the 1970s, post unpegging of USD to gold, where there was high inflation from RAMPANT creation of monetary supply and the FED tried to hike then economy went into recession/stagflation. inflation got so bad, around 14.8% (which coincidentally using olden day measures, is around what USA/the world is experiencing now) , that they  finally had a proper FED chair that just hiked from 11.2% (1979) to 20%(1981) to finally overcome inflation. However this caused MASSIVE unemployment >10% and recession. and of course Australia got our recession during that time in 1982 as well.
> 
> GOLD went from $40USD to $650+USD during the 70s high inflation decade. It only went back down to 260 over next 2 decades due to positive real rates and lack of "inflation panic" but its now at 1800 another 2 decades post 2000 dotcom boom and massive "money printing"
> 
> ...



 i lived through the 1970's  i can probably survive that again  BUT several folk are saying we are in  uncharted  territory  piloted by a ship of fools , 

 BTW there was a stupid war raging then as well , BUT that might be a coincidence


----------



## againsthegrain (5 May 2022)

divs4ever said:


> MAYBE we shouldn't have started digging there in the first  place ( let the 'free-market '  work undistracted )
> 
> but the government/RBA like to pretend they are in control ( and not just annoying meddlers
> 
> ...




Saying this kind of stuff even a year ago made you a doomsayer and 🤪


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## divs4ever (5 May 2022)

againsthegrain said:


> Saying this kind of stuff even a year ago made you a doomsayer and 🤪



have a long-standing reputation  as a 'portent of doom ' ( since roughly 1975 )

 but don't faces drain when they finally work out i am actually an optimist   ( otherwise i wouldn't still have about 90% in the current market )


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## StockyGuy (5 May 2022)

Times like these I'm glad I swore off ever taking any debt/leverage after paying off my place a few years ago.  Maybe not the smartest approach, but makes for more restful sleep.  I would have to be extremely confident about the gamble to borrow again.


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## divs4ever (5 May 2022)

StockyGuy said:


> Times like these I'm glad I swore off ever taking any debt/leverage after paying off my place a few years ago.  Maybe not the smartest approach, but makes for more restful sleep.  I would have to be extremely confident about the gamble to borrow again.



 looks clever to me , but then i roll my eyes at the guys/gals  the use high leverage plays to buy other assets ( stuff like property )

 AND you are liable to sleep easier at night ( as a bonus )


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## StockyGuy (5 May 2022)

divs4ever said:


> looks clever to me , but then i roll my eyes at the guys/gals  the use high leverage plays to buy other assets ( stuff like property )
> 
> AND you are liable to sleep easier at night ( as a bonus )




Sadly my cautious way is not really a way to get "proper rich", though - unless one of my buy and hold stocks goes utterly nuts (I can only dream lol).


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## divs4ever (5 May 2022)

but your way MIGHT help you stay rich  ( or solvent )

 there are several billionaires that can't say that ( they have declared bankruptcy , and restructured their debt obligations )

  i see what  the 'credit-friendly ' folk do , and how it works  , but am trying to  avoid train-wrecks whilst still a passenger on the train


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## bluekelah (6 May 2022)

divs4ever said:


> i lived through the 1970's  i can probably survive that again  BUT several folk are saying we are in  uncharted  territory  piloted by a ship of fools ,
> 
> BTW there was a stupid war raging then as well , BUT that might be a coincidence



Which stupid war was that? Was that the end of the Vietnam war in the early 70s where the Americans finally pulled out and the communist Viet Cong then managed to take over the entire country ?  Sounds like a repeat of history in Afghanistan, where US forces left and the country fell to the Taliban.

or was it on of the Arab - Isreali wars?

Must have been a rough time to live through. I believe in history repeating itself, maybe not exactly but in similar fashion. Its been shown throughout history that a dominant power will create their own reserve fiat currency for global trade (dutch -> british -> USA) but ultimately another superpower takes over. Gold is what prevails in the end. We could be looking at a Chinese based global trade currency soon.

This Ray Dalio Video i think sums it up well.


I do think most CBs are hiking now, not becoz their economies are doing well but becoz they have NO CHOICE as thats the only way they know to fight inflation (or dare i say hyperinflation). Perhaps if we get to 15-20% rates again folks will remember it for at least a generation or so...Just like during the DotCom boom, those highly leveraged players will be wiped out for sure, we might even have to do a bank bail out or two


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## bluekelah (6 May 2022)

StockyGuy said:


> Sadly my cautious way is not really a way to get "proper rich", though - unless one of my buy and hold stocks goes utterly nuts (I can only dream lol).



I am in the same boat, just doing income stocks, own my PPOR outright, zero debt, small stash of physical metals,  just growing the pile for kids one step at a time.


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## divs4ever (6 May 2022)

bluekelah said:


> Which stupid war was that? Was that the end of the Vietnam war in the early 70s where the Americans finally pulled out and the communist Viet Cong then managed to take over the entire country ?  Sounds like a repeat of history in Afghanistan, where US forces left and the country fell to the Taliban.
> 
> or was it on of the Arab - Isreali wars?
> 
> ...




well the Vietnam War ( and the neighbouring Asian nations  entangled  with it ) was the one most remembered   but there were other ones in other areas  ( like South America )

 BTW Vietnam was officially a 'police action'  which allowed sections of the Geneva Convention to be bypassed  ( by guess who )

 now Vietnam  depends  on which side you viewed  it from  , i was lucky to work  with  a boy soldier ( conscripted at gun-point ) who was forced to be a scout ( mine detector ) for three different armies  , lucky for him the Australian troops respected him enough  to evacuate him when they left , so became an Australia citizen

however the war stories were NOT as one-sided as you might think  , ( considering the Army threatened to slaughter the whole village if there was any compliant on the 'recruitment ' )

am not sure if any of my associates had any involvement of the Arab-Israeli war ( maybe they had strong views better not expressed  , or maybe they had exited the middle-east previously )

now inflation is in the best interests of national treasuries  ( inflate the national debt to trivial value  and the CBs BUY that debt , if the CBs didn't buy that debt ... the CBs are basically unimportant  (, except a few nations like the Russian Central Bank )

 how close to those 15%-20% inflation rates ( not interest rates ) are we currently , i suspect scarily close , and IF SO the interest rates NEED to be slightly HIGHER to reduce inflation ( instead of fueling it )

 remember  the 'parachute ' this time  is ( 'officially ' ) BAIL-IN  they are coming for YOUR money early rather than later

 for fun research , go research 'Tier 1' assets  as Basel III sees  that debt in the liability ranking in stressed banks


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## wayneL (6 May 2022)

divs4ever said:


> remember  the 'parachute ' this time  is ( 'officially ' ) BAIL-IN  they are coming for YOUR money early rather than later
> 
> for fun research , go research 'Tier 1' assets  as Basel III sees  that debt in the liability ranking in stressed banks



Interesting point about bail ins. Australian government has categorically stated that this does not apply in Australia, yet the possibility still does remain via loophole. Additionally it is the official policy of the BIS of which our banks are party to.

SO YEP I DON'T TRUST THEM.

This is highly alarming is we have more than a few shekels in the bank at the moment.


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## againsthegrain (6 June 2022)

so gentleman,  who is tipping what for tomorrow's meeting?  Everybody is saying up but just by how much?


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## Dona Ferentes (6 June 2022)

Dona Ferentes said:


> . My prediction, for what it's worth, is that the next, post-election, lift will be *40 bips, to take it to 0.75%*. Then the RBA could raise further in the normal increments. And possibly to be in the 2's sometime next year.



from 04 May.


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## JohnDe (6 June 2022)

againsthegrain said:


> so gentleman,  who is tipping what for tomorrow's meeting?  Everybody is saying up but just by how much?




I’m going with 0.25%. The RBA broke governor broke his promise of no rate rise until 2024, so he doesn’t want to go too hard.

My business partner reckons that if the RBA board has any guts they’ll get all the pain out of the way early and hit us with 0.5%. Short term pain for long term gain.


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## JohnDe (6 June 2022)

Dona Ferentes said:


> from 04 May.




Pretty good. From the Australian - 

“Bank economists are broadly split on whether the RBA’s board at its June meeting on Tuesday will deliver a 0.25 percentage point increase in the official cash rate target to 0.6 per cent, or announce a jumbo 0.4 percentage point increase to 0.75 per cent”



			https://www.theaustralian.com.au/nation/power-petrol-spikes-to-ramp-up-inflation/news-story/a575905b4225b6b8cf52fb8b14397414


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## divs4ever (6 June 2022)

JohnDe said:


> I’m going with 0.25%. The RBA broke governor broke his promise of no rate rise until 2024, so he doesn’t want to go too hard.
> 
> My business partner reckons that if the RBA board has any guts they’ll get all the pain out of the way early and hit us with 0.5%. Short term pain for long term gain.



 normally i would go for 0.25% ( despite the fact it is basically ineffective )  the RBA has been late and pathetic since at least November 2016  ( imo ) ... BUT it broke long term custom  of hiking during a Federal Election  campaign  .

 so was the RBA being political  or desperate   , 0.25% or 0.40% would hint at political  , but would it bite the bullet and go for 0.5%  trying for SHOCK ( without a nuclear fallout ) 

 Australia with it's trade surplus is one of the few global economies  that can survive a shock ( this time )

 let's face it even a 1% rise is still way behind official inflation  , but our economy  is as much about confidence  as about   trade balance  ,

 maybe i am losing my memory but i don't remember Albo's greatest achievements when treasurer  ,  so i doubt  Albo will try a Kevin Rudd style recovery ( which i think was a good strategy implemented poorly )

 lets go for 0.5% ( and most likely be disappointed again )

 PS  at the first hint of unrest with the masses  ( and the Greens ) expect Albo  to be bumped off the pedestal


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## Jeda (7 June 2022)

0.40%, if Philip has a pair


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## Tropico (7 June 2022)

Jeda said:


> 0.40%, if Philip has a pair



0.4% or more, if the RBA will admit that real inflation is bigger than quoted and they really want to do something about it.
But they will probably remain in denial and drag the chain.


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## Garpal Gumnut (7 June 2022)

0.25%

gg


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## Telamelo (7 June 2022)

RBA governor Philip Lowe announced a 0.5 percentage point increase in the cash rate to 0.85 per cent following the board’s June meeting on Tuesday afternoon.


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## divs4ever (7 June 2022)

seems the market is not so pleased about that , but maybe it is news elsewhere  , that is moving the market


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## waterbottle (7 June 2022)

A


Telamelo said:


> RBA governor Philip Lowe announced a 0.5 percentage point increase in the cash rate to 0.85 per cent following the board’s June meeting on Tuesday afternoon



About time


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## Garpal Gumnut (7 June 2022)

Garpal Gumnut said:


> 0.25%
> 
> gg





0.5%

gg


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## divs4ever (7 June 2022)

Telamelo said:


> RBA governor Philip Lowe announced a 0.5 percentage point increase in the cash rate to 0.85 per cent following the board’s June meeting on Tuesday afternoon.



 WHOOPS i thought GG had the goss. 

this is probably less than we really needed  but am happily surprised  to see the RBA take things seriously ( at last )


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## waterbottle (7 June 2022)

divs4ever said:


> WHOOPS i thought GG had the goss.
> 
> this is probably less than we really needed  but am happily surprised  to see the RBA take things seriously ( at last )



We are actually well behind several Western nations in the rate hike cycle, the difference being we have the opportunity to hike on a monthly basis


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## Garpal Gumnut (7 June 2022)

divs4ever said:


> WHOOPS i thought GG had the goss.
> 
> this is probably less than we really needed  but am happily surprised  to see the RBA take things seriously ( at last )



I was just going on the AUD/USD Forex this morning, it was falling.

AUD gone up since announcement.






						Australian Dollar to US Dollar Exchange Rate Chart | Xe
					

AUD to USD currency chart. XE’s free live currency conversion chart for Australian Dollar to US Dollar allows you to pair exchange rate history for up to 10 years.




					www.xe.com
				




And its gone down a bit since I started this post.

gg


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## Knobby22 (7 June 2022)

JohnDe said:


> Pretty good. From the Australian -
> 
> “Bank economists are broadly split on whether the RBA’s board at its June meeting on Tuesday will deliver a 0.25 percentage point increase in the official cash rate target to 0.6 per cent, or announce a jumbo 0.4 percentage point increase to 0.75 per cent”
> 
> ...



The bank economists got that wrong.


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## divs4ever (7 June 2022)

well a rate hike ( within reason ) used to be good for the AUD

 but the higher AUD might make it tougher for some miners ( and other exporters )


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## CityIndex (7 June 2022)

The RBA surprised markets with their decision yet again, seems like not many were expecting the cash rate to be lifted 0.5%. 

Perhaps 50bps rate hikes are becoming the new norm with major central banks, in which case both AUD and the ASX200 may potentially be in for some repricing building up to the July meeting.


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## KevinBB (7 June 2022)

All I want for Christmas is .... for today's 0.5% rate hike to immediately flow through to bank term deposits   

KH


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## divs4ever (7 June 2022)

good luck on THAT  ( history has been unkind there )

 however variable mortgages  ( and such ) i am betting most will be lifted by Friday evening


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## divs4ever (7 June 2022)

CityIndex said:


> The RBA surprised markets with their decision yet again, seems like not many were expecting the cash rate to be lifted 0.5%.
> 
> Perhaps 50bps rate hikes are becoming the new norm with major central banks, in which case both AUD and the ASX200 may potentially be in for some repricing building up to the July meeting.



 logic says  the RBA will 'round ' the interest rates sooner rather than later  , the canary MIGHT be house prices/sales  , if the housing market cools  a little  , the RBA MIGHT lift off  the pedal a little next month   to only raise TO 1% 

 but realistically it still needs to be at least 3% by Xmas  ( to look like it is trying )


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## Jeda (7 June 2022)

JohnDe said:


> I’m going with 0.25%. The RBA broke governor broke his promise of no rate rise until 2024, so he doesn’t want to go too hard.
> 
> My business partner reckons that if the RBA board has any guts they’ll get all the pain out of the way early and hit us with 0.5%. Short term pain for long term gain.




you owe your partner a beer or two


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## mullokintyre (7 June 2022)

Well,  will Albo fire Lowe now?
He got the predictions systemically wrong  since he took over.
Between the the Financial Wizards at the RBA and the Financial Wizards at treasurey, we F@#@#^ed.
Their forecasts are less than worthless.
Mick


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## Dona Ferentes (7 June 2022)

ASX200 .... down 111 pts at close to 7096.


