You know it's bunkum

- because we told you -



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From the ABS

'The most significant price rises this quarter were for automotive fuel (+9.1%), hospital and medical services (+3.4%), fruit (+8.4%), rents (+1.6%), vegetables (+6.1%), furniture (+3.9%) and house purchase (+1.0%).'


So here we have the poe-faced Stevens putting up interest rates because



Petrol goes up - certainly not due to inflation - the price is tied to global markers




Fruit goes up - certainly not due to inflation - more likely drought and floods wiping out crops




Rent goes up - due to the Reserve Bank putting up interest rates last time




Furniture goes up because every one is buying expensive plasma screens (and not paying for them until 2010) - certainly not due to inflation. The Government can put a stop to that nonsense.




The banks keep writing to people seducing them into raising their credit card limit. Westpac write to me this morning inviting me to increase my limit from $15000 to $20,000




Medical expenditure goes up - because the Government has give the industry a blank cheque. Every account is paid, no questions asked, irregardless of the amount.


The medical and pharmaceutical industries bear all the characteristics of either monopolies or cartels. They are the most protected industries in the country - $60B of public money a year - and rising. Competition is restricted.


Any medical or pharmaceutical bill submitted to the Government is paid - no eyelids batted.  Governments won't say 'No'. 


After any visit to the doctor a bell rings over in Parkes and money is deposited in the doctor's bank account. No proper delegation. No control over burgeoning expenditure.


So why is the Reserve Bank putting up interest rates?



Is this the same po-faced Stevens who sat on his hands while the price of houses doubled in the last 5 years. This is the great tragedy of economic mismanagement in this country.


We're still going to be paying through the nose for petrol regardless of what the Reserve Bank does.


Fruit and vegetable prices will continue to increase due to drought and floods.


Rent will definitely go up because owners are paying more due to this interest rate increase - on top of the last 4.


Mortgage rates will continue to go up - and keep going up all the way to 18%.


More people will default on their home loans and be thrown out onto the streets. This is already happening.


Medical and pharmaceutical costs will go up, principally because the Government protects them and pays most of the bills.


People with a few rental properties will start feeling the pinch. Less houses and flats will be built. Rents will go up as supply fails to meet demand. When rents go up the Reserve Bank will put interest rates up. Hello!


People will keep buying plasma screens they don't have to pay for until 2100.


Banks will keep inviting people to put more money on the plastic.


More people will be unemployed - something the Reserve Bank thinks is a good thing.


Interest rates will go up again in a couple of months time.


Inflation wasnít stopped by the previous 5 rate rises, What evidence that it will be stopped by the next 5 rate increases? All it will do is increase the level of misery all the way up to 18%.


The Reserve Bank us using a 20th Century financial solution to a 21st Century problem. The tool that it's got in its hand is limp and useless.



Should the Treasury take back responsibility for setting interest rates? It's got more levers to pull. It has the ability to take into account social and political effects as well a hard core economic factors. The Reserve Bank has only one lever - a limp and useless tool.


Is inflation a worse demon than unemployment?


Should growth be sacrificed on the alter of inflation?


If we float the exchange rate should we not also float the interest rate?


It's bunkum


Frank Blunt

Syndicating columnist

August 2007