We have watched in horror since the election as the Property Council Government has set about a single-minded agenda to re-inflate the property bubble, which has included:
- driving for stimulus despite collapsing domestic demand to force interest rates lower;
- tax cuts and deposit insurance for principle to leverage;
- winding back Hayne Royal Commission changes at astonishing pace and co-opting APRA chairman Wayne Byers;
- force feeding mass immigration to pump prime demand.
In its own way, the Lunatic RBA has been resisting these pressures, insisting instead that the Government invest productively, sensibly enough. This week it refused to cut interest rates in part owing to a house price rebound.
Now we get the response from the bubble-mad Recessionberg, at the AFR:
Reserve Bank governor Philip Lowe may soon write to Finance Minister Mathias Cormann explaining why the central bank has missed its inflation target – a move likely to raise pressure to cut interest rates.
…”Yes, I am looking to have such an agreement and Treasury are currently engaged in a discussion with the Reserve Bank about that inflation target, which is 2 to 3 per cent,” Mr Frydenberg said.
Mr Frydenberg said that with inflation at 1.6 per cent and the target band at between 2 to 3 per cent then “we have been a long way short of it”.
“It is not going to be a radical change, but there is a discussion about maybe ways we can strengthen that agreement, strengthen that target to ensure that we continue to see inflation where the Reserve Bank and the government want it to be,” he said.
In other circumstances I would applaud this move. The Lunatic RBA has been taking the proverbial piss on its mandate for two years. It’s forecasting has been disastrous and it deserves every bit of accountability the political economy can muster.
But this is also awful from Recessionberg, whose only goal is to re-inflate the property bubble as soon as possible. He has no other answers, via News:
The Treasurer stressed that “significantly, these numbers do not incorporate the passage through parliament of the most significant tax cuts in more than 20 years and the full impact of the RBA’s decision to reduce interest rates by 50 basis points”.
“As of today, the ATO has issued more than 5.5 million refunds totalling more than $14 billion. This money is flowing through to households and will be reflected in the September quarter,” he said.
We already have a leading data for the September quarter and it is worse than June for retail, cars and trade.
This is absolute dysfunctionality in our monetary and fiscal authorities:
- the Government is bubble crazy;
- the RBA is right that it should not be pumped up further;
- but, we do need lower rates for a lower currency instead;
- which brings us back to APRA and its co-opted head, Wayne Byers, who is now personally in hock to Recessionberg, having been re-appointed when he should have been sacked post Hayne RC.
What a mess of corruption, failed process and conflicting agendas.
Let’s hope that a global shock lands on it all before Recessionberg can torture homeless Australians for another cycle.