Inflation

[waterbottle]

They want pay rises to continue, that it what resets the Government debt by inflating the tax take, the only downside is it inflates asset prices and devalues people's buying power.
Peoples wages have gone up 5%, but at the same time the cost of everything has gone up 20% and the cost of housing/rent more, so people feel they are poorer while being told they are better off.
The only other option is to have a recession, but that doesn't increase the tax take, but it does maintain the value of your money and stop the inflation of assets eg houses.

https://www.news.com.au/finance/money/tax/australia-world-leader-in-income-tax-surge-oecd-data-reveals/news-story/a8adfd1d7ce611415f1dc87246a2eca8

With bracket creep fuelling record tax collections, fresh data has revealed Australia’s personal income tax burden grew faster than any other advanced economy last year.
Australians’ personal income tax burden, already among the highest in the world, grew faster than any other advanced economy last year, as bracket creep fuelled record Commonwealth tax collections.
According to a fresh report published by the Organisation for Economic Co-Operation and Development (OECD) on Thursday evening, a single, average wage-earner without children paid approximately $24,791 in personal income taxes last year — up 7.6 per cent on 2022 levels.

In comparison, Luxembourg, which recorded the second-largest increase in personal average tax rate rose by just five per cent.



The reality is that the Government needed more money, there is only one way to increase it tax, unfortunately it just means a reset of the buying power the wage slave has.
People adapt, they are good at that, IMO the real problem is, it is making doing business in Australia a lot less competitive and the money is being taken from the productive side of the economy to bolster the non productive side.
If it was being used to improve the productive side, that would be fine, living standards would improve, but it isn't so where living standards settle is a work in progress IMO.

If you're feeling too scared to spend money right now, some relief is on the way

While the cost of living crisis continues in Australia, there is some relief on its way from July.

www.abc.net.au

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The problem with that graph is that CPI is no longer at 7% - it's now halved. Also wage negotiations don't stop - workers will naturally keep asking for more.

 

[mullokintyre]

As more and more people are employed by the state, their own interests are far more aligned with the state.
People are not going to vote out a government that provides them with so much, no matter how much it costs everyone else.
So the state keeps building up its support base by employing or supporting them.
Its one of the reason why labour are still in power in Victoria (as well as having an opposition that is weak, ineffectual and lacking in any clear purpose of plan).
Mick

 

[sptrawler]

The problem with that graph is that CPI is no longer at 7% - it's now halved. Also wage negotiations don't stop - workers will naturally keep asking for more.

Which is what the Government wants, as I said.
The last thing the Government wants is inflation to stop, the growth in tax receipts would stop also.
Whether we like it or not, this is going to continue, the Govt can't pay down debt, buy submarines, completely change the electricity grid, fund the NDIS etc without increasing the tax take.
The way the Govt is doing it is different to usual, normally they put the tax up, this time they are pushing the money supply up IMO.
Unfortunately a 5% increase on a $70k job, isn't the same as a 5% increase on a $800k house, se la vie.
It is different and it remains to be seen if the masses like it, I don't think they will, especially when the subsidies dry up.
The Govt is hoping everyone gets used to the new norm, time will tell.
Just my thoughts.

Government pushes for minimum wage increase to keep pace with inflation

The government will advocate that the wages of Australia's lowest-paid workers do not go backwards, as the Fair Work Commission reviews minimum and award wage rates.

www.abc.net.au

https://www.news.com.au/finance/money/tax/australia-world-leader-in-income-tax-surge-oecd-data-reveals/news-story/a8adfd1d7ce611415f1dc87246a2eca8

With bracket creep fuelling record tax collections, fresh data has revealed Australia’s personal income tax burden grew faster than any other advanced economy last year.

 

[divs4ever]

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View attachment 181780View attachment 181779

Note the divergence right at the GFC? The private sector jobs market simply never recovered. Hence why the jobs market for grads has been so bad for (as a millennial) our entire adult lives (unless we studied something that employed us in the public sector, anything in healthcare for example).

60-80 years after a baby boom you have a healthcare boom.

And this private sector contraction-public sector (healthcare in particular) expansion divergence has gone into overdrive post-covid. Just look at the red vs blue at the end of the bar graph. When you consider the base effect that the private sector numbers will show once the vaccines are announced (i.e subtract the negative blue in covid from the positive blue in 2021-2022) you can see that net, private sector growth has gone nowhere since the end of 2019.

Comically, underemployment, which used to be an absolutely chronic problem, has actually improved, not because of any kind of actual macro level improvements in the jobs market, but because so many people are now working multiple jobs to make ends meet:

View attachment 181781

This trend (problem) is not going to improve. Inflation is going to continue to soar and the jobs market is going to continue to get worse and worse.

.. let's call it 7% ( with multiple jobs ' )

that would be an interesting data point

anecdotal evidence points at that being far higher ( assuming 'multiple means two OR more jobs )

 

[divs4ever]

Just stop the pay rises. Wage stagnation ala 2008-2020.

that doesn't work while there is underlying inflation

stagnate wages translates to less discretionary spending ( and less wages pumped into super funds ) and since we are a consumer-driven economy ( although less so than the US and UK ) there will be increased jobs losses and that creates a different cycle , without the compounding factor of skilled labour leaving the job market ( retiring early or migrating elsewhere )

some might argue we are suffering the consequences of 2008 to 2020 now which was always a financial cover-up issue

 

[over9k]

We should also be paying attention to the near trillion dollar debt we have. What's the interest?
$61 million per day?

This is why they want inflation to run hot.

 

[moXJO]

This is why they want inflation to run hot.

Also the high levels of immigration.