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## Tropico (7 June 2022)

KevinBB said:


> All I want for Christmas is .... for today's 0.5% rate hike to immediately flow through to bank term deposits
> 
> KH



Christmas in July lol.


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## divs4ever (7 June 2022)

mullokintyre said:


> Well,  will Albo fire Lowe now?
> He got the predictions systemically wrong  since he took over.
> Between the the Financial Wizards at the RBA and the Financial Wizards at treasurey, we F@#@#^ed.
> Their forecasts are less than worthless.
> Mick



 probably not  , some would argue the RBA  'gifted' the ALP a win  by raising during an election campaign , and is now giving a belated appearance of action  , if getting things habitually wrong was a sin , half the civil servants would be gone ( in DOZENS of departments  , not just the RBA and Treasury )

 and sacking all those career public servants would be fatal for the ALP

 the QUESTION is do this public servants know the truth , but lie to fit the government agenda  , or are they all incapable of seeing the truth in their analysis ( remembering most belong to the Keynesian school of economics  and some are fans of MMT   aka they have been educated to think this way )

 but worthless , yes , much of the time, but employing them boosts union membership and make the unemployment figures look better


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## divs4ever (7 June 2022)

and PS  many data collection parameters are rigged and have been so in a progressively twisted manner since at least 1990  ... so garbage in equals ..... ( one of my deceased relatives worked in the Federal public service  for several decades but also transferred often between  departments .. and brought some of the memos  , and other paperwork home )


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## mullokintyre (7 June 2022)

divs4ever said:


> probably not  , some would argue the RBA  'gifted' the ALP a win  by raising during an election campaign , and is now giving a belated appearance of action  , if getting things habitually wrong was a sin , half the civil servants would be gone ( in DOZENS of departments  , not just the RBA and Treasury )
> 
> and sacking all those career public servants would be fatal for the ALP
> 
> ...



Well if Lowe wanted to "gift" the ALP a win, he would have done a couple of rates increases well before he did.
We could have had rates with a  2 in front of them by the time the election was called if  he had the cajones.
The ALP may have got 85 seats and control of the senate.
Mick


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## divs4ever (7 June 2022)

mullokintyre said:


> Well if Lowe wanted to "gift" the ALP a win, he would have done a couple of rates increases well before he did.
> We could have had rates with a  2 in front of them by the time the election was called if  he had the cajones.
> The ALP may have got 85 seats and control of the senate.
> Mick



 maybe  , but the Sco-Mo narrative was we were all fine 

 now of course the RBA might have realized it HAD TO raise last month or face complete irrelevance , not that there are many RBA faithful here


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## Telamelo (8 June 2022)

Westpac last night advised/confirmed that it will increase mortgage interest rates by 0.5 percentage points, passing on the Reserve Bank’s latest official rate rise to customers in full.


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## MovingAverage (8 June 2022)

Some really interesting insight from the ABS on the recent CPI numbers. 

You can see the biggest driver of our CPI is the increase in transportation, which is up 13.7% over the PCP. This is followed by a 6.7% increase in housing on the PCP. Now I'm no economist, but I can see how the RBA rate hikes can dampen the growth in housing, but think that rate hikes will have minimal impact on bringing down transportation, which I assume is up because of the global supply chain disruptions. I can see how rate hikes will also have an impact on killing off consumer sentiment which in turn may wind back the more discretionary CPI segments such as recreation and culture and alcohol and tobacco segments 



So I understand that the ABS does not consider existing built houses when calculating the housing segment for CPI--they only look and new builds and exclude land costs. But below shows a PCP increase in building a new house is almost a record levels and approaching the levels of 20 years ago. If this excludes land cost and only new buildings then my thinking is that the recent big increase is probably down to the increase in building material costs and the shortage of building labor and their increasing fees. Will be interesting to see the impact that rising interest rates will have on this segment.




The ABS also factors in rents for the housing CPI segment. Some what surprising to me is that PCP rents in Sydney and Melbourne have gone backwards with relatively modest MoM increase. It is the rents in the other capital cities that have grown dramatically over the past year and is what appears to be driving the CPI increase--not Melbourne and Sydney. I'm not entirely sure how interest rate hikes with bring this under control. 




As I mentioned earlier, transportation costs are risen dramatically and no doubt is is largely down to the increase in fuel costs. Interesting to note that we are back to the record levels set 30 years ago with the invasion of Kuwait by Iraq. Can't see the RBA interest rate rises bringing this under control any time soon.


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## divs4ever (8 June 2022)

Reserve Bank of India Hikes Key Rate by 50 Basis Points to 4.90% as CPI Overshoots

https://www.investing.com/news/econ...basis-points-to-490-as-cpi-overshoots-2834670


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## mullokintyre (8 June 2022)

The 50 BPS interest rate rise was the first time in 20 years that the RBA has done a 50 BPS rise (they have done a few 50BPS  cuts, but that is another matter).
Its also almost 20 years there was any kind of rate rise.
So there must be a lot of home buyers out there who have never had the sticker shock of a rate rise.
Will be interesting to see what happens with spending.
Mick


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## MovingAverage (8 June 2022)

mullokintyre said:


> The 50 BPS interest rate rise was the first time in 20 years that the RBA has done a 50 BPS rise (they have done a few 50BPS  cuts, but that is another matter).
> Its also almost 20 years there was any kind of rate rise.
> So there must be a lot of home buyers out there who have never had the sticker shock of a rate rise.
> Will be interesting to see what happens with spending.
> Mick



100%…whole generation of home owners out there who have never experienced high interest rates and have only experienced rate reductions. Interesting times ahead for sure.


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## divs4ever (8 June 2022)

am expecting the low end of the market ( first home buyers  and buy to live in folks ) to fade first 

 the top of the market should hold for a while  as those with CASH will buy up the good value houses ( at the top end , and solid rent-earners )

 renos will be the sector to watch NORMALLY  these should fade less however this time shortages are already here , fittings , workers , tradesmen  and finance will be tougher  , and 'waiting it out ' might turn into a doom spiral 

 watch out for unusual twists


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## mullokintyre (8 June 2022)

I read the following from a commentator in  the dreaded murdoch press.
Back in the olden days, when banks sourced much of their capital from overseas markets,  the banks were at the mercy of off shore investors.
But now with so much money from  Superannuation,  the banks will do very nicely still paying less than 0.7% on their so called high interest accounts, but being able to pass on the full increases to home lender customers.
Watch how quickly their interest rate  margins start to climb.


> Most people don’t understand the reality here.
> When RBA raises the interest rate on money banks borrow it is only part of the price of their capital.
> Most is zero cost as in savings deposits.
> But the big deception is that banks lend out multiples of their capital (deposits and borrowing) according to capital adequacy risk settings. Right now for every $15 capital they can lend out $100.
> ...




Mick


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## divs4ever (8 June 2022)

mullokintyre said:


> I read the following from a commentator in the dreaded murdoch press.
> Back in the olden days, when banks sourced much of their capital from overseas markets, the banks were at the mercy of off shore investors.





 but will that off-shore borrowing return  , and how much is still borrowed ( i suspect SOME , but not as much as 'olden days ' )

 for example  i stopped looking at bank-hybrids  after i found an interesting explanation of bank's tier 1 capital , now sure i was only putting in a few thousand here and a few thousand there ( dollars  not hybrids ) but are there more like me  seeing not enough reward for the risk taken  in these bank hybrids 

 what happens when local buyers resist buying in bulk , relying on steady demand from super funds  might be a BIG trap , if jobs start disappearing


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## mullokintyre (8 June 2022)

The banks would prefer not to have to borrow offshore as it introduces currency risk that they would not incur in country of origin.
But if the risk reward is ok, i.e. its cheaper to borrow off shore and wear the currency risk, that is what they will do.

Mick


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## Macquack (9 June 2022)

CityIndex said:


> The RBA surprised markets with their decision yet again, seems like not many were expecting the cash rate to be lifted 0.5%.



Lowe must have finally off loaded his last investment property.


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## mullokintyre (9 June 2022)

CityIndex said:


> The RBA surprised markets with their decision yet again, seems like not many were expecting the cash rate to be lifted 0.5%.
> 
> Perhaps 50bps rate hikes are becoming the new norm with major central banks, in which case both AUD and the ASX200 may potentially be in for some repricing building up to the July meeting.



Is it a case of Lowe being contrary and just trying to confuse the market?
Why now, why 50BPS?
Why not give a couple of 25 BPS raises before Christmas? 
Have the metrics really changed so much since then, or was it just a case of confirmation?
Be interesting to the see the minutes.
Mick


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## divs4ever (9 June 2022)

mullokintyre said:


> Is it a case of Lowe being contrary and just trying to confuse the market?
> Why now, why 50BPS?
> Why not give a couple of 25 BPS raises before Christmas?
> Have the metrics really changed so much since then, or was it just a case of confirmation?
> ...



 there was speculation  the RBA would have rates between 2.5% and 3% by December this year 

 now  the wild card here is bond yields  , but don't neglect a potential tamper tantrum ( like we had in 2018 )

 remember  before this 'new era of economics '  to reduce inflation ( CPI ) the cash rates needed to be equal or higher  ,  so in the past  3% cash rate  did little to slow down 8% CPI rises  

 and what if those that  claim REAL inflation  is at least twice that of the CPI are correct


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## CityIndex (9 June 2022)

Perhaps the RBA felt like following in the footsteps of other major central banks, echoing the 50bps rate hike seen by the Fed, BoC, and RBNZ in recent weeks. 

This has also opened the possibility for a more aggressive tightening cycle from the RBA over the coming months, and when coupled with the prospect of slowing growth, this could weigh heavily on the equity market. 

The ASX200 has dropped 100 points today for the second time this week, and could be track for a retest of range lows below 7000 in the coming weeks. 

All trading carries risk, but it will be interesting to see how this shapes up.


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## mullokintyre (26 June 2022)

I have been critical of the RBA baord  in the past, but the latest attempts to "improve" the RBA smacks of power grabbing.
From ABC news


> Federal Treasurer Jim Chalmers has thrown his support behind calls for the Reserve Bank (RBA) board to be more representative of the broader Australian community, following scathing criticism that it is out of touch with workers demanding wage increases.
> 
> Key points:​
> Treasurer Jim Chalmers has already committed to a review of the RBA
> ...



Well, I am not sure if the good Sal is aware  or not, but the RBA does not set wages.
The only thing it sets is the cash rate, plus the ability to force the OZ banks keep  a certain volume of money as  capital, rather than lending it all out.
It cannot force the banks to either raise or lower rates in sync with the rates it sets.
As to the idea that Chalmers wants  "to also make sure that the right voices are represented around the table", that is fraught with danger.
We would need to have at leat 50 percent women, representatives from first nations people, representatives from the LGBTI+- community, 
people from non English speaking backgrounds, union reps,  the tennants union, experts from the media, academic experts,  self employed reps, and possibly someone from big business as well. And then theres the rest of us.
The board would end up needing the entire surface of the MCG to meet.
Mick


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## divs4ever (26 June 2022)

mullokintyre said:


> I have been critical of the RBA baord  in the past, but the latest attempts to "improve" the RBA smacks of power grabbing.
> From ABC news
> 
> Well, I am not sure if the good Sal is aware  or not, but the RBA does not set wages.
> ...



 but it is the RBA 'data '  and political expediency  that have a BIG part   in wages rises  ( sure the smart employers negotiate  with the employees directly , and help them resist union membership )  but some management are just dumb  and the disgruntled workers are easy pickings for  the parasitic unions   so you have the unions  on one side , the employers on the other and the politicians trying to look important in the middle .

 and the 'right voices'  do NOT generally  come from the best minds  ( we have several parliament houses in Australia to prove that )

 all i can say to the youngsters  is .. please remember how you got into the mess ( that is coming )

 and back when i was much younger  the BIG banks sourced the majority of their funding inside Australia  so were  influenced  by the RBA rates to a greater extent  , since then  there has been a trend to source more funding  internationally  , with all the perils that brings  ( i hope those globe-trotting banks don't expect the Australian taxpayer to bail them out again  )


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## CityIndex (5 July 2022)

At the time of writing, both the ASX200 and AUD/USD are trading just off session highs with today's RBA meeting in focus.

Governor Lowe al-but-confirmed that the RBA would follow the Fed’s lead and raise rates by 75bps, with the market now widely expecting another 50bps hike Aussie central bank due to a strong Retail Sales print for May as well as persistent inflation around the world;

However, all trading carries risk, and Gov. Lowe did say that the board will consider 25bps. Either way, it will be interesting to see how markets react with the decision around 2 hours away as any deviation in either direction is likely to result in elevated volatility.


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## Garpal Gumnut (5 July 2022)

mullokintyre said:


> I have been critical of the RBA baord  in the past, but the latest attempts to "improve" the RBA smacks of power grabbing.
> From ABC news
> 
> Well, I am not sure if the good Sal is aware  or not, but the RBA does not set wages.
> ...




I would be happy to put my hat in the ring to represent the miserable, raucous and disreputable who make up the membership of Aussiestockforums, on the board of the RBA.

Is one allowed smoke cigars, swallow mullet roesack, drink champagne and have one's PA on one's knee during meetings or is it Lenten Rules ? 

I'm ok with Lenten Rules if the expense account is appropriate to a person of my standing.

gg


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## Dona Ferentes (5 July 2022)

Got my vote, gg. 

Either 50 or 65 basis points, are my guesses


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## divs4ever (5 July 2022)

i went ( earlier  ) for 0.5%  ( with a slight chance of 0.4% )

 good luck


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## divs4ever (5 July 2022)

*DJ Australia's RBA Raises Cash Rate Target 50 Bps to 1.35%
05 Jul 2022 14:30:16


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## divs4ever (5 July 2022)

remember our RBA gets more opportunities to raise than some other Central Banks


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## CityIndex (5 July 2022)

AUD/USD tumbled while the ASX200 rallied after the RBA's interest rate decision matched expectations. The pair put in new session lows following the news, and is currently still down 0.24%. 

