This week the mighty Reserve Bank of Australia, cheerleader for Central Bank Digital Currencies (CBDCs) and for printing money no one has, increased interest rates yet again, plunging millions of Australians further into hoc and, for many, despair.
As the Sydney Morning Herald noted:
On 13 occasions from May last year, the Reserve Bank board has lifted the cash rate. It has now been pushed up by 4.25 percentage points – the biggest increase in the shortest period in 40 years. The last time the bank was so aggressive, the country ended up in the deepest recession since the 1930s.
The purpose of this monetary carnage is to curb inflation. You know, the cost-of-living crisis. (The same crisis that apparently caused nearly two thirds of us to reject the voice to parliament recently. Really?) The crisis that will, in all likelihood, make the Albanese Government a one-term wonder. To borrow from a previous famous election campaign, the Dutton message might simply be “ask yourself – are you better off than you were three years ago?”
What is the main cause of inflation? As any student of Milton Friedman would remember, it has more than a little to do with the money supply. The Heritage Foundation notes:
What do you know about inflation? Milton Friedman famously said: “Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” Of course, we all know the driver of the quantity of money is government spending priorities, and recently the government has been spending a lot.
Did someone say “quantitative easing”?
I wonder where our current inflation came from … It isn’t rocket surgery. During the “Covid exceptionalism”, as the former Victorian Premier, the Butcher of Williamstown, termed it, we had:
· Almost zero output, as the whole economy was sedated;
· A trillion dollars hosed up against the proverbial by the Government of Scotty from AstraZeneca and the other fiscal bandits sitting around the National Cabinet table; and
· The central bank printing money like an inebriated matelot.
As perfect a recipe for hyper-inflation as one is likely to find. Another explanation is as follows:
The word inflation comes from the ballooning of money vs production. "Printing money" when production is constant means more money available for the same quantity of goods and services and jobs, leading to incremental then sometimes rapid increase in prices. Sometimes price increases, how we use the word inflation today, comes from lack of supply. Supply shocks, like closing down production, are a sure fire way to see inflation. Increase in demand for a constant production also leads to inflation. So. In 2020 you close down all factories. You print trillions of money. And then you give some of that money to people once they are freed from house arrest. What happens? Inflation.
Source: Robin Monotti at Telegram, quoting Florian Zimmer.
One of the more surprising developments during the Covid economic pause, where many were under-employed, working from home and/or raking in taxpayer-funded JobKeeper, JobSeeker and similar scams, was the Covid real estate boom. It went viral! People, especially those of the laptop class, with both money and time on their hands and the unexpected bonus of sudden mobility, went off and caused a massive property bubble. A substantial contributor to inflationary pressures. Then we had the lockdown driven supply chain ruptures. Causing shortages of all sorts of things, and increasing demand for smaller supply, causing … more inflation. Now we have prospective mass immigration, adding to housing shortages and so putting a floor under rents and house prices. More inflation. Of course, the banks and business generally want more and more migrants, so as to prop up spending in the economy – the spending that is taken out by the interest rate hikes.
You couldn’t make this up. It is all economics 101. Jeffrey Tucker wrote in 2022:
The outrageous prices at the grocery store and gas stations – the highest ever recorded and increasing at rates too fast to calculate with precision – are yet more collateral damage from the initial lockdowns two years ago. The story unfolds over two years but the line of causality is direct.
Apparently it’s going to get much worse. I wonder if at some point, no one will remember how this all began. Maybe everyone has already forgotten.
I asked a friend: do you think people understand the relationship between the March 2020 lockdowns and the wild price increases two years later? The answer came: no way.
That surprises me but I also understand. There has been so much flimflam coming from the media and government spokespeople for so long, so many many attempts to demonize and scapegoat.
In addition, for many people, the past 24 months have seemed like one big blur when everything they thought about the world has been blasted to pieces. It’s extremely disorienting. After a while, one can get used to the chaos and just accept it without attempting to account for it. The lines of causality too become blurry.
https://brownstone.org/articles/the-inflation-disaster-is-collateral-damage-from-lockdowns/
As Tucker also argued:
The money itself, rather than being used for compensation for lockdowns, became itself a moral hazard to continue the lockdowns for as long as possible.
And so the spendathon and the lockdowns turned into a death spiral for the economy, more spending encouraging more lockdowns encouraging more spending.
