Oh can you just get with the program rather than obsessing on the past?
The GFC is just so much yesterdays news.
Do you think the Fed will unwind it's 4.5T balance sheet, or expand it further with some other type of instrument?
------------------------------ " ... which is that all-too-familiar dynamic in Irish life where people tell lies, cover them up and create all sorts of collateral damage, sometimes spread out over decades, and never take responsibility." - Alan Glynn
The big picture is that the GOVT & RBA will continue to collude, it aims to target positive inflation & encourage people's to take on more debt & the prices of real assets will aim to go up over time.
So any more waffle from Genn Stevens is just that, waffle.
The central banks are inflation targeters not inflation fighters when you think about it.
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$ It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do. Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
The big picture is that the GOVT & RBA will continue to collude, it aims to target positive inflation & encourage people's to take on more debt & the prices of real assets will aim to go up over time.
So any more waffle from Genn Stevens is just that, waffle.
The central banks are inflation targeters not inflation fighters when you think about it.
This theory tips me closer to buying two investments, funny thing is I could afford three with my savings but take a safer bet and get two in Melb prim local and rape the community like everyone else.
Rape is a strong word but seriously it is money for jam if the RBA keep rates on hold, and if they lower then I would be a farkin idgiot to keep my money in a term