This could be stemming from traders speculating that we have seen peak hawkishness from the RBA as well, but it will be interesting to see how much of a sustained impact this actually has on the markets.


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## Gunnerguy (1 August 2022)

RBA tomorrow needs to raise by 75 bps.
What do you think they will do tomorrow ?

Gunnerguy


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## macca (1 August 2022)

Gunnerguy said:


> RBA tomorrow needs to raise by 75 bps.
> What do you think they will do tomorrow ?
> 
> Gunnerguy




50 is my pick


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## Knobby22 (1 August 2022)

Not many more left.
Expectation is falling rapidly and now a fall is expected late next year.


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## greggles (1 August 2022)

I don't think the RBA will tighten the screws too much. The public outcry from the over-leveraged - of which there are many - will become too great and the RBA will ease off.

I think there's maybe another percentage point in rate rises to come this year, but I don't see them going any higher than that. Personally I think that the rate increases to date have likely had a significant impact on discretionary spending already.


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## gartley (1 August 2022)

The over leveraged better used to higher long term IR.  After this impulse up completes in the months ahead and we get a wave 2  multi month pullback, they will get one last chance to lock in at lower rates before wave 3 starts...


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## divs4ever (2 August 2022)

since the RBA has more opportunities per year to tighten( or relax ) than most other nations 

 i am sticking with 0.5% as mostly likely   and a slight chance of only 0.4% ( to round out the official rate )

 we are  well behind the official CPI ( and i doubt they have the courage to lift it 5% in one jump )  and even further behind 'felt price increases ' 

 they are still whistling in the wind  , but SO FAR Australia is still generating trade surpluses ( but of course we will eventually enter a trade war with China  and we missed the opportunity to create strong trade partnerships  with India or even Mexico ) we can carry on with the clown show until China starts flexing it's muscles  ( and halts investments in 'unfriendly nations ' )


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## qldfrog (2 August 2022)

divs4ever said:


> since the RBA has more opportunities per year to tighten( or relax ) than most other nations
> 
> i am sticking with 0.5% as mostly likely   and a slight chance of only 0.4% ( to round out the official rate )
> 
> ...



Rba will chicken out 0.5% at most


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## againsthegrain (2 August 2022)

qldfrog said:


> Rba will chicken out 0.5% at most



too many cry babies all whining and playing blackmail on rba


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## CityIndex (2 August 2022)

divs4ever said:


> since the RBA has more opportunities per year to tighten( or relax ) than most other nations
> 
> i am sticking with 0.5% as mostly likely   and a slight chance of only 0.4% ( to round out the official rate )
> 
> ...



This is a great point. The increased number of opportunities to raise the interest rate could mean that the RBA isn't under as much pressure to tighten as aggressively as some other central banks.

The soft Q2 CPI print did result in traders cooling bets on a 75bps hike this month, with the market now seemingly expecting a third consecutive 50bps. However, the tight labour market, combined with the RBA’s continued shift towards a more hawkish rhetoric, does still add some uncertainty to today’s decision.


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## divs4ever (2 August 2022)

Central Banks usually try rhetoric first   ( action if they must )

 as long as Australia has a trade surplus  it can  be more flexible  ( the national credit rating  will be better than some developed nations )

 and an end of year rate  of 2.5% or 3%   shouldn't stampede the borrowers  unless job losses start to explode 

 i also ASSUME our super funds steadily  buy up Aussie Treasuries


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## waterbottle (2 August 2022)

Let's hope they just bring it up to 2%. I won't be able to remember 1.85% ffs


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## mullokintyre (2 August 2022)

divs4ever said:


> Central Banks usually try rhetoric first   ( action if they must )
> 
> as long as Australia has a trade surplus  it can  be more flexible  ( the national credit rating  will be better than some developed nations )
> 
> ...



THE RBA is playing catch up.
They held interest rates low for at least six months too long.
They should have raised by 25 basis points in January,  which would have signalled to the market what was about to happen.
They then could have used the monthly meetings to raise by 25 BPS in an orderly fashion.
They are so far behind the curve, I reckon they will go for a minimum of 50 points,.
They need to get interest rates to a minimum of three percent, so that they have room to move when the recession hits.
Then they will most likely hold the up for too long and it starts all over again.
Mick


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## CityIndex (2 August 2022)

The RBA hiked rates by 50bps, taking the cash rate to 1.85% as expected.

Similar to the Fed, the Aussie central bank has also stated that they will continue to monitor incoming data to determine the pace of their tightening cycle. 

AUD/USD fell to a new intraday low, while the ASX200 bounced as traders had already been pricing in this decision. All trading carries risk, but it will be interesting to see how the economic data over the coming week's shapes market expectations for the September meeting.


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## mullokintyre (2 August 2022)

So we get 50BPS increase, and what does the market do?
AUD/USD pair dumps 30%.
I can scratch me head as much as I like about why it is that the market reacts with a drop in the AUD when a 50 BPS rise is  served up.
I am sure thee will be a volume of reasons as to why there was this outcome, but so far I can't think of any.
Mick


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## waterbottle (2 August 2022)

mullokintyre said:


> So we get 50BPS increase, and what does the market do?
> AUD/USD pair dumps 30%.
> I can scratch me head as much as I like about why it is that the market reacts with a drop in the AUD when a 50 BPS rise is  served up.
> I am sure thee will be a volume of reasons as to why there was this outcome, but so far I can't think of any.
> Mick




AUD and other risk-on assets getting dumped. Crypto down. Possibly due to a Pelosi visiting Taiwan.


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## mullokintyre (2 August 2022)

waterbottle said:


> AUD and other risk-on assets getting dumped. Crypto down. Possibly due to a Pelosi visiting Taiwan.



The problem is,  the Pelosi trip has been on the cards for at least two weeks.
If you have a look at the currency chart, you can see the steep dive just before the announcement.
That to me does not look like a reaction to  the idea of trisk on/ risk off assets, it looks suspiciously like a reaction to the 50 BPS rate hike.



Mick


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## waterbottle (2 August 2022)

mullokintyre said:


> The problem is,  the Pelosi trip has been on the cards for at least two weeks.
> If you have a look at the currency chart, you can see the steep dive just before the announcement.
> That to me does not look like a reaction to  the idea of trisk on/ risk off assets, it looks suspiciously like a reaction to the 50 BPS rate hike.
> View attachment 144866
> ...




It's the old argument about whether or not the markets are reactive or proactive, forward-looking or not. I don't think anyone knows why it moves... 

Market was expecting a 50bps hike. Pelosi's travel plans were known for a while too. AUD isn't the only asset trending down. Oil, ex USD currencies, Asian equities and crypto all down.


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## CityIndex (2 August 2022)

Although risk assets across the board are currently lower, it does seem like local assets are being driven by the RBA Meeting. AUD/USD dropped immediately after the announcement, while the ASX200 has since rallied into the green at the time of writing.

As is sometimes the case, it wouldn't be surprising if this was simply an initial, short-lived, reaction to the RBA matching market expectations. However, given that this decision was already priced in, perhaps traders are putting greater emphasis on Gov. Lowe's post-meeting statement that the board isn't following a pre-set path.

Of course, all trading carries risk, but as global growth concerns rise and inflation shows signs of easing, this could be an indication that the market is repricing for the possibility that the RBA has reached peak hawkishness.


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## waterbottle (2 August 2022)

CityIndex said:


> Although risk assets across the board are currently lower, it does seem like local assets are being driven by the RBA Meeting. AUD/USD dropped immediately after the announcement, while the ASX200 has since rallied into the green at the time of writing.
> 
> As is sometimes the case, it wouldn't be surprising if this was simply an initial, short-lived, reaction to the RBA matching market expectations. However, given that this decision was already priced in, perhaps traders are putting greater emphasis on Gov. Lowe's post-meeting statement that the board isn't following a pre-set path.
> 
> Of course, all trading carries risk, but as global growth concerns rise and inflation shows signs of easing, this could be an indication that the market is repricing for the possibility that the RBA has reached peak hawkishness.




Very possible. The BNPL sector has rallied since the announcement. Although difficult to interpret with NASDAQ futures down at present and other risk assets down.


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## divs4ever (2 August 2022)

mullokintyre said:


> THE RBA is playing catch up.
> They held interest rates low for at least six months too long.
> They should have raised by 25 basis points in January,  which would have signalled to the market what was about to happen.
> They then could have used the monthly meetings to raise by 25 BPS in an orderly fashion.
> ...



 i doubt they will catch up  at their current rate  , i am thinking they will try for 5% so they can cut in the next financial crisis 

 i doubt they will get to 6%  before 'official ' inflation is closer to 10% 

 expect them to 'tweak ' the CPI again  to lull us into  lower wage hikes  ( and probably bump up super contributions  so the super funds buy more treasuries )


----------



## Gunnerguy (2 August 2022)

We all look for/at the complex aspects. Personally and simply I believe the market expected 50bps, but had some concern it would surprise at 75bps. It was 50 so ‘they’ we relieved and had a bit of a ‘relief’ rally. That’s all.

Gunnerguy


----------



## frugal.rock (2 August 2022)

I feel sorry for the bunnies that believed Lowe 10 months ago, when he said rates would stay at the lows until at least 2024. The sad side of that is the defaults that are just a little ways down the track.

Sure, Ukraine came along and hastened the rate of inflation, but heck, it was out of control well before then.

Bring on the recession, as it's another one we are going to have to have....

In my opinion, the RBA needs to be more fluid in reaction and use better indicators. He who hesitates is lost, type scenario.
They seem to only have red and green lights, stop and go, where's the amber been?


----------



## Smurf1976 (3 August 2022)

frugal.rock said:


> Sure, Ukraine came along and hastened the rate of inflation, but heck, it was out of control well before then.



The war seems to be being used as a convenient excuse for rather a lot of problems that existed even without it.

Just an observation.


----------



## divs4ever (3 August 2022)

Gunnerguy said:


> We all look for/at the complex aspects. Personally and simply I believe the market expected 50bps, but had some concern it would surprise at 75bps. It was 50 so ‘they’ we relieved and had a bit of a ‘relief’ rally. That’s all.
> 
> Gunnerguy



 that was how i was reading it as well  , 

will be watching to see if the XJO can close above 7,000  today


----------



## divs4ever (3 August 2022)

Smurf1976 said:


> The war seems to be being used as a convenient excuse for rather a lot of problems that existed even without it.
> 
> Just an observation.



 that is what has happened several times before  , and at least  two analysts ( a fair while before  ) had declared   that normal fiscal measures would not get them out of the stress  the global economy  ( circa 2019 , i believe ) had found itself in


----------



## divs4ever (3 August 2022)

frugal.rock said:


> I feel sorry for the bunnies that believed Lowe 10 months ago, when he said rates would stay at the lows until at least 2024. The sad side of that is the defaults that are just a little ways down the track.
> 
> Sure, Ukraine came along and hastened the rate of inflation, but heck, it was out of control well before then.
> 
> ...



 might be time for the #endtheFed campaign to extend to the RBA as well


----------



## Sharkman (3 August 2022)

frugal.rock said:


> I feel sorry for the bunnies that believed Lowe 10 months ago, when he said rates would stay at the lows until at least 2024.




i'm not sure he ever said that TBH. i don't have the exact quote readily available, maybe someone who does can fill us all in, but from what i remember he said something along the lines of the RBA *expecting* rates to remain at the current levels until 2024 based on the _currently available_ data (ie. implying that should the data change dramatically, that may no longer hold true). big difference vs saying *we guarantee *rates will remain steady until 2024.

the media took it all out of context for the sake of sensationalism (as they always do), it was them who put the words into the RBA's mouth in my view. that being said the RBA should have tried to correct them once all those dangerously misleading headlines started coming out. then again perhaps they did try, and the media chose to ignore it and not publish it, because why would the media let something like that get in the way of sensationalism.


----------



## frugal.rock (3 August 2022)

Yeah, I hear you @Sharkman

There's always the "read between the lines caveat" and if the media scrum and the general public can't rely on Lowe/ RBA, who can they rely on... Albanese?
Bandt? 😩😵‍💫

It's all about the vibe... Sure there wasn't any guarantees, but a heck of a lot of bunnies forged ahead based on his words.

YouTube only 7 months ago...


----------



## againsthegrain (3 August 2022)

frugal.rock said:


> Yeah, I hear you @Sharkman
> 
> There's always the "read between the lines caveat" and if the media scrum and the general public can't rely on Lowe/ RBA, who can they rely on... Albanese?
> Bandt? 😩😵‍💫
> ...





There was voices saying rates will go up, 1 or 2 years in a frame of a lifetime is really not a long time.  They were drowned out by all the "gurus" yelling money is cheap and its the new way.  Whatever it is tulips bitcoins or unaffordable loans its always the same game over again, the Aussie way is to go kicking and screaming all the way to current affair and blame somebody else always somebody else


----------



## divs4ever (3 August 2022)

frugal.rock said:


> Yeah, I hear you @Sharkman
> 
> There's always the "read between the lines caveat" and if the media scrum and the general public can't rely on Lowe/ RBA, who can they rely on... Albanese?
> Bandt? 😩😵‍💫
> ...




 oh the joys of 'wiggle words '


----------



## frugal.rock (3 August 2022)

Id vita procedit

I consider myself to be lucky by being edumacated by learned types on this forum. 
With thanks. 😘👍


----------



## frugal.rock (4 August 2022)

No hairs on these rates rises, Brazilian C Bank (Banko Brazil).
Waiting on August decision, any minute now...
In comparison, would one think the RBA was slow as a wet week?


----------



## againsthegrain (6 September 2022)

Apart from a few bs media articles I haven't seen anybody gone homeless or struggling since last month's raise,  people still going out eating, going holidays and doing renos. 

We should be good for another .50 today.... hope


----------



## SirRumpole (6 September 2022)

The Greens are calling for Philip 
Lowe to resign for "encouraging" people to take out loans by saying there would be no interest rate rises until 2024.

Pity he doesn't  have clairvoyant powers that would have predicted the Ukraine war.