Here is Tucker again:
When Congress spends like this, it generates government-secured debt that seeks a market. Eventually that $2.2 trillion would become $6 trillion. The Federal Reserve was there to provide exactly what Congress needed, and hence its balance sheet – still in the process of normalizing from its previous bout of buying – shifted dramatically. The balance sheet at the Fed exploded in its debt holdings, all of which are purchased with metaphorically printed money.
And there will be longer term consequences:
The realization of inflationary pillaging tends to dawn slowly and then all at once. In the coming months and years, we are going to see a dramatic change in the psychology of saving. More people will see that it is not worth it. Better to consume now. Live in the moment. Don’t plan for the future. Get rid of the paper as fast as possible before it loses ever more value.
That’s how inflationary expectations work: it adds fuel to the fire of devaluation. We aren’t yet seeing much evidence of this yet but it could emerge at any time. This has a cultural impact on whole societies, rewarding short-term consumption over long-term planning. It punishes saving and rewards profligacy.
Just great. A more conspiratorial take comes from Robin Monotti:
Lockdowns were an economic terrorism tool designed to cause inflation to decrease the real cost of national debt and push the masses into Universal Basic Income, which means depending on government. They had nothing at all to do with contagion. The next step is to "save" the masses through handouts via Central Bank Digital Currency. This is the "Great Reset".
Source Robin Monotti, Telegram, 15 August 2022.
Like many conspiracy theories, entirely plausible, consistent with the facts and more-than-likely to be proven correct in time. Monotti isn’t the only observer to see Covid as cover for the global debt and monetary crisis that was coming in late 2019. Catherine Austin Fitts is another.
As John Titus and Austin Fitts argued:
… the Covid-19 “magic wand” allowed the Fed to execute BlackRock’s “going direct” plan, literally: it carried out an unprecedented purchase of government bonds, while, on an infinitesimally smaller scale, also issuing government backed ‘COVID loans’ to businesses. In brief, only an induced economic coma would provide the Fed with the room to defuse the time-bomb ticking away in the financial sector. Screened by mass-hysteria, the US central bank plugged the holes in the interbank lending market, dodging hyperinflation as well as the ‘Financial Stability Oversight Council’ (the federal agency for monitoring financial risk created after the 2008 collapse) …
Source Robin Monotti, Telegram, 1 February 2023.
In the economist Ellen Brown’s view, it was “a bailout under the cover of a virus”.
https://www.commondreams.org/views/2020/05/18/another-bank-bailout-under-cover-virus
Just so long as everyone knows, the still-more-pain caused to ordinary people’s lives and wallets this week is a direct outcome of the lockdowns that everyone supported. Not caused by Covid. Caused by the criminals who were in charge of the Treasury benches at the time the minor virus staggered into the Land of Oz. And those who egged them on. Mortgage holders should bring a class action against everyone who supported and instigated a Covid lockdown.
The magnitude of the pain is far from negligible:
The additional 25 basis point rate lift in the cash rate announced on Tuesday will add an extra $900 a year for the average borrower, with the cumulative impact of rate rises increasing repayments by around $14,500 a year since the hiking began, a 50 per cent lift in overall repayments for those who have not haggled for a better deal.
During the pandemia, the only critics of the lockdowns allowed to get their opinions into the media were those (idiots) calling for even harsher and longer lockdowns. Like The Guardian, which headlined this week:
Almost half of Australian mortgage holders under financial stress …
Channel Nine chipped in:
Interest rate hike means you need almost three median incomes to afford the average Australian house.
According to Finder, the minimum wage required to comfortably afford a mortgage for the average house – which costs $926,899 – with the cash rate now at 4.35 per cent is $182,000.
That's almost three times the median income which, according to the Australian Bureau of Statistics, was $65,000 last year.
All down to Covid “management”. What were they thinking?
It all traces to the fateful March 2020 decision to turn off economic activity as if this would be as easy as shutting off a light switch. Just turn it back on when the virus is gone! It turned out not to be so easy.
It was a reminder of the earlier madness of another prime minister and Treasury head (Kevin Rudd and Ken Henry) and another cash splash engineered to “solve” some other exaggerated “crisis”. Go big, go early, go households!
Apparently ScoMo was all but ignored by fellow summiteers at the much-discussed Alliance for responsible Citizenship conference in London the other week. That was a bit harsh, though richly deserved in his case. Harsh? Well, the room was full of those who have been royally rogering their countries for decades, including (especially?) during the Covid scare, and who now have found their principles. As Cory Bernardi has acidly noted.
