Edwards: RBA to go brrrrrrrrrrrrrrrrrrr…

Former RBA board member John Edwards is on the hustings today going brrrrrrr

  • Edwards sees AUD at 80 cents.
  • The RBA will keep printing so long as the AUD is high enough to constrain the recovery (which, in my view, is anything above 60 cents).
  • Fiscal will be severely contractionary from here, down 8% of GDP per annum, for a decade.
  • Unemployment will struggle to fall as such. More brrrrr….
  • We are a China proxy and we’ll be friends again as we get more friendly with America.

He should stick to economics. He’s sound on these forecasts, though my own view is the AUD will struggle very much to return to 80 cents now. On geopolitics, he has no idea.

We do not need to be a China proxy and the relationship will only get worse from here as Xi Jinping weaponises nationalism to support CCP power as the economy goes ex-growth.

We need to prepare for a severing of the commodity trade when the CCP occupies the democracy of Taiwan.

David Llewellyn-Smith
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Comments

    • I have a couple bottles of the good stuff lined up ready for the great day of celebration when he, Rupert or High-rise Harry improve this planet enormously by catching a case of death.

  1. pfh007.comMEMBER

    Edwards sounds like he understands loony Aussie Economic Management quite well:

    He thinks we will continue to be a proxy for China. This is clearly correct and the only way that will change is if China decides to stop buying our stuff. When it suits them to stop doing so they will but they are probably quite happy knowing they could be dancing in Taipei and we would still be shipping them iron ore to use for bullets.

    RBA will keep printing. Well that is clearly correct as everyone seems to think that trying to push down the AUD with QE is smart rather than loony.

    AUD at 80 cents? Well that depends on China and their desire to buy our dirt. I am sure Xi will give us plenty of warning if they change their mind.

    Unemployment will stay high? Of course it will. You can’t expect all those folks being made rich by QE and TFF to pay decent wages for their lifestyle services? Morrosin will have the planes dropping in wet backs once he has jabbed all those who matter – old boomers who vote Liberal and Nats.

    Fiscal for those who are poor will be tight but there will be plenty of fiscal for those wealth creators who lack enough wealth to do any creating.

    It is a shame that NO economic commentators are interested in a bit of competition for the banks in the form of ending their monopoly of deposit accounts at the RBA but then economic reform in financial services is a dirty word.

    • I think you will get something like your wishes in time……first will come Central Bank Digital Currency and private banks will slowly get sidelined. Then fiscal will be distributed through these digital accounts at the Central Bank. When the debt no longer exists ( cancelled by the Fed ) we will have true raw digital money creation……..the Fed won’t like this but the 2008 act which enables Treasury Repo will be an end run around them.

      • pfh007.comMEMBER

        The driver for change is simply that there is no alternative. If the west don’t want to fade away they will have to start allocating capital productively again and that means pulling the plug on the current banker dominated model of public money.

        But this doesn’t mean there is no role for financial intermediaries or even private money. In fact ending the banker monopoly of the central banks will allow many financial intermediary flowers to bloom.

        The central bank will not pay interest on deposits and it will not engage in lending.

        Furthermore ending the banker monopoly is more consistent with less government than more.

        • Why do you just assume the lack of productive investment is due to a shortage of capital.
          Investment demand is weak and has been since the late 70s (neoliberalism)
          It’s not a supply/funding issue.

          • pfh007.comMEMBER

            “..Why do you just assume the lack of productive investment is due to a shortage of capital.

            I don’t.

            “..Investment demand is weak and has been since the late 70s (neoliberalism)..”

            What do you mean by neoliberalism?

            And what is your theory as to why neoliberalism has resulted in weak investment demand (I assume that is the point you are making)

            You talk as though neoliberalism had no impact on the financial / banking system.

            The financial / banking system we have today is a manifestation of neoliberal ideology..especially the idea of an independent Central Bank and government delivering balanced budgets over the business cycle.

            It is odd that you are so opposed to neoliberalism and Hawke/Keating yet you are never very clear what aspects of the deregulation of the financial system you actually object to.

            Your support of current RBA QE, ZIRP and TFF policy suggests support for the status quo as that is the objective of those policies. To avoid dealing with the problems resulting from neoliberal deregulation of banking / finance.

          • Yes you do. Above you said that productive investments can’t get capital / or banks don’t allocate capital to productive investments.
            It’s the same thing.

