RBA alumnus, Tulip, backs Keating’s demolition

Peter Tulip sticking the boot in:

My understanding is the board is little more than a rubber stamp. If the paralysis of fear is emanating from them then it’s only because the bank staff are too afraid to push the right agenda.

Aside from anything else, the bank’s maniacally optimistic outlook destroys all thought of appropriate easing. That’s not the board’s fault.

The Kouk will change his mind tomorrow but he’s right today.

Sack Deflation Phil. Slam the RBA and APRA together. Put an RBNZ almunus in charge and burn the deadwood.

David Llewellyn-Smith
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Comments

  1. I’m an RBNZ alum… I put my hand up!

    MB readers (and my clients) know I’ve been a super bear on Aussie inflation for years – since 2012 to be precise…

    Would be nice to live in SYD for a while!

  2. Could it be they personally have too much property on the line.

    From memory public servants have a proportionally high rate of property investment compared to other Mum’s and Pops’

    • adelaide_economistMEMBER

      Forget public servants generally, the RBA staff specifically get discounted mortgages as part of their employment. I’d say it’s very likely the entire organisation is very overweight in property investment.

      • Is that actually true?? That would be quite extraordinary – baking a conflict of interest right into the structure of your organisation.

    • Not quite.

      Under the current Policy Targets Agreement (PTA) the Reserve Bank is required to keep annual increases in the CPI between 1 and 3 percent on average over the medium term, with a focus on keeping future average inflation near the 2 percent target midpoint.

      • Jumping jack flash

        This. The smartest thing Fearful Phil did was to decouple CPI from interest rates. He knew what was happening.

  3. Jumping jack flash

    Anyone can see from their wishy-washiness that they had their pants scared off a while ago. I think sometime around when interest rates got down to 1 or 2%, but they had no choice but to keep going.

    This MMT business has them petrified. If Westpac Bill wants his NIRP he may be waiting a while until they get comfortable with the idea.

  4. Timid?

    The RBA are not timid.

    They are very aggressive at pushing the neoliberal central bank agenda. Exactly the agenda that Keating was driving when he deregulated the banking / finance sector back in the 1980s.

    That it is broken and makes no sense has been obvious for the last 20 years but still all we hear about are more exotic and batty solutions to keep the charade going for a bit longer.

    It would be nice if just once in a while all those Vikings who claim that all the the RBA needs to be is be more “aggressive” accept that the problem is far far deeper than putting on a macho mood ring and demanding that the RBA pay too much for the wealth assets of the rich (aka bonds, RMBS etc) or manipulate the cost of credit made available by comfy bankers to their mates they deem “credit worthy” so they can stroll around paying too much for productive enterprises and existing real estate assets.

    The RBA are playing the role that they have been asked to play by people who refuse to accept that their vision of how a monetary system should work is a dead parrot.

    https://theglass-pyramid.com/2018/10/14/rba-watch-unintended-and-intended-consequences/

    “..Assistant Governor Luci Ellis was back on the podium this week providing some guidance on the ways in which ‘growth’ is supported in the short run and long run in the land down under. Unfortunately, Luci missed the opportunity to explain one of the great mysteries of recent years. How does blowing a bubble in the prices of Australian housing generate the kind of ‘growth’ that is in the interests of all Australians?..”

    • Jim's Central Banking

      I’m starting to think the Vikings won’t be happy until we’re Japanified and every pleb has to rent housing from an investment fund.

      • Exactly, it is unbelievable how otherwise reasonably sensible people get all hysterical when it comes to the RBA doing what it is designed to do and finding it doesn’t work.

        Why they think having the RBA expand its balance sheets buying rich people assets or just giving them cheap lines of credit will help is a complete mystery.

        All those dopey acronyms CLF, TFF blah blah boil down to one thing.

        Giving money to rich people as cheaply as possible and hoping they don’t use it to shaft the public.

        Of course they will as that is exactly what they have spent the last 40 years doing !

        • Jumping jack flash

          I still reckon its going to take them another 9 months, give or take, to get used to the whole NIRP thing. But after that….

  5. Display NameMEMBER

    “Sack Deflation Phil. Slam the RBA and APRA together. Put an RBNZ almunus in charge and burn the deadwood.”

    Carthago delenda est

  6. Interesting to me that Peter T is going public on this. His linked in says he’s still at the RBA. If you recall, he got into bother speaking to an economics conference in Brisbane saying house prices should always go up, whatever, for some reason I can’t recall. Someone else from the RBA flew up that day to hose it down. He also wrote the report in C2007 saying Iceland’s banks were gold because they were backed by Iceland property prices. I used to socialise with RBNZers when I was at NZ Tsy. and I recall when the official interest rates were somewhere between 15 and 20pct (c1992). RBNZ staff could get interest free loans for their mortgages as part of their compensation package. I wouldn’t be surprised if the same were true for the RBA back in the day and hence the current senior crop.

    • Was wondering the same thing. He’s obviously bitter and going to stick the boot into the RBA at every opportunity. But make no mistake, he’s not on our team.