No, ScoMo isn’t Robinson Crusoe. From all reports, Covid totalitarianism wasn’t high on the ARC agenda. No doubt, as Bernardi suggested, because it suited the many delegates present who were from government (or who have stayed schtum about the Covid crimes of their political allies) to park the whole mess. Just don’t talk about it!
Perhaps coincidentally, other Covid malfeasance news hit the headlines this week.
Pandemic PPE: how Australia entrusted a small-time retailer with $100m and got 46m unusable masks.
Yes, The Guardian … again! The Daily Vaccinator. The Lockdown Times. This story is a doozy.
Those of whom we expected so much more, helped drive the collapse of sense, proportion, reason, moral compass and spine in our governance institutions.
In April 2020, with Australia gripped by the pandemic’s early, frenzied stages, a group of doctors wrote an alarming letter to the then prime minister, Scott Morrison.
Frontline medical staff, they warned, were being placed in significant danger by the lack of quality personal protective equipment.
“We are fearful for our safety and wellbeing during this pandemic,” the letter said. “International experience has shown that we are a very high risk group for Covid-19 infection, illness and death.”
Yep, this was our medical establishment. Having lost its grip on reality and science. Wanting its cut from the emerging irrational panic. So, who did the Morrison Government (and Professor Greg Hunt, as he now is) turn to?
Three weeks later, Australia signed the first of two massive PPE contracts with a largely unknown company, Australian Business Mobiles (NSW) Pty Ltd.
Its previous experience included selling robot vacuum cleaners, air fryers and other household goods.
Normal government procurement procedures went out the window. Covid! It gets better:
ABM had come to the government’s attention after an unknown individual made an unsolicited approach to the then health minister, Greg Hunt. As was standard practice with all unsolicited approaches received during the pandemic, Hunt’s office referred it on to his department to assess.
Like many pandemic-era deals, the ABM contracts were awarded outside normal procurement processes. Using an exemption designed to “protect human health”, the government was able to handpick companies such as ABM without open tender, instead conducting its due diligence and buying decisions through taskforces of health and industry department officials.
This story is no one-off:
Data shows the government received a staggering 4,076 unsolicited approaches from suppliers of PPE and other medical equipment during the pandemic. Some of those approaches were made directly to Hunt’s office.
A spokesperson for Hunt said the minister’s office referred all offers of PPE or other assistance, including those put to him by Labor MPs, to the health department and then had no involvement in any further assessment or buying decisions.
Of course.
This story is a timely reminder of the madness of the day and of the fact-free, proportion-free decision-making of those in power, afflicted by a telling and lethal combination of cluelessness and panic.
Remember PPE? Or ventilators (that killed people)? Distancing? Silly masks? Queues going around the block for useless, misleading PCR tests for tens of thousands of people not remotely ill? Daily Covid-porn press conferences featuring people no one had ever heard of who suddenly became household names? Who later became governors and Victorians of the year. Or the conga line of Covid criminals who have slithered out of the building? With names like Gunner, Andrews, Hazzard, Berejiklian, Morrison, McGowan, (the aforementioned) Hunt, Skerritt, Sutton. Send them the bill for your latest mortgage rate rise.
Still no Covid inquiry of consequence or consequences. Only stories like the PPE disaster, public sector pay rises, more clueless, yes-voting public servants off to Canberra as part of an ever-expanding government sector, an exponential increase in business bankruptcies, masses of people simply exiting the economy, radical decarbonisation, and ever more migrants to plug all the gaps. It behooves us, as the economy, bank balances and the hopes of a generation sink yet further into the quagmire, to reflect on cause and effect in public policy, on political class responsibility and on the continuing long tail of the Covid policy lunacy. Every single interest rate rise, the fruits of inflation driven by spending madness and printing money that no one had, should set off our anger afresh. I suspect it won’t.
The crimes of Covid totalitarianism did not end in 2022, not by a long stretch. Jeffrey Tucker asks:
When governments and central banks behave in unbearably stupid ways, it is worth asking whether there might be a point to the madness.
Other than venal self-preservation on the part of the political class, I don’t see any.
Paul Collits
10 November 2023
We really were ruled by scum over this Covid era.
Australians should listen to ABC's Richard Aedy about interest rates and the consumer price index and what is included, etc. Also, listening to NAB CEO Ross McEwan and bank's $7.7 billion profit, he spruiks the RBA (BIS) mantra of increasing interest rates to reduce inflation, increase unemployment, etc. Is there another economic theory to counter this unoriginal theory.