 

[over9k]

We should also be paying attention to the near trillion dollar debt we have. What's the interest?
$61 million per day?

Not sure what rate it was all borrowed at but 5% on a tril is 50 bil a year which is a bil a week which is just under 150 mil/day.

 

[mullokintyre]

BOE cuts rates to 5.0%.
No signals on which direction next move is.
Mick

 

[moXJO]

Not sure what rate it was all borrowed at but 5% on a tril is 50 bil a year which is a bil a week which is just under 150 mil/day.

Seems one problem breeds 10 others.
Inflation is high.
Everyone stops spending.
People stop having kids.
Import immigrants that send money offshore.
Housing too high and no one can afford to build.
No where to live, rents go up.
Governed by idiots at every level.
It's like a bad clown show.

How does this not blow up in the end?
Realistically Canada and the US is still kicking.

 

[sptrawler]

Seems one problem breeds 10 others.
Inflation is high.
Everyone stops spending.
People stop having kids.
Import immigrants that send money offshore.
Housing too high and no one can afford to build.
No where to live, rents go up.
Governed by idiots at every level.
It's like a bad clown show.

How does this not blow up in the end?
Realistically Canada and the US is still kicking.

We will be fine for 50 or so years, plenty of resources and a relatively small population.
In 50 years, we'll there won't be as many resources and there will be a lot more people, that's a given.

 

[waterbottle]

BOE cuts rates to 5.0%.
No signals on which direction next move is.
Mick

Down or hold

 

[BossMan.]

My bet, writing this here so I can say I said it.

USA stays to high for to long, employment cracks, USA goes into a recession, fed chases its tail down with cuts, hard landing

This is looking more and more likely.

Stocks Sell Off a Day After Furious Rally as Volatility Returns​

Notable quotes from the article:




good for interest rate sensitive assets though?

 

[Knobby22]

This is looking more and more likely.

Stocks Sell Off a Day After Furious Rally as Volatility Returns​

Notable quotes from the article:
View attachment 181846

View attachment 181847

good for interest rate sensitive assets though?

They usually overcook it.

 

[over9k]

good for interest rate sensitive assets though?

Possibly. They've typically been growth plays, but if there ain't no growth...

Despite the fact that the past few days (and powell's last meeting) have now fully priced a september cut in, this hasn't come close to counteracting the earnings misses. It has been a slaughter. The semiconductor index has seen its largest drop on record just yesterday for example.

With that being said, this year's entire rally has, in my opinion, been absolutely ridiculous. It's also been the most concentrated (magnificent seven) rally in history.

Everything else has been in the doldrums for ages. It's only been all this "ai" carryon that has been running markets. There's even been some real diamonds in the rough (HSBC comes to mind) that haven't even made a headline.

Consumer spending etc was pretty much toast at the start of this year. I've shown how ppi has continually come in above estimates, how despite all the price rises companies keep missing earnings, how the debt burden has become a real issue now that rates have, proportionally speaking, shot up so much, and yet all we've heard is "ai ai ai ai ai".

If we assume markets will return to their start-of-year levels before all of this exuberance (i.e they realise this all might have been a biiiiiit overblown) then there's quite some drop to go yet.

 

[over9k]

The other absurdity is that things like the unemployment rate have actually remained quite good not because of any real decent jobs market but because people are now having to work more to pay their bills. This is why paying attention to things like the participation rate are so important. The same goes for GDP growth vs population growth (we can be in a per capita recession despite not being in an actual recession for example).

The reality is that if your inflation is a supply side driven problem there is nothing that monetary (or even fiscal, really) policy can do to solve it.

Like if there's a big war to fight or something, you have no choice but to restructure your economy around the problem, and this is the bind that policy makers now find themselves in because doing this is going to hurt. It's not so much a "recession we have to have" but a "reset we have to have".

Until we see any kind of real political will to do that we are going to continue to eat the shite sandwich we are being dealt and so need to invest assuming that things will continue in this way because, to be honest, they're probably going to.

 

[over9k]

And as I type this, my news stream is talking about "perhaps the ai bubble is popping".

Nah, you think?

Unless markets find another big thing (it was ai at the start of this year) then the correction is now in.

 

[divs4ever]

The other absurdity is that things like the unemployment rate have actually remained quite good not because of any real decent jobs market but because people are now having to work more to pay their bills. This is why paying attention to things like the participation rate are so important. The same goes for GDP growth vs population growth (we can be in a per capita recession despite not being in an actual recession for example).

The reality is that if your inflation is a supply side driven problem there is nothing that monetary (or even fiscal, really) policy can do to solve it.

Like if there's a big war to fight or something, you have no choice but to restructure your economy around the problem, and this is the bind that policy makers now find themselves in because doing this is going to hurt. It's not so much a "recession we have to have" but a "reset we have to have".

Until we see any kind of real political will to do that we are going to continue to eat the shite sandwich we are being dealt and so need to invest assuming that things will continue in this way because, to be honest, they're probably going to.

the 'big inflation fix ' is coming don't worry ( she'll be right )

sure it will look like sanctions and extra tariffs on China ( to you and me )

but it will all work out ( for somebody )

 

[over9k]

Meanwhile: Harris's odds vs trump are now positive. If you're trying to run a play reference trump vs harris economic policies then placing a bet one way or another is an excellent way to hedge. I made about 80k doing this back in 2016 for anyone doubtful about this. It's not something to be dismissed.

 

[over9k]

the 'big inflation fix ' is coming don't worry ( she'll be right )

sure it will look like sanctions and extra tariffs on China ( to you and me )

but it will all work out ( for somebody )

Mmmm I'm halfway with you on this divs.

I watch FMG like a hawk for a reason