----------



## divs4ever (6 September 2022)

didn't need to be clairvoyant  , it  was coming  for years ( some argue  eight some argue five )

 the only surprise is Russia has been so restrained about it  ( Medvedev  would have been much more emphatic  )

 the next bombshell will be Serbia 

 ( at least in Europe , if the Middle East warms up  , that will be much worse )

 the EU is imploding and desperate to create distractions


----------



## qldfrog (6 September 2022)

divs4ever said:


> didn't need to be clairvoyant  , it  was coming  for years ( some argue  eight some argue five )
> 
> the only surprise is Russia has been so restrained about it  ( Medvedev  would have been much more emphatic  )
> 
> ...



As soon as Trump was out, war was on, it would have started with Hillary if she had been elected, now serbians minorities are treated as Russians ones were in ukraine in 2014..and i expect same results.
No one growing on the land of his ancestry can be denied speaking his language or culture , or discriminatory behaviour and not react, especially if a whole cousin country next door can help them.Kosovo part II..
Imagine if we were treating aboriginal clans here as serbians minorities in Kosovo or Russian ones were in Crimea.
Anyway going off subject, but yes Europe is exploding, and maybe it is a good thing that the EU collapses
.the problem is that it is not brexit but a collapse with economic calamities, suffering and a high danger of wars, internal due to migrants population, and between states with the US fanning fires left and right, 
and China/Russia quite happy to help..who would blame them.
Euro collapse, shortages will not help with inflation here..or anywhere


----------



## divs4ever (6 September 2022)

qldfrog said:


> As soon as Trump was out, war was on, it would have started with Hillary if she had been elected, now serbians minorities are treated as Russians ones were in ukraine in 2014..and i expect same results.
> No one growing on the land of his ancestry can be denied speaking his language or culture , or discriminatory behaviour and not react, especially if a whole cousin country next door can help them.Kosovo part II..
> Imagine if we were treating aboriginal clans here as serbians minorities in Kosovo or Russian ones were in Crimea.
> Anyway going off subject, but yes Europe is exploding, and maybe it is a good thing that the EU collapses
> ...



 i was hoping the UK  could handle it's own collapse  ( as to me ,  the EU was a basket-case  well before Brexit )   i , in no way envisaged  the collapse would be ACCELERATED by such financial mismanagement  and was hoping the UK could have managed a softer landing  than some ( than the PIGS for instance )

... just as well i had prepper tendencies  from a very young age  ( looks like i am going to need them )


----------



## rcw1 (20 September 2022)

Good morning
Reserve Bank of Australia will release minutes from its September policy meeting at 11.30am AEST.

Kind regards
rcw1


----------



## CityIndex (28 September 2022)

Retail sales data for August was stronger-than-expected at 0.6% (est. 0.4%), increasing market pricing for the RBA to take the cash rate into restrictive territory with another 50bps hike next month.

While the ASX200 reversed gains, the news doesn't seem to be providing any support for the Aussie Dollar, with AUD/USD currently trading at session lows. With the yuan falling to its lowest level since 2008, perhaps the dim economic outlook for Asia will continue to drag AUD lower. 

All trading carries risk.


----------



## Gunnerguy (4 October 2022)

25bps Cash Rate rise .......... really !!!
Inflation to contiue .....
The RBA lost their bottle !!
US will go more than 25bps, AUD will suffer.
Gunneguy


----------



## againsthegrain (4 October 2022)

Gunnerguy said:


> 25bps Cash Rate rise .......... really !!!
> Inflation to contiue .....
> The RBA lost their bottle !!
> US will go more than 25bps, AUD will suffer.
> Gunneguy



yeah weak, maybe they bought into those media articles which are calling .25 a super sized hike.  I guess good for gold with aud down


----------



## waterbottle (4 October 2022)

Gotta say I was surprised with 25bps.

All of the speeches coming out of the Fed have emphasised that central bankers have been moving in unison to fight inflation globally.
Either Phil Lowe is ahead of the curve or worryingly behind. We'll have to wait for the minutes to be released.


----------



## CityIndex (4 October 2022)

While there was speculation that the RBA would being to slow the pace of rate hikes after Gov Lowe's comments last month, markets were still widely expecting one last 50bps move today before that pivot. 

AUD/USD has consolidated between 0.6400 and around 0.6530 over the past week, and there is still a lot of key US data this week, including the NFP report, that will likely play a key role in direction. All trading carries risk, but the pair could be exposed to break lower if the American economy shows signs of resilience and continues to support Fed aggression.


----------



## JohnDe (4 October 2022)

I think that the RBA have got it right. 

After the Governor told everyone that Covid would ensure no rate rises until 2024 caused many of our youth to borrow, and then the recent increases have been the fasted in history, there was risk of mortgage defaults and bankruptcies.

The previous two hikes haven't had a chance to bight yet, and they will bight for some.

Interest rate hikes are a blunt tool. I for one do not want the economy to bludgeoned unconscious for the next few years.

My son and his mates are very happy today, and so is my share portfolio.


----------



## Value Collector (4 October 2022)

JohnDe said:


> I think that the RBA have got it right.
> 
> After the Governor told everyone that Covid would ensure no rate rises until 2024 caused many of our youth to borrow, and then the recent increases have been the fasted in history, there was risk of mortgage defaults and bankruptcies.
> 
> ...



I agree, 0.25 a month is still pretty fast rises, no point of them over shooting, they can always increase faster next month if they have to.


----------



## Smurf1976 (4 October 2022)

My thought is it’s the first step in what will become a “pivot” by central banks globally.

A slowdown in the pace of rate rises, then a pause, then the deep cuts when the wheels fall off.


----------



## divs4ever (4 October 2022)

Gunnerguy said:


> 25bps Cash Rate rise .......... really !!!
> Inflation to contiue .....
> The RBA lost their bottle !!
> US will go more than 25bps, AUD will suffer.
> Gunneguy



yes i agree , i was thinking 0.5% ( when 0.75% was actually warranted ) and no rise in November 

 is this the first sign of a RBA pivot ??

 let's see if i am correct about November 

 on the plus side my tip GEAR rose 10% today ( unfortunately  it didn't go low enough yet to entice me to buy any )


----------



## divs4ever (4 October 2022)

JohnDe said:


> I think that the RBA have got it right.
> 
> After the Governor told everyone that Covid would ensure no rate rises until 2024 caused many of our youth to borrow, and then the recent increases have been the fasted in history, there was risk of mortgage defaults and bankruptcies.
> 
> ...



 pain now , or disaster in the months to come  , at least Australia should still be in a trade surplus


----------



## qldfrog (4 October 2022)

Yesterday saw me selling nearly all of my bear and start buying shares as well as usd.the RBA move was even better than expected...
Not for Australia in my view but for my portfolios .
Only issue is i risk being rich in worthless DUP:
 down under pesos😁


----------



## mullokintyre (4 October 2022)

waterbottle said:


> Gotta say I was surprised with 25bps.
> 
> All of the speeches coming out of the Fed have emphasised that central bankers have been moving in unison to fight inflation globally.
> Either Phil Lowe is ahead of the curve or worryingly behind. We'll have to wait for the minutes to be released.



he's been behind the curve for some time.
Surprised they opted for 25 over 50, but then  maybe he is hoping that inflation has topped out (fat chance).
Mick


----------



## againsthegrain (4 October 2022)

I am wondering where we really are, on 1 end 2 days before rba meeting news articles flood us saying how 1/4 Aussies will struggle etc etc
but then I see everybody around actually sepending, shops and restaurants have been pretty full the last 2 weeks when I have been around.

Also to add to inflation vic govt just slammed in another 25m into the market with their 25% rebate program on dining and entertainment.  I think this shows that on average people are not really concerned









						Victorian Dining and Entertainment Program | Victorian Government
					

The Victorian Dining and Entertainment Program has closed.




					www.vic.gov.au


----------



## Dona Ferentes (4 October 2022)

mullokintyre said:


> Surprised they opted for 25 over 50, but then  maybe he is hoping that inflation has topped out (fat chance).



With cash rate at 2.60%, they still have the flexibility to round it up 0.15% or down 0.10%, down the track, a bit of 'fine-tuning' (lol) and return to a 'normalised' 25 bip number


----------



## mullokintyre (4 October 2022)

Dona Ferentes said:


> With cash rate at 2.60%, they still have the flexibility to round it up 0.15% or down 0.10%, down the track, a bit of 'fine-tuning' (lol) and return to a 'normalised' 25 bip number



With the OZ inflation rate running at 6.1% in August, the idea of fine tuning seems somewhat superfluous.
The RBA itiself has forecast inflation to peak at 7.1% in the December 2022 quarter,  so why the slowing down now?
Unless they have had a preview of the ABS inflation figures due out in three weeks.
From The ABS


> On 26 October 2022, the ABS will commence publication of a monthly CPI indicator. This first publication will occur alongside the release of the quarterly CPI. Thereafter, the monthly CPI indicator will be published around four weeks after the end of the reference month, starting with the October month release on 30 November. The exception to this will be the November data, which will be published in January.
> The monthly CPI indicator will provide a timelier indication of inflation using the same data collected for use in the quarterly CPI. Each month will include updated prices for between 62 and 73 per cent of the weight of the quarterly CPI basket.
> The quarterly CPI will continue to be Australia’s key measure of inflation
> There will be no changes to the quarterly CPI outputs and release schedule.
> Consistent with existing policy, the ABS does not comment on the use (or otherwise) of the price indexes we publish. However, it should be noted that the monthly CPI indicator may be routinely subject to revision, in contrast to the quarterly CPI which is only revised in exceptional circumstances.



Perhaps the RBA has seen preliminary figures for this monthly Inflation figure, be interesting to see how much agreement there is between the sum of the monthly figures and the  quarterly result, given that the monthly figures use a subset of the items used in the quarterly index.

The suggestion that the RBA has some real control over the economy  is something  I treat with great suspicion.
Mick


----------



## Value Collector (4 October 2022)

mullokintyre said:


> With the OZ inflation rate running at 6.1% in August, the idea of fine tuning seems somewhat superfluous.
> The RBA itiself has forecast inflation to peak at 7.1% in the December 2022 quarter,  so why the slowing down now?
> Unless they have had a preview of the ABS inflation figures due out in three weeks.
> From The ABS
> ...



The RBA pull apart inflation numbers a bit, taking out things that can’t be controlled etc.

For example, they when weighing up whether to increase rates they might give less weight to energy prices and farm prices because these aren’t going to be able to be controlled with interest rates.

Also, it take time for the previous rate rises to kick in, and they have competing objectives, for example they are tasked with keeping both inflation and unemployment low, but these do factors are opposite.

So if it looks like a bulk of the inflation is being caused by external factors and rate increases will have limited effect, they may decide to reduce rate rises to preserve the employment number.


----------



## Smurf1976 (4 October 2022)

mullokintyre said:


> The RBA itiself has forecast inflation to peak at 7.1% in the December 2022 quarter, so why the slowing down now?



I think there's an issue in that we've already had several rate rises none of which have had time to see their full effects flow through the economy yet.

Plus we have the fuel excise increase. Whilst not massive in outright $ terms it's nonetheless something that takes money out of consumers' pockets and does so in a highly visible manner. One doesn't need to own a car or even have a drivers' license to see the price boards outside servos on a daily basis and to grasp that there's an impact. It's the most visible of all prices.

Then there's the "wealth effect" bearing in mind the stock market's down and there's been plenty of mainstream media reports about falling property prices.

Put all that together and my thought is consumers will pull back before too much longer. There's got to be a breaking point somewhere surely? A point will come where anyone selling non-essentials loses pricing power.


----------



## Value Collector (4 October 2022)

againsthegrain said:


> I am wondering where we really are, on 1 end 2 days before rba meeting news articles flood us saying how 1/4 Aussies will struggle etc etc
> but then I see everybody around actually sepending, shops and restaurants have been pretty full the last 2 weeks when I have been around.




It takes time for the interest rates to kick in, most people have buffers that take time to exhaust before their weekly spend gets squeezed.

Eg. 

1. It can take months before credit card balances creep up enough to get people to realise their weekly deficit has grown.

2. It can take months before peoples home loan payments actually rise because due to previous low rates most people are ahead in their payments.

3. It can take months before peoples savings are exhausted.

4, it can take years before fixed rate loans roll off.

But once these things do start to bite we should see consumer behaviour start to bend,


----------



## divs4ever (4 October 2022)

qldfrog said:


> Yesterday saw me selling nearly all of my bear and start buying shares as well as usd.the RBA move was even better than expected...
> Not for Australia in my view but for my portfolios .
> Only issue is i risk being rich in worthless DUP:
> down under pesos😁




 actually it is times like this that i remember the first currency ( under British administration )  where  silver pesos were imported  and the centers were punched out and the coins became known as the holey dollar  and the dump ( the punched out core )

 turned out rather prophetic  ( imo )


----------



## divs4ever (4 October 2022)

mullokintyre said:


> The suggestion that the RBA has some real control over the economy is something I treat with great suspicion.
> Mick



 WOW !  how polite are you ??

 reading on your other posts on how local inflation is calculated ( manipulated )  and most people in my social circle and working class ( or on some sort of Centre-Link support  or BOTH ) would probably choke with rage if they understood the subtlety .

 luckily ( for governments ) their indoctrination system ( the education system ) worked  , and yes they still hurt , but are unable to understand why they are hurting .

 BUT maybe the times are a-changing


----------



## Smurf1976 (4 October 2022)

Value Collector said:


> But once these things do start to bite we should see consumer behaviour start to bend,



Another is seasonality.

Energy use is highly seasonal for much of Australia. For those in the mild weather areas I'll point out that heating in particular tends to be a pretty hefty expense in colder places - nothing unusual about people getting huge energy bills turning up about now.

Christmas comes once a year. For some it's largely irrelevant but for others it's a huge expense.

Entertainment is another. Regardless of what you're into, most of it's seasonal. Football in winter, concerts and festivals peak over the warmer months, etc.

Holidays for many are still a once a year thing.

Back to school expenses for those with children. 

Even things like car servicing tend to be at most 6 monthly.


