Why the RBA is blind to its own imminent rate cuts


Here is the problem with the Reserve Bank of Australia:

Wage rises will have to be lower and interest rates higher for longer if the Reserve Bank of Australia’s “optimistic” expectations for a productivity rebound turn out to be wrong, governor Michele Bullock says.

This is poppycock. That Bundering Bullock can utter it tells us how far out of touch with reality the RBA remains.

Australian productivity is not going to rise. But neither are wages. And inflation is going to fall, contrary to theory.

The reason is as obvious as a dog’s balls. It is only invisible because a giant vested interest conspiracy keeps it hidden.


It is, of course, mass immigration, the most powerful and invisible force in Australian macro-management.

The local economy is long past when quantitative peopling was a helpful complement to growth.

It was a great strategy when the land was cheap and abundant in the 1950s.


It was also a reasonable strategy in the early 1970s and 200os, during the rare mining booms that create labour shortages in the external sector.

But, today, when crush-loaded cities are far too expensive to retrofit, and foreign workers rob locals of pricing power, all mass immigration does is destroy productivity and wages via capital shallowing.

Once more for the dummies. Contemporary quantitative peopling destroys productivity AND wages, resulting in falling real living standards, lowfaltion and rising inequality, most notably in housing.


So, for those concerned about interest rates, don’t be. The intellectually fraudulent RBA will be mugged by immigration in due course (again), and rising unemployment will force deep rate cuts:


What we should be worried about is the Alliance of Immigration Evil that is dragging the economy inch by inch towards the Third World.

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.