Madometer confirms H&H insight

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From the contrarian signal generator, The Madometer, on H&H:

Surely there must come a point — a moment of clarity — even where policymakers realise that what they’re doing is wrong. It isn’t helping — and in fact it’s probably making things worse.

Listing off the negatives is easy. Ultra low rates are hitting the nation’s retirees hard, so much so that that holding $1 million in super can no longer provide sufficient income for retirement. In more ways than one, the country has turned its back on its seniors.

Elsewhere, there is growing alarm about a property boom. Doomsayers warn that a bust is near, that a recession is inevitable. If that is so, it would be a recession clearly born from an ultra-low rate environment.

Yet perversely, these people call for still lower rates. Then there are the calls for greater regulation and red tape, as if that will somehow help the economy claw its way back up the competitiveness tables, down 15 rungs in five years.

Nameless as usual but clearly aimed at myself (as well as Callam Pickering who has sensibly picked up the MB meme). I’m happy to take on all comers but at least tell the truth, Adam. Lower rates with muscled up macroprudential. That’ll get the dollar down and do a lot of the heavy lifting in improving competitiveness, which is the real problem. That’s not red tape. I don’t want regulation in anything else, just that, and if there were any hope of fiscal reform to do it instead, like removing negative gearing, I’d go for that instead. But note that rates would still fall with the dollar.

Your economic model is broken, Madometer. Your one-way bullishness and fixation with “confidence” is a cog in the broken machine so I don’t blame you for being unable to see that a new economic model is emerging.

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It is reassuring to know I’m on the right path!

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.