----------



## mullokintyre (4 October 2022)

Value Collector said:


> It takes time for the interest rates to kick in, most people have buffers that take time to exhaust before their weekly spend gets squeezed.
> 
> Eg.
> 
> ...





Value Collector said:


> 3. It can take months before peoples savings are exhausted.
> 
> 4, it can take years before fixed rate loans roll off.
> 
> But once these things do start to bite we should see consumer behaviour start to bend,



Just as it takes time for the interest rates to kick in, it takes time for the other side to kick in.
The businesses that have had increases in wages costs, increase in transport/Delivery costs, increases in rents, increases in rates, increases in raw materials etc  are also lagging, and those same businesses will still have to pass them on eventually.
I have been staying in the mid coastal area of Western Oz for the past five weeks while Mrs does a locum here.
Its a tourist town, and the school holidays have blown the whole place up with people.
There does not seems to be many holding back on spending here, assuming they could find enough things to spend it on.
Like everywhere else, staffing issues are holding everything back, and nothing seems to be coming along to improve that situation.
The pharmacy where my wife is doing the locum is down 1.5 people, and can't even get anyone in the town to apply for jobs, much less  actually find someone suitable.
There is a chronic lack of housing, a chronic lack of tradies, a chronic lack of materials.
She can virtually name her own price  for locums, she is getting five or six emails a day asking if she is interested in  a locum job somewhere.


----------



## Value Collector (4 October 2022)

mullokintyre said:


> Just as it takes time for the interest rates to kick in, it takes time for the other side to kick in.
> The businesses that have had increases in wages costs, increase in transport/Delivery costs, increases in rents, increases in rates, increases in raw materials etc  are also lagging, and those same businesses will still have to pass them on eventually.
> I have been staying in the mid coastal area of Western Oz for the past five weeks while Mrs does a locum here.
> Its a tourist town, and the school holidays have blown the whole place up with people.
> ...



Yep, it can take time for some cost increases to be passed along, although some some are instant, and the fact that we are seeing inflation means that those costs are already starting to be passed along.

One thing about Central Banks though, the Brake pedal works a lot better that the accelerator pedal, so you don’t want to step to hard on the Brake because once the economy screeches to a halt it can be hard to get it going again, as was seen in the Great Depression.

It’s a delicate balancing act, eg pressing the brake hard enough to slow the vehicle but not causing it to stop completely.


----------



## Knobby22 (4 October 2022)

Smurf1976 said:


> I think there's an issue in that we've already had several rate rises none of which have had time to see their full effects flow through the economy yet.
> 
> Plus we have the fuel excise increase. Whilst not massive in outright $ terms it's nonetheless something that takes money out of consumers' pockets and does so in a highly visible manner. One doesn't need to own a car or even have a drivers' license to see the price boards outside servos on a daily basis and to grasp that there's an impact. It's the most visible of all prices.
> 
> ...



It's not only the petrol, also the slow winding back of other excesses.

Getting paid for staying home Covid is ending, some of the dodgier government spending and programs will be ending.

I think the next mini  budget this month will attempt to control this. There is plenty of loose government  money and they want a war chest.


----------



## mullokintyre (5 October 2022)

Value Collector said:


> The RBA pull apart inflation numbers a bit, taking out things that can’t be controlled etc.
> 
> For example, they when weighing up whether to increase rates they might give less weight to energy prices and farm prices because these aren’t going to be able to be controlled with interest rates.



Its an absolute farce to take out things they can't control.
These items still affect the price inputs to goods and services, and most likely on the plus side, so whether its controllable or not is immaterial, the poor sucker paying will not care, they still have to pay.
Mick


----------



## Value Collector (5 October 2022)

mullokintyre said:


> Its an absolute farce to take out things they can't control.
> These items still affect the price inputs to goods and services, and most likely on the plus side, so whether its controllable or not is immaterial, the poor sucker paying will not care, they still have to pay.
> Mick



It’s not a farce at all, some price changes are temporary caused by other things such as drought and war.

For example, let’s say a drought causes farm prices to rise this year, there is no real point trying to adjust money supply to bring the price of avocados and wheat down when the price rise is justified and will fix itself.

Interest rate rises are designed to fix problems caused by money supply.

So the reason for picking apart the inflation number is to try and get at the facts and figure out what is broad based inflation that needs to be addressed with monetary policy and what is price increases caused by other factors that we need to just deal with.

In a lot of cases higher prices are necessary to stimulate more supply, and raising interest rates can make it worse.


----------



## qldfrog (5 October 2022)

I wonder if this lower RBA rate is not already impacting the AUD greatly.
If you look at the last hours:US market etc, it is following a well used scenario
US Market great jump, USD falling against euro, British pound, yen etc BUT not the AUD
Whereas other currencies are going strong against the us dollars, we are actually going backward.
On an individual level:
FWIW, on monday, i played heavy bull on the market, sold nearly all bears and bought  extra USD exposure and actually moved into to the CHF for some of the cash portion.
All discretionary as my systems are lagging and are nearly 100% cash.


----------



## divs4ever (5 October 2022)

keep that cash liquid  ,  there is a saying about a politician  and a pot of money  ( bankers are often just as bad )


----------



## CityIndex (5 October 2022)

qldfrog said:


> I wonder if this lower RBA rate is not already impacting the AUD greatly.
> If you look at the last hours:US market etc, it is following a well used scenario
> US Market great jump, USD falling against euro, British pound, yen etc BUT not the AUD



It could very well be the case. Although we might continue to see a broader USD pullback on rising speculation that the Fed may slow the pace of tightening, the RBA is the only major central bank who has actually made the pivot. 

Taking look at the RBNZ as well, despite recent comments about their rate hike cycle being "very mature", they elected for another 50bps move today, and AUD/NZD is currently trading broadly lower as a result.


----------



## moXJO (5 October 2022)

Might be political pressure regarding the rba.
Plenty of whinging going on by the over leveraged.


----------



## divs4ever (5 October 2022)

well if you were unwise enough to over-leverage ( especially by buying property late in the cycle ) you might be screaming and begging 

 i wonder if the 'whingers' are those ALP MPs with substantial property holdings


----------



## Gunnerguy (1 November 2022)

Are we all waiting with bated breath ???


----------



## frugal.rock (1 November 2022)

At its meeting today, the Board decided to increase the cash rate target by 25 basis points to  2.85 per cent. It also increased the interest rate on Exchange Settlement balances   25 basis points to 2.75 per cent.









						Statement by Philip Lowe, Governor: Monetary Policy Decision | Media Releases
					






					www.rba.gov.au


----------



## waterbottle (1 November 2022)

Hmmmm Phil Lowe leading the pivot charge


----------



## mullokintyre (1 November 2022)

So,  do we now expect a breather in the rates rises till perhaps the feb meeting so that they can see what impact the  previous rate rises have on the inflation?
It may stop people buying lots of things, including houses, but its questionable as to whether it will stall the price increases.
mick


----------



## CityIndex (1 November 2022)

mullokintyre said:


> So, do we now expect a breather in the rates rises till perhaps the feb meeting so that they can see what impact the previous rate rises have on the inflation?



This could be the possible next step. 

The statement following the meeting reiterated what they've been saying for a few months now. The Board plans to continue raising rates for the period ahead, with the size and timing depending on incoming data.

So, given that they did also revise their inflation forecasts higher, now seeing the peak at 8% this year, perhaps the decision to maintain a slower pace of tightening means they can continue hiking over the coming months instead of taking a breather.


----------



## divs4ever (1 November 2022)

Gunnerguy said:


> Are we all waiting with bated breath ???



 NOPE !! i was sleeping  all through it ( and that horse race )


----------



## waterbottle (1 November 2022)

Keep in mind the RBA can hike monthly whereas the Fed can't. Central Bankers have also publicly stated that they're acting in unison. 

The shift to smaller rates may be part of a global strategy but it could also be an issue of practicality rather than a signal for a true pivot.

I still think Powell's statement will be critical, but I'm admittedly betting on a rally.


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## divs4ever (1 November 2022)

mullokintyre said:


> So,  do we now expect a breather in the rates rises till perhaps the feb meeting so that they can see what impact the  previous rate rises have on the inflation?
> It may stop people buying lots of things, including houses, but its questionable as to whether it will stall the price increases.
> mick



yep  , i mostly agree  , if the RBA really wanted to tackle inflation  ( above all ) it would have moved 0.5%  or more ( and tried the 'shock factor' )

 i had been thinking  a wimpish 0.4%  ( and am obviously wrong )

 now December .. THAT is a puzzler  will the RBA be the Grinch that crushes Christmas for the battler ( and retailer ) ( who wants to recover from Christmas activities to face new increased fees  and charges and interest rate hikes .. which will be slow to trickle down to savers )

 stall increases ( apart from houses )  ??  i suspect not   i think the RBA is too far behind the target for that  and might actually fuel increases

 in the past  when the inflation fight is on , the official  rates have  been much close  to the CPI ( official and real CPI )

 will be interesting to see if they revamp CPI calculations ( again )


----------



## divs4ever (1 November 2022)

waterbottle said:


> Keep in mind the RBA can hike monthly whereas the Fed can't. Central Bankers have also publicly stated that they're acting in unison.
> 
> The shift to smaller rates may be part of a global strategy but it could also be an issue of practicality rather than a signal for a true pivot.
> 
> I still think Powell's statement will be critical, but I'm admittedly betting on a rally.



 some Central Banks are truly independent ( Russia and Turkey  for two ,  but non-aligned are getting rarer )

 the US Fed will be under pressure to try and save the ( Dem) mid-terms  , so that pause ( if it happens ) could more political than strategic 

 much of the global economy  has it's foot in the bear trap  and mommy bear and the cubs  are coming back to see what they caught


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## JohnDe (1 November 2022)

divs4ever said:


> some Central Banks are truly independent ( Russia and Turkey  for two ,  but non-aligned are getting rarer )
> 
> the US Fed will be under pressure to try and save the ( Dem) mid-terms  , so that pause ( if it happens ) could more political than strategic
> 
> much of the global economy  has it's foot in the bear trap  and mommy bear and the cubs  are coming back to see what they caught



Are you saying that the Australian & US central/federal banks are not independent?


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## divs4ever (1 November 2022)

JohnDe said:


> Are you saying that the Australian & US central/federal banks are not independent?



since the certain very large banks are shareholders ( and it is difficult to see WHICH very large banks are the share-holders ) one could call  ( most of ) them a cabal  cooperating within the BIS framework 

 they are mostly detached from the Federal Government ( Australia , UK , US and several others ) with politicians  appointing the chair ( for the US Fed ) and governor  ( in Australia and UK )

 but certain WEF presentations shows the senior ( central ) bankers  working towards a defined agenda  ( not national policy )


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## Smurf1976 (1 November 2022)

waterbottle said:


> The shift to smaller rates may be part of a global strategy but it could also be an issue of practicality rather than a signal for a true pivot.



That the RBA does it more often would naturally bias them toward smaller increments if there's some aim to keep roughly in step with other central banks.

That alone could explain the decision.


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## basilio (1 November 2022)

The RBA has said  today it will continue to raise interest rates until inflation recedes.

BUT.... We know for certain that the current  Australia wide floods will result in losses of many vegetable crops and inevitably the cost of remaining veges will jump.
The cereal crops are also underwater so the price of remaining wheat, barley ect will jump forcing up all cereal based produce.

There will be massive damage to roads, infrastructure and buildings that will need to be addressed in the next 2-3 months. How will this not affect cost pressures on materials and labour ?

There has to be a sharp increase in replacement of much flood damaged goods. More pressure on prices.

It seems  impossible to control inflation in the next 3 months unless we absolutely smash the economy .  Is that what is intended ?









						Interest rates to keep rising as RBA warns it will do ‘what is necessary’ to curb inflation
					

Reserve Bank governor Philip Lowe says half percentage point increases to cash rate possible if economic conditions do not improve




					www.theguardian.com


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## againsthegrain (1 November 2022)

Smurf1976 said:


> That the RBA does it more often would naturally bias them toward smaller increments if there's some aim to keep roughly in step with other central banks.
> 
> That alone could explain the decision.



They are playing at as safe as possible, did anybody see the media headlines? According to the media .25 was a horror rate increase 😂 

Under so much media fire and fist shaking a more spread out rapid fire of  .25 stings seems more chance to put the public to sleep then with a few .50 slugs ringing in the new year that the ass is falling out the world.


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## JohnDe (1 November 2022)

divs4ever said:


> since the certain very large banks are shareholders ( and it is difficult to see WHICH very large banks are the share-holders ) one could call  ( most of ) them a cabal  cooperating within the BIS framework
> 
> they are mostly detached from the Federal Government ( Australia , UK , US and several others ) with politicians  appointing the chair ( for the US Fed ) and governor  ( in Australia and UK )
> 
> but certain WEF presentations shows the senior ( central ) bankers  working towards a defined agenda  ( not national policy )




My understanding of your statements -

‘Unknown large banks are shareholders of the Australian Reserve Bank. Communication from the banks and the RBA leads to cooperation within the BIS. Some WEF presentation proves that senior members of Reserve Banks of certain countries are acting on their own agenda, and not the national policy.’​
Have I deciphered your posts correctly?


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## Gunnerguy (1 November 2022)

divs4ever said:


> some Central Banks are truly independent ( Russia and Turkey  for two ,  but non-aligned are getting rarer )
> 
> the US Fed will be under pressure to try and save the ( Dem) mid-terms  , so that pause ( if it happens ) could more political than strategic
> 
> much of the global economy  has it's foot in the bear trap  and mommy bear and the cubs  are coming back to see what they caught



Turkey CB independent. What are you smoking ?? Eradogan controls the CB and just reduced IR. His personal thesis is that he does not believe increasing IR will reduce inflation. I’ll find the reference for you sometime. I believe he has changed/removed some CB officials recently because he did not agree with their strategies.


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## Value Collector (2 November 2022)

divs4ever said:


> since the certain very large banks are shareholders ( and it is difficult to see WHICH very large banks are the share-holders ) one could call  ( most of ) them a cabal  cooperating within the BIS framework
> 
> they are mostly detached from the Federal Government ( Australia , UK , US and several others ) with politicians  appointing the chair ( for the US Fed ) and governor  ( in Australia and UK )
> 
> but certain WEF presentations shows the senior ( central ) bankers  working towards a defined agenda  ( not national policy )



There are no “shareholders” of the federal reserve in the way that we normally understand the word shareholders.

The Federal reserve have Members who must subscribe to stock in the fed reserve by depositing 6% of their capital base, but they don’t receive any profits, those are passed along to the government.


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## divs4ever (2 November 2022)

Value Collector said:


> There are no “shareholders” of the federal reserve in the way that we normally understand the word shareholders.
> 
> The Federal reserve have Members who must subscribe to stock in the fed reserve by depositing 6% of their capital base, but they don’t receive any profits, those are passed along to the government.



one might wonder  why the members would bother , since they would be looking to derive some gain from somewhere ( apart from front-running/insider-trading )


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## JohnDe (2 November 2022)

Value Collector said:


> There are no “shareholders” of the federal reserve in the way that we normally understand the word shareholders.
> 
> The Federal reserve have Members who must subscribe to stock in the fed reserve by depositing 6% of their capital base, but they don’t receive any profits, those are passed along to the government.




And if we're clearing the mud, stricly speaking the "Members" are not ordinary banks - 

The *12 Federal Reserve Banks are the operating arms of the Federal Reserve System*. Each Reserve Bank is an independent corporation and operates within its own particular geographic area, or District, of the U.S.​


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## mullokintyre (2 November 2022)

JohnDe said:


> And if we're clearing the mud, stricly speaking the "Members" are not ordinary banks -
> 
> The *12 Federal Reserve Banks are the operating arms of the Federal Reserve System*. Each Reserve Bank is an independent corporation and operates within its own particular geographic area, or District, of the U.S.​



Go read the book "The Creature from Jekyll Island" by Ed Griffin.
The Fed reserve was created by the big banks in  1913
From the Fed reserve charter articles


> "A Federal reserve bank, which has accumulated a surplus fund, has legal authority, under the provisions of Section 7 of the Federal Reserve Act, to pay out of such fund, to its stockholding member banks dividends for a year in which the current earnings of the Federal reserve bank are insufficient for this purpose."



Here is another little known gem from New Republic


> Rarely does a day go by when some House Republican doesn’t demand an end to Federal Reserve funding of the Consumer Financial Protection Bureau (CFPB). But you will never hear about the Fed’s direct subsidy to private banks that costs over three times as much as the total CFPB budget.
> The subsidy comes in the form of a 6 percent dividend, paid on stock that over 2,900 banks purchase to participate in the Federal Reserve system. Very few places where ordinary Americans park their money offer such a risk-free benefit. In 2012 (the last year with available data), the Fed gave away $1.637 billion in dividends to banks, _tax-free_ in the majority of cases. And the Fed has been doing this for the last 100 years. It’s one of the many unknown ways the Fed extends special benefits to Wall Street.




It is owned by them.
If that does not make them shareholders what does.
 It is controlled by them, for their benefit.
The US Gov has no control over it.
Mick
NOTE edited to correct the date when Fed was created.


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## JohnDe (2 November 2022)

mullokintyre said:


> Go read the book "The Creature from Jekyll Island" by Ed Griffin.
> The Fed reserve was created by the big banks in  1913
> From the Fed reserve charter articles
> 
> ...




Who is 'them'?


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## mullokintyre (2 November 2022)

JohnDe said:


> Who is 'them'?



I thought is was bleedin obvious, but I will play the game.
The  Them is the member banks who hold stock in the federal reserve banks, which is what the article stated
Mick


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## JohnDe (2 November 2022)

mullokintyre said:


> I thought is was bleedin obvious, but I will play the game.
> The  Them is the member banks who hold stock in the federal reserve banks, which is what the article stated
> Mick




Not even close to 'obvious'.

The 'member banks' are Reserve Banks, each operating under the Federal Reserve System. They are an entity controlled by a board with a charter, answerable to laws, regulations and responsibility. 

The Board of Governors of the Federal Reserve System is a U.S. federal agency that guides the operation of the Federal Reserve System, including overseeing the operations of the 12 Reserve Banks.​
I don't mean to be blunt but unless you have specific examples, you are handing us conspiracy theories.


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## mullokintyre (2 November 2022)

JohnDe said:


> Not even close to 'obvious'.
> 
> The 'member banks' are Reserve Banks, each operating under the Federal Reserve System. They are an entity controlled by a board with a charter, answerable to laws, regulations and responsibility.
> 
> ...



From the  same article I quoted that refuted your statement that the 6% dividend goes to the government ( it goes to the 12 state reserve banks which in turn send it back to the owner banks as dividends under the same charter that set up the fed reserve).


> These Reserve Banks operate as private corporations owned by member banks in their districts, even though they also regulate the same banks. Their websites have a .org, not a .gov, suffix.



So the reserve banks are owned by the banks that operate in those 12 states.  Does that make it any clearer/
Mick


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## divs4ever (2 November 2022)

mullokintyre said:


> Go read the book "The Creature from Jekyll Island" by Ed Griffin.
> The Fed reserve was created by the big banks in  1913
> From the Fed reserve charter articles
> 
> ...



 one might argue 'stake-holders'  which implies a 'controlling interest ' rather than share-holders ( as retail share-holders understand it )

 ( i voted  from management  changes at WOW for over 5 years  before reducing  my holding by 90%  )

 the US Government ( President ?? ) does appoint the Chair  ( whether that is a completely voluntary choice  , or a pick from a small number of 'suggestions'  , is less clear )


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## Value Collector (2 November 2022)

divs4ever said:


> one might wonder  why the members would bother , since they would be looking to derive some gain from somewhere ( apart from front-running/insider-trading )



You have to be a member if you want to be a bank.

Also, you get the support of the federal reserve, back in the day before central banks an Individual bank could go bust over night if enough of its depositors tried to withdraw money at the same time.

Having central banks removed a lot of the risk of banks going suffering fatal “runs” on capital.

If all the banks have to deposit 6% of their capital at the federal reserve, and 1 bank has a short term liquidity problem, it can borrow from the federal reserve to get through the short term cash crunch.


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## Value Collector (2 November 2022)

mullokintyre said:


> From the  same article I quoted that refuted your statement that the 6% dividend goes to the government ( it goes to the 12 state reserve banks which in turn send it back to the owner banks as dividends under the same charter that set up the fed reserve).
> 
> So the reserve banks are owned by the banks that operate in those 12 states.  Does that make it any clearer/
> Mick



Think of it more like a club that costs money to be in, rather than a profit centre, any money the federal reserve does make gets paid to the government,  it the shareholders/members.

Everyone benefits from the existence of the federal reserve, you have to try and avoid the conspiracy theories that revolve around it.


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## JohnDe (2 November 2022)

mullokintyre said:


> From the  same article I quoted that refuted your statement that the 6% dividend goes to the government ( it goes to the 12 state reserve banks which in turn send it back to the owner banks as dividends under the same charter that set up the fed reserve).
> 
> So the reserve banks are owned by the banks that operate in those 12 states.  Does that make it any clearer/
> Mick




As clear as mud. Your comments are very vague. 

Each reserve bank has a board of highly qualified individuals, they receive and review a lot more information than any of us. As well has having regulations to follow while governing in the best interest of the people and country, they are liable to laws which hold 'them' accountable.

I can only presume that you are calling out corruption within the US Federal Banking System, but unable to name anyone or give specifics other than some vague document that sounds like it is written by a conspiracy theorist.

*Who owns the Federal Reserve?*​The Federal Reserve System is not "owned" by anyone. The Federal Reserve was created in 1913 by the Federal Reserve Act to serve as the nation's central bank. The Board of Governors in Washington, D.C., is an agency of the federal government and reports to and is directly accountable to the Congress.​


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## divs4ever (2 November 2022)

Value Collector said:


> Think of it more like a club that costs money to be in, rather than a profit centre, any money the federal reserve does make gets paid to the government,  it the shareholders/members.
> 
> Everyone benefits from the existence of the federal reserve, you have to try and avoid the conspiracy theories that revolve around it.



 i will prefer the conspiracy theories thank you , since i lean more to the Austrian School of Economics


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## mullokintyre (2 November 2022)

Value Collector said:


> Think of it more like a club that costs money to be in, rather than a profit centre, any money the federal reserve does make gets paid to the government,  it the shareholders/members.
> 
> Everyone benefits from the existence of the federal reserve, you have to try and avoid the conspiracy theories that revolve around it.



Conspiracy Theory?
 Did you not read the articles of association I quoted from in the setup of the Reserve banking system?
It distinctly said that if profits are made, dividends go to the 12  member reserve banks, which in turn , are owned by the private banks in each state.
 And some of those private banks are subsidaries of non American Banks such as HSBC, Tokyo bank and even the Industrial and Commercial Bank of China.
Mick


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## divs4ever (2 November 2022)

what about the George Carlin conspiracy  ... 'it's just one big club  and i ain't in it ' ( to paraphrase it )


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## mullokintyre (2 November 2022)

JohnDe said:


> As clear as mud. Your comments are very vague.
> 
> Each reserve bank has a board of highly qualified individuals, they receive and review a lot more information than any of us. As well has having regulations to follow while governing in the best interest of the people and country, they are liable to laws which hold 'them' accountable.
> 
> ...



Oh for crying out load. I never mentioned anything about the high quality individuals you talk about  or accountable they are or to whom. 
Rule no 1. Follow the money.
Rule no 2. see rule no 1.
You stated that the profit goes to the government.
I pointed out where this is incorrect, and any profit made goes to the individual banks who own the capital in each federal reserve bank.
As to the rest, got nothing to do with the oirginal post.
if you want to talk about corruption in the Fed Reserve, make another thread, more than happy to  discuss that.
Mick


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## JohnDe (2 November 2022)

mullokintyre said:


> Oh for crying out load. I never mentioned anything about the high quality individuals you talk about  or accountable they are or to whom.
> Rule no 1. Follow the money.
> Rule no 2. see rule no 1.
> You stated that the profit goes to the government.
> ...




Please show where I 'stated that profit goes to the government'.

My question was in regard to your comment - 

"It is owned by them.​If that does not make them shareholders what does.​It is controlled by them, for their benefit."​
That statement looks like it is saying that individuals have control, and those individuals are benefiting.

I figure that 'them' is a person, because an institution cannot make a decision without people.


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## Value Collector (2 November 2022)

Here is a video explaining banking and central banking.

Most countries have a central bank, Federal reserve is the central bank of the USA, in Australia we have the reserve bank of Australia, in the UK they have the Bank of England etc etc.

All the commercial banks you know eg CBA, ANZ, NAB etc etc all contribute capital to the Reserve Bank, and in hard times the Reserve Bank can use this pool of funds to support and bolster the commercial banks.

It’s just part of the way banking works that banks are forced to Borrow short term (deposits) but lend long term (mortgages), this means that they are open to big drains on capital which then simply don’t have liquid cash to support, so central banks can fill the gaps, for a price.


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## Value Collector (2 November 2022)

mullokintyre said:


> Conspiracy Theory?
> Did you not read the articles of association I quoted from in the setup of the Reserve banking system?
> It distinctly said that if profits are made, dividends go to the 12  member reserve banks, which in turn , are owned by the private banks in each state.
> And some of those private banks are subsidaries of non American Banks such as HSBC, Tokyo bank and even the Industrial and Commercial Bank of China.
> Mick



After it’s paid its expenses, all the federal reserves profits are turned over to the US treasury.

It may pay some token interest to the member banks on the deposits it collects from them, but it’s profits go to the treasury.


----------



## Value Collector (2 November 2022)

divs4ever said:


> i will prefer the conspiracy theories thank you , since i lean more to the Austrian School of Economics



Ok, Google “federal reserve Rothschild” and you will get more than enough fake federal reserve stories than you can read in a life time 😜


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## Value Collector (2 November 2022)

mullokintyre said:


> Oh for crying out load. I never mentioned anything about the high quality individuals you talk about  or accountable they are or to whom.
> Rule no 1. Follow the money.
> Rule no 2. see rule no 1.
> You stated that the profit goes to the government.
> ...




I think you might have been reading some misinformation, the Feds profits definitely go to the government via the US treasury department.

Last year the Fed handed over $107 Billion to the US treasury. (But yeah if you go down conspiracy theory rabbit holes they will not tell you that)

https://www.federalreserve.gov/newsevents/pressreleases/other20220114a.htm


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## Value Collector (2 November 2022)

In case anyone was wondering, the Reserve Bank of Australia also pays its profits to the Australian government. (After it had deducted a portion to add to its permanent capital reserve), last year it paid $2.7 Billion to the government and added $1.2 Billion to its permanent reserve.


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## mullokintyre (2 November 2022)

Value Collector said:


> I think you might have been reading some misinformation, the Feds profits definitely go to the government via the e US treasury department.
> 
> Last year the Fed handed over $107 Billion to the US treasury. (But yeah if you go down conspiracy theory rabbit holes they will not tell you that)
> 
> https://www.federalreserve.gov/newsevents/pressreleases/other20220114a.htm



OK, I have made an error.
I should have said that before any money is paid to treasury, a 6% dividend is paid to the  member banks who own stock in the Federal reserve, assuming the Fed reserve makes a profit. ( according to Bloombergs it is currently running at an operational loss for the first time  in its history ). 
From Section 7 of fed reserve act
*(a)* *Dividends And Surplus Funds Of Reserve Banks.*


Stockholder Dividends.
Dividend Amount. After all necessary expenses of a Federal reserve bank have been paid or provided for, the stockholders of the bank shall be entitled to receive an annual dividend on paid-in capital stock of--
in the case of a stockholder with total consolidated assets of more than $10,000,000,000, the smaller of--
the rate equal to the high yield of the 10-year Treasury note auctioned at the last auction held prior to the payment of such dividend; and
6 percent; and

in the case of a stockholder with total consolidated assets of $10,000,000,000 or less, 6 percent.

Dividend Cumulative. The entitlement to dividends under subparagraph (A) shall be cumulative.
Inflation Adjustment. The Board of Governors of the Federal Reserve System shall annually adjust the dollar amounts of total consolidated assets specified under subparagraph (A) to reflect the change in the Gross Domestic Product Price Index, published by the Bureau of Economic Analysis.

and just to add icing on the cake the very last sentence from the  same section


> *c) Exemption From Taxation.* Federal reserve banks, including the capital stock and surplus therein, and the income derived therefrom shall be exempt from Federal, State, and local taxation, except taxes upon real estate.



So the dividends are paid before the treasury gets a slice.
Mick


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## divs4ever (2 November 2022)

Value Collector said:


> Ok, Google “federal reserve Rothschild” and you will get more than enough fake federal reserve stories than you can read in a life time 😜



 my first mentor  , was a member of JBS ( John Birch Society  )  and i was given a couple of books to read  ( one was title None Dare Call It .......... )

 ( there was no Google back in the early 1970's  , the WAS  a less interfered with  press )

 ( BTW i use alternative search engines  , for a different view of the internet , but sadly several are now piggy-backing on Google )


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## qldfrog (2 November 2022)

Gunnerguy said:


> Turkey CB independent. What are you smoking ?? Eradogan controls the CB and just reduced IR. His personal thesis is that he does not believe increasing IR will reduce inflation. I’ll find the reference for you sometime. I believe he has changed/removed some CB officials recently because he did not agree with their strategies.



Independent from the US control was my reading and yes you are right about Turkey, i started a thread about the economy there.not many seem interested while India seems to get the popularity support.
Turkey is feeding on the silverware of Europe so i expect better medium term outcome


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## Garpal Gumnut (2 November 2022)

This is all very, very, very complicated. 

I could work it all out, and good on everyone for posting, but it's a bit like the weather. "The Bureau", or BOM as I call it, is similar witchcraft and if I had enough decades left in my life I'd look in to understanding weather as well as interest rates.

Again, good on all ASF members for posting. 

I'll just return to looking out the window on The Fed and "The Bureau" to work out where to park my money, stocks and Gold next month, and also whether to bring an umbrella out when I visit my Australia Post locker for any Cohibas from Cuba. 

gg


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## Value Collector (2 November 2022)

mullokintyre said:


> OK, I have made an error.
> I should have said that before any money is paid to treasury, a 6% dividend is paid to the  member banks who own stock in the Federal reserve, assuming the Fed reserve makes a profit. ( according to Bloombergs it is currently running at an operational loss for the first time  in its history ).
> From Section 7 of fed reserve act
> *(a)* *Dividends And Surplus Funds Of Reserve Banks.*
> ...



Yes, so that is more like interest earned on long term funds they deposit into the federal reserve, not earnings from the operations of the fed.

From that 6% interest the earn they have to pay their long term depositors and capital notes, so it’s not all profit for the bank, because those notes cost nearly 6%

Then ofcourse any profit the bank does make is taxable, so generates further income for the government


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## mullokintyre (2 November 2022)

Garpal Gumnut said:


> This is all very, very, very complicated.
> 
> I could work it all out, and good on everyone for posting, but it's a bit like the weather. "The Bureau", or BOM as I call it, is similar witchcraft and if I had enough decades left in my life I'd look in to understanding weather as well as interest rates.
> 
> ...



GG, I am more than happy to look after your money for you.
For a small fee of course.
mick


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## mullokintyre (2 November 2022)

Value Collector said:


> Yes, so that is more like interest earned on long term funds they deposit into the federal reserve, not earnings from the operations of the fed.



Really?  And where do you think that interest paid comes from, if not its operations?


Value Collector said:


> From that 6% interest the earn they have to pay their long term depositors and capital notes, so it’s not all profit for the bank, because those notes cost nearly 6%



What do you mean they cost nearly 6%? Cost for whom?
When theymember banks deposit the 6% of capital to be allowed to operate,  they only pay half the 6%  up front , the other half is at call ( see Richmond Fed membership .


Value Collector said:


> Then ofcourse any profit the bank does make is taxable, so generates further income for the government



Which bank are you referring to when you say its Taxable. 
As I showed in the post of the article 7 reg s, (see Section 7 of fed reserve act ) , it distinctly states these dividends are Tax free.
Mick


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## divs4ever (2 November 2022)

qldfrog said:


> Independent from the US control was my reading and yes you are right about Turkey, i started a thread about the economy there.not many seem interested while India seems to get the popularity support.
> Turkey is feeding on the silverware of Europe so i expect better medium term outcome



 no matter how many times Turkey exasperates me , i realize  the current leader is a Nationalist ( thinks of HIS country first ) and i respect him for that 

Europe needs Turkey as a buffer for immigration from the Middle-East wars that NATO created , so Turkey extracts a fair price for services provided


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## qldfrog (2 November 2022)

divs4ever said:


> no matter how many times Turkey exasperates me , i realize  the current leader is a Nationalist ( thinks of HIS country first ) and i respect him for that
> 
> Europe needs Turkey as a buffer for immigration from the Middle-East wars that NATO created , so Turkey extracts a fair price for services provided



Note there is no lost love for Turkey from me either but the way this country/ leader tricks the West again and again,rolling them in their own incompetency and narrative...
Can only admire ....and cry, again and again for the West ...


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## divs4ever (2 November 2022)

qldfrog said:


> Note there is no lost love for Turkey from me either but the way this country/ leader tricks the West again and again,rolling them in their own incompetency and narrative...
> Can only admire ....and cry, again and again for the West ...



 i am guessing he exasperates Russia and China as well  , but i suspect they understand what motivates him 

 the West will have to cure itself  , or plunge into an unhappy state ( for most )

 my subtle barbs to high school teachers didn't work ,  suggestions to several corporations ( as a share-holder or employee ) didn't work  , so here we are 

 ( hope you stacked up on the popcorn  , firewood and generator fuel )


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## Gunnerguy (2 November 2022)

This podcast might be of interest to people. I have listened to ‘Planet Money’ and ‘The Indicator’ weekly for over 10 years. Lots of interesting simply, none conspiracy, econ topics. Highly recommended


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## Value Collector (2 November 2022)

mullokintyre said:


> Really?  And where do you think that interest paid comes from, if not its operations?
> 
> What do you mean they cost nearly 6%? Cost for whom?
> When theymember banks deposit the 6% of capital to be allowed to operate,  they only pay half the 6%  up front , the other half is at call ( see Richmond Fed membership .
> ...




Ok, so you are still a bit confused about how this all works and who the member banks are and what they do.

The 12 member banks are not actually commercial banks, they themselves basically operate as mini reserve banks for their region of the country, and have many duties to carry out and incur running cost.

The of costs of running these operations are large, they range from operating clearing houses to process cheques, replacing worn out currency, processing inter bank payments, conducting research, supervising banks and credit unions etc etc 

So that 6% interest rate isn’t going as profit to anyone it’s largely consumed as running costs or added to the capital reserve or paid to the deposit holders of the commercial banks, credit unions etc that make deposits with the regional member banks.

As I mentioned before, even if some of it does make it back down to the commercial banks, they then pass it on to their depositors or shareholders who are subject to taxation.


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## mullokintyre (2 November 2022)

Value Collector said:


> Ok, so you are still a bit confused about how this all works and who the member banks are and what they do.
> 
> The 12 member banks are not actually commercial banks, they themselves basically operate as mini reserve banks for their region of the country, and have many duties to carry out and incur running cost.
> 
> ...



I don't know where you get your information from , but once again, I will quite the federal reserve regulations.
The Fed Appendix B


> To: Federal Reserve Board
> From: Mr. Walter S. Logan, General Counsel
> Subject: Payment of dividends of Federal Reserve Banks out of surplus
> Date: April 11, 1922
> ...



You did not provide anything to backup your claims that  the 12  regional fed reserves  have large expenses.
According to This year 2000 fed report in the year 2000, 


> The aggregate amount of the surplus funds of the Federal reserve banks may not exceed $6,825,000,000.
> ) 1 Transfer for fiscal year 2000​(1) In general​The Federal reserve banks shall transfer from the surplus funds of such banks to the Board of Governors of the Federal Reserve System for transfer to the Secretary of the Treasury for deposit in the general fund of the Treasury, a total amount of $3,752,000,000 in fiscal year 2000.



The maximum the fed could distribute to the member banks in dividends was nearly twice the amount to be distributed to treasury.


As to the tax  question, I refer you to the following from New Republic


> But if the 6 percent dividend on capital stock isn’t the Fed’s largest gift, it may be the most brazen—a risk-free entitlement program that has operated in obscurity for 100 years. Most member banks don’t even have to pay corporate taxes on the dividends, unlike most Americans who pay anywhere from 15-20 percent in dividend taxes. An update to the law imposed taxes on dividends from Federal Reserve stock to any shares issued after March 28, 1942. But most Wall Street banks have charters with roots back to the 19th century, and are grandfathered in with the tax exemption.



Mick


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## Value Collector (2 November 2022)

mullokintyre said:


> I don't know where you get your information from , but once again, I will quite the federal reserve regulations.
> The Fed Appendix B
> 
> You did not provide anything to backup your claims that  the 12  regional fed reserves  have large expenses.
> ...



I think you need to have a look at the actual numbers, for example in the year that the Fed sent $96 Billion to the government, it only paid $1.7 billion in dividends to the member banks. Last year it paid $5.3 Billion in dividends but sent $107 Billion to the government.

Have you had a look at any of the member bank websites? You will see that their responsibilities are quite large, what makes you think they wouldn’t have large operating costs, they probably do more work than the actual Federal reserve itself.

I am not sure you actually have an idea of how they operate, you seem to be attacking your research side ways.


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## JohnDe (3 November 2022)

The Federal Reserve: Myths and Conspiracies — Are They Real or Not? — Tally
					

The Federal Reserve is the central banking system of the United States. But there are many conspiracies and myths about the Fed. Here’s the truth.




					www.meettally.com


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## mullokintyre (3 November 2022)

Value Collector said:


> I think you need to have a look at the actual numbers, for example in the year that the Fed sent $96 Billion to the government, it only paid $1.7 billion in dividends to the member banks. Last year it paid $5.3 Billion in dividends but sent $107 Billion to the government.
> 
> Have you had a look at any of the member bank websites? You will see that their responsibilities are quite large, what makes you think they wouldn’t have large operating costs, they probably do more work than the actual Federal reserve itself.
> 
> I am not sure you actually have an idea of how they operate, you seem to be attacking your research side ways.



I try to provide the sourse of any figures I put up.
It would be helpful if you could do the same, lest somebody accuse you of pulling them out of your ear.
As for the large operating costs, once again,  you provide no supporting evidence other than the word probably.
I have no idea what their operating costs are, but whatever the operating costs are, they still manage to pay out the dividends.

Mick


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## Value Collector (3 November 2022)

mullokintyre said:


> I try to provide the sourse of any figures I put up.
> It would be helpful if you could do the same, lest somebody accuse you of pulling them out of your ear.
> As for the large operating costs, once again,  you provide no supporting evidence other than the word probably.
> I have no idea what their operating costs are, but whatever the operating costs are, they still manage to pay out the dividends.
> ...



You can find a chart showing the feds distribution to the government each year here.





__





						Federal Reserve Board announces Reserve Bank income and expense data and transfers to the Treasury for 2021
					

The Federal Reserve Board on Friday announced preliminary financial information indicating that the Reserve Banks had estimated net income of $107.8 billion du



					www.federalreserve.gov
				




I can’t find a chart showing all the federal reserve dividends, but if you spend some time looking they are mentioned in multiple articles such as this one. You can compare them to the other chart against what the federal reserve pays the government each year and you will see that a lot more money goes to the government than does as dividends.





__





						Loading...
					





					www.stlouisfed.org
				





You don’t seem to understand the basic structure of the federal either, I find some of your assumptions are based on cynicism, eg you seemed to at first to assume that the fed was a private for profit organisation, and then even after you learned that 100% of profits are assumed that it must be the dividends that direct rivers of cash to member banks leaving the government with scraps, but as I have shown that’s not true either.

I tried to explain that the dividends only represent interest on Collateral deposited at the fed, but yeah you seem to have read some  cynical/conspiracy theory trash about the Fed and I don’t think I will be able to get you to see past that, so I think I will leave you to it.


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## mullokintyre (4 November 2022)

Firstly, thanks for supplying some  sources for your statements.
This discussion was started when you said in post #240



> The Federal reserve have Members who must subscribe to stock in the fed reserve by depositing 6% of their capital base, but they don’t receive any profits, those are passed along to the government.



You said right there, that members do not receive any profits, and they are passed to the government.
I pointed out that the dividend on that money goes back to the  commercial member banks who put 6% of their capital into the system.
And this dividend gets paid to the member banks regardless of whether the fed reserve makes a profit or not.
In post #242 you reference that same post by saying saying that the members are not ordinary banks. 
You confused the members who paid capital into the fed to participate in the banking system with the 12 "members" of the federal reserve system.
You repeated the same statement in pos #246
Then in post #250 you said 


> Think of it more like a club that costs money to be in, rather than a profit centre, any money the federal reserve does make gets paid to the government, it the shareholders/members.



 When I tried to point out again that the commercial member banks who have 6% of their capital invested in the fed reserve gets paid a dividend, you went off a on tangent saying I was into conspiracy theories.
I will admit to making a mistake in post #255 when I said any profit goes to the individual banks, which I acknowledged in post #262.
I think I have said enough on this subject, other than to suggest you take the time to follow the original suggestion I made in my very first post, namely it is instructive to the book by  Ed griffin.
Mick


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## Value Collector (4 November 2022)

mullokintyre said:


> Firstly, thanks for supplying some  sources for your statements.
> This discussion was started when you said in post #240
> 
> 
> ...



It’s true that all the “profits” do get passed along to the government, as I have said the dividends that get paid are just interest on their capital which they are forced to store at the reserve, not true “profits”, the actual profits which are about 20 times larger than the dividends/interest get passed along to the government.

————————
Yes I agree we have both been a little sloppy with the term member bank referring sometimes to the 12 reserve banks.

————————
Looking back over the posts I seems that I have attributed some of divs comments to you, this conversation started out with me replying to his cynical comments and it’s seems some where in the middle it switched to you and I talking, so some of the conspiracy theory remarks relate to him.

However, you did still fail to realise that the fed paid its profits to the government, and then once you were shown that you then took the cynical view that the dividends must then be the mechanism that they use to divert large profits to private people, but as I then showed the dividends are small, and are actually interest on deposits not true profits.

I have read a couple of books on fed history, and watched 8 hours of university lectures on it, I am not sure that book could add much, have you read it? Because if it didn’t show you that the profits go to the government I don’t know how good it can be.


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## mullokintyre (17 November 2022)

According to one of the many economics journos,   todays reduction in the unemployment rate means we are more than likely to get another rate rise before Christmas, though the size of it is not stated,
From The Evil Murdoch press


> Australians look destined to cop an eighth straight rate hike in the lead up to Christmas, after stronger-than-expected jobs figures showed unemployment dropped back to its 48-year low of 3.4 per cent in October.
> Despite the Reserve Bank’s aggressive efforts to slow demand in order to tame this year’s inflationary surge, the number of workers climbed by 32,000 in the month – or twice what had been anticipated, according to the Australian Bureau of Statistics.
> 
> That helped push the key jobless measure down by 0.1 percentage points to 3.4 per cent, where it was in July and the lowest since 1974.
> ...



With employment still growing, and the hours worked by those in employment still going up, it is hard to see where the expected slowdown from previous  rate hikes is going to come from.
The Policies of the RBA actively encouraged a massive housing bubble, and it is possible that the housing bubble may be pricked without reducing inflation, though even that may be overcome by events.
There is still a lot of money floating around the system, with pretty much every arm of government running expanded deficits, and   a couple of state and fed governments handing out stimmy checks to people as election ploys to buy votes,  its pretty hard to  see where the contraction is going to come from.
Albo has promised another 10,000 homes for those who don't have them, so  that will put a little more pressure on the lack of timber, steel, bathroom goods, furnishings and carpets as they compete with all the  thousands of households devastated by flood waters.  
Many people devastated by fires two years ago are still waiting to rebuild because of shortages of everything from sensible local councils to tradies.
Mick


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## Telamelo (28 November 2022)

Reserve Bank governor Philip Lowe has apologised to Australians who may regret taking out a home loan off the back of claims interest rates would remain unchanged until 2024. 

Meanwhile, during recent interest rate hike RBA boss celebrated afterwards by enjoying expensive champagne at a gala dinner with a smirk on his face (as seen on t.v.)



			https://www.news.com.au/finance/economy/interest-rates/reserve-bank-chief-philip-low-sorry-for-interest-rate-call/news-story/2136ca52bfb1d08407a05da6058b5d3b


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## mullokintyre (6 December 2022)

So whats the bet on the RBA meeting today?
I am going for a 25 basis points increase.
There has been some arguments that a 015 basis points rise is in order to "round it up" to 3.00 percent.
However, given that there is no meeting in January, so likely there is no change in that month, a 15 basis points rise followed by no rise might give the impression that rates have topped out.
I am sure the RBA would like to have rates topped out, however, there has not been sufficient data to warrant it.
Mick


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## divs4ever (6 December 2022)

i am  going for a 0.5%  rise  with a lesser chance of a 0.4%  rise 

 IMO  we still need a 0.75%  rise but i think the RBA will lack the courage to do that 

 BTW i have been wrong before  ( don't bet the farm on my guesses , 'cos i won't be )


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## rcw1 (6 December 2022)

Good morning
0.50 % rise.  

Have a very nice day, today.

Kind regards
rcw1


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## againsthegrain (6 December 2022)

.25 or lower, the media is squeeling like a gutted pig and lowe is sweating from all the personal attacks and pitchforks altho we all know we need a .50%+ pill


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## divs4ever (6 December 2022)

againsthegrain said:


> .25 or lower, the media is squeeling like a gutted pig and lowe is sweating from all the personal attacks and pitchforks altho we all know we need a .50%+ pill



that appears to be the consensus ( 0.25% )

 but since the initial rate rises were late  , this is basically virtue-signalling


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## mullokintyre (6 December 2022)

So we got the 25 point increase.
Nothing more till feb meeting.
Cash rate at its highest level since 2012 when it was 3.25.
Mick


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## KevinBB (6 December 2022)

The increased rate is still, however, below the long term average interest rate of (say) 5%.




_*Keep on increasing the rate, Phil!*_

KH


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## divs4ever (6 December 2022)

chances are it will only further fuel  inflation  ,  but the decision is made 

 one tiny fragment of uncertainty  removed for the rest of the month


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## macca (6 December 2022)

I will have to disagree with the general consensus on here.

I believe that it should not have been raised as the impact of the previous increases have not flown through to household spending yet. I think we need a pause until February retail figures are in.

I think when our "so called RBA expert" publicly stated that there would be no interest rate increase for at least 18 months that encouraged a lot of youngish people to jump into home ownership rather than wait for the market to cool.

The FOMO was huge because there was now no reason for the price surge to stop.

He then proceeded to raise the interest rate to be 31 times higher than it was when he made the statement.

If that is not incompetence worthy of dismissal then what does one need to do to get the sack?

In the cities the general working people are bleeding because of his stuff up.

Folk always spend at Christmas and they will again this time but come January the economy will drop off a cliff and stay there for some time.

The total dollar TO may stagnate, held up by inflation, but the volume of sales will drop as folk struggle to meet their repayments 

Simply by trying to provide a home for their family they got suckered into a very deep pile of **** by a person promoted way beyond his ability.


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## frugal.rock (6 December 2022)

KevinBB said:


> Keep on increasing the rate, Phil!



The Lynch mob's are assembling Phill, and guess what... they ain't old fuddy duddys with cash in the bank.

I think Phil is a gene away from being a Koala.


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## waterbottle (6 December 2022)

macca said:


> I will have to disagree with the general consensus on here.
> 
> I believe that it should not have been raised as the impact of the previous increases have not flown through to household spending yet. I think we need a pause until February retail figures are in.
> 
> ...




We do have a pause - for a month - RBA will next meet on Feb 7th.

Emergency meetings are still possible should it be required.

Phil Lowe's hands are tied here, as are the rest of the central bankers. They're all being dragged along by the Fed. 

Alot of people were struggling without this hike. Savings are near pre-COVID levels, so any buffers that once existed are now virtually exhausted. In my circle, the struggle is tied to housing repayments. People did not fix and were shocked by how quickly rates rose.


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## divs4ever (7 December 2022)

macca said:


> I will have to disagree with the general consensus on here.
> 
> I believe that it should not have been raised as the impact of the previous increases have not flown through to household spending yet. I think we need a pause until February retail figures are in.
> 
> ...



 i understand your logic  and had the RBA moved earlier ( and more carefully ) you would probably be correct BUT this would be only Xmas 2021 

 a lot of the world  in plummeting  towards CRAP and the RBA desperately needs all the 'wiggle-room  ' it can get , BUT not stampede the masses 

 this has been a major long-term stuff up by several large nations 

 this mess has been years in the making    and tonnes of band-aids wasted in the process 

 BTW it is always the working class ( and middle class ) that  wear the debt burden 

 just beware of elites providing solutions ( it was their supervision that allowed the problem to fester  , because they control who stands for election )


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## farmerge (7 December 2022)

waterbottle said:


> We do have a pause - for a month - RBA will next meet on Feb 7th.
> 
> Emergency meetings are still possible should it be required.
> 
> ...



Its the usual scenario those that least afford to pay are the ones paying the most the price of having incompetents in charge. Its not hurting them any interest rate rises, still being able to afford the "I'm entitled to" the luxuries of life.


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## macca (7 December 2022)

I do agree that it has been coming for years but here in Oz we propped up the economy by borrowing money to give away, beyond stupid IMO

We have a generation of people who have never experienced a slow down, I have a builder friend who has been self employed for 12 years and has never seen an interest rate increase or the effects it Will have on his business.

But the thing that Really pisses me off is that people were told by the Expert there would be no interest rate rise until 2024.

Beyond incompetence, just a stupid thing to say, if he is any good he Must know that anything can happen but the general populous read in the media "no interest rate increase until 2024" and they believe it.

Poor suckers


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## waterbottle (7 December 2022)

macca said:


> I do agree that it has been coming for years but here in Oz we propped up the economy by borrowing money to give away, beyond stupid IMO
> 
> We have a generation of people who have never experienced a slow down, I have a builder friend who has been self employed for 12 years and has never seen an interest rate increase or the effects it Will have on his business.
> 
> ...




True, the poor communication is what has hurt people the most. 
Unfortunately modern western society is built on borrowing from the future and I don't think there's an alternative.


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## againsthegrain (7 December 2022)

There were people saying be careful rates are at the bottom and there is only 1 way up, they were drowned out by the media and all the re gurus, perhaps even Lowe was over quoted for their agenda, now the same media is playing the mini violin once again for their own agenda and clicks.  This is where I lay the blame. 

Also I think the rba started this mess by dropping the rates too low in the first place. 

Nobody is innocent


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## Smurf1976 (7 December 2022)

againsthegrain said:


> There were people saying be careful rates are at the bottom and there is only 1 way up, they were drowned out by the media and all the re gurus, perhaps even Lowe was over quoted for their agenda



Biggest problem with all these issues is the limited attention span of the public and the media’s fuelling of it.

It’s not an issue that can be covered in 30 seconds and which has a simple answer but sadly that’s what many do, they just aren’t interested in publishing or reading complex discussion.

Same happens with everything. Mainstream media is far, far too simplified.


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## divs4ever (7 December 2022)

againsthegrain said:


> There were people saying be careful rates are at the bottom and there is only 1 way up, they were drowned out by the media and all the re gurus, perhaps even Lowe was over quoted for their agenda, now the same media is playing the mini violin once again for their own agenda and clicks.  This is where I lay the blame.
> 
> Also I think the rba started this mess by dropping the rates too low in the first place.
> 
> Nobody is innocent



 the RBA is nearly  always  reactionary ( late to the party )  , the media is all about 'eyes ' ( advertising revenue ) even to the extent of manufacturing the story to attract  'eyeballs '


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## divs4ever (7 December 2022)

Smurf1976 said:


> Biggest problem with all these issues is the limited attention span of the public and the media’s fuelling of it.
> 
> It’s not an issue that can be covered in 30 seconds and which has a simple answer but sadly that’s what many do, they just aren’t interested in publishing or reading complex discussion.
> 
> Same happens with everything. Mainstream media is far, far too simplified.



 several decades ago  ( when i was barely out of my teens ) my social  circle  used to call the television   the 'idiot box '  

 unfortunately the masses didn't extend that logic to the folks consume a lot of the output 

 even shows like the 'news ' are often advertorials  or a segway  into the commercial break to follow


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## Value Collector (7 December 2022)

divs4ever said:


> several decades ago  ( when i was barely out of my teens ) my social  circle  used to call the television   the 'idiot box '
> 
> unfortunately the masses didn't extend that logic to the folks consume a lot of the output
> 
> even shows like the 'news ' are often advertorials  or a segway  into the commercial break to follow



The good thing these days is you have much more choice in the content you watch, and don’t have to rely on the 3 pre programmed channels.

With Netflix, YouTube, etc etc you can definately “idiot” content, but there is a lot of educational stuff for curious minds too.


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## farmerge (7 December 2022)

Isn't it a pity that the so-called "smart" people in charge weren't on the ball a bit better than they are.


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## moXJO (9 December 2022)

RBA will err to the side of jacking up rates too much to deal with inflation. Stimulus is generally a fast fix to a economy busted by rate rises. Out of control inflation on the other hand can't be fixed as easy.


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## Value Collector (9 December 2022)

moXJO said:


> RBA will err to the side of jacking up rates too much to deal with inflation. Stimulus is generally a fast fix to an economy busted by rate rises. Out of control inflation on the other hand can't be fixed as easy.



The brakes tend to work better than the accelerator in my opinion, you have to be careful not to apply them for to long, or the momentum is very hard to get back.


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## divs4ever (9 December 2022)

my understanding  of traditional inflation control  ( if it in fact exists ) is official lending rates  must rise above official CPI rises 

 ( this of course is only notional  given the extensive massaging on 'the official CPI ' rises )

 so grab the 'official CPI rate ' and compare it the the current RBA and add a couple of handfuls of salt for reality


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## divs4ever (9 December 2022)

Value Collector said:


> The brakes tend to work better than the accelerator in my opinion, you have to be careful not to apply them for to long, or the momentum is very hard to get back.



the accelerator  works effectively and efficiently   , all you need to do is slash regulation and complexity  ,  removing the dullard with the foot on the accelerator  ( the Government ) is usually more difficult  ( as they love to build empires at tax-payer expense   )


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## moXJO (9 December 2022)

Value Collector said:


> The brakes tend to work better than the accelerator in my opinion, you have to be careful not to apply them for to long, or the momentum is very hard to get back.



 Stamping out inflation imo is very difficult. Too little and inflation can run away from you and that's a huge issue.

Accelerator is easy. When threatened with deflation, just throw money out the helicopter- Ben Bernanke style.


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## Knobby22 (9 December 2022)

moXJO said:


> Stamping out inflation imo is very difficult. Too little and inflation can run away from you and that's a huge issue.



True, the other tool the government has besides interest rates is to force the banks to put more money aside (through the Reserve Bank).

This is like putting the handbreak on as it greatly constricts lending forcing the velocity of money down. It forces down asset prices.

The Hawke Government used this when interest rates were up near 17% and they didn't want to go higher.


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## moXJO (9 December 2022)

Knobby22 said:


> True, the other tool the government has besides interest rates is to force the banks to put more money aside (through the Reserve Bank).
> 
> This is like putting the handbreak on as it greatly constricts lending forcing the velocity of money down. It forces down asset prices.
> 
> The Hawke Government used this when interest rates were up near 17% and they didn't want to go higher.



I think they will do it at some stage. Need a huge deflate in house prices.
Governments of the world have got themselves in such a sht situation that it's hard to see the way forward without a nasty recession.


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## divs4ever (9 December 2022)

moXJO said:


> I think they will do it at some stage. Need a huge deflate in house prices.
> Governments of the world have got themselves in such a sht situation that it's hard to see the way forward without a nasty recession.



.. optimist 

 governments and currencies rely on trust 

 ( just be careful  which 'savior ' you follow out of this mess , plenty of 'snake oil salesmen ' out there  )


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