          • To answer your question re. Investment demand.
            That is a very interesting question.
            Firstly investment demand is derived demand (dependent on aggregate demand) if firms are struggling to sell why increase capacity?
            So part of it is the obsession with inflation targeting v full employment as was the case before neoliberalism.

            The other side is the investment hurdle rate.
            Why has the hurdle rate stayed high despite the collapse in real interest rates?
            Partly because because of the boom and bust nature of neoliberalism.

          • pfh007.comMEMBER

            I don’t know why you bother to misquote me when what I said is right above.

            “..Above you said that productive investments can’t get capital / or banks don’t allocate capital to productive investments…”

            All I said is that the west has to start allocating capital productively and that will require reform of the banker dominated model of public money.

            “..The driver for change is simply that there is no alternative. If the west don’t want to fade away they will have to start allocating capital productively again and that means pulling the plug on the current banker dominated model of public money…”

            The current banker dominated model of public money is part of the neoliberal agenda.

            An agenda which you claim to oppose but oddly seems perfectly comfortable with the neoliberal status quo in banking/finance.

            Probably a bit of self interest and myopia is behind that.

            Considering you are a fan of bank nationalisation you should be a huge fan of tight regulations that control bank credit creation short of actual nationalisation but curiously you are silent bob on that and actually support the loony approach the RBA has been taking to drive capital as unproductively as possible.

      • pfh007.comMEMBER

        If they were serious about pushing down the AUD there is a lot more that they can do then just printing money. Printing money to devalue the AUD is about the dumbest thing they can do. If they (and the govt) really want the AUD to fall to aid competitiveness is their plenty they can do to reduce demand for the AUD. Blocking foreign investment in real and financial local assets would be a good start. If they really want to get serious block some exports to China.

        And the argument that they can’t do anything else because they are not allowed to does not wash either as they are not supposed to be trying to manipulate the exchange rate anyway.

        Not that anyone seems likely to complain about what is now becoming an anything goes international race to devalue.

          • pfh007.comMEMBER

            Who knows!

            In Sweeper theory it should be but we were told that if there was less than a 2% margin to US rates the AUD would collapse and it didn’t. US rates at 0.25 and ours is 0.1 yet it is still 77c.

            Plus even if the RBA rate was 2.5% and there were restrictions on capital flows it might not go up much at all.

            If you are a foreigner and you can’t easily buy AUD you can’t get the 2.5%.

  2. Got to keep adding extra r’s lol.

    > Fiscal will be severely contractionary from here, down 8% of GDP per annum, for a decade.

    So we’ve become Japan except much worse.

  3. Why are we suiciding off todays young, to fund a Baby Boomer pension, which the Young are not respsonsible?

    Young people are obligated to pay Tax. Arent we all? But we are talking about holding a knife to young throats and making them responsible for a problem they never created. We are making them responsible and to die for a problem they never created.

    Australias Woman have an obligation to there Young Husbands… not to Baby Boomers. If Young Woman want to go out and work, and lavish there young husbands with love, money and affection then why not? Why have Woman become the plaything of Boomers? Boomers are not content that they just destroyed mens lives by jacking up house prices but now, they want to control Mens Wifes as well.

    Todays young have an obligation to be ‘Living there Life to the fullest’ but Australia has made the decision to take that life away from them, for a group of people who have had 50 years to think this through.

    What did the young do wrong that they now have to sacrifice there entire lives, for a generation that has clearly hated them, that has spat on them, that has stolen from them and is now wanting to ‘Steal there Life’ ?

    Why dont we cut Pensions from $61 to $41 per day? If we did, Australias Liabilities would shrink.

    Instead of making decisions over peoples heads and making a decision to suicide off Australias Young, why dont we give them a choice? Why dont we… ask them… how they wish to live there own life instead of allowing the Boomers to take that away from them?

    We are talking about Suiciding off the Young and ‘Stealing there Life’. What did they do to deserve this? Why have they become responsible for Boomers?

    Give Australias Young a choice. Let them decide how they wish to live instead. If todays young dont want anything to do the Boomers then the Boomers are going to have to find there own way.

    What gives Australian MPs the Right to commit murder and kill Young Australians?

  4. When I kill a Politician, Australia calls it Murder.

    When a Politician kills me, Australia calls it ‘Just Politics’.

    Im in Jail. The politician walks free.

    I have no sympathy for what the boomers have done to themselves, nor how they’ve treated todays young.

    I intend to live my life and I refuse to pay a cent.

    Let it crash. Its for the greater good. Let the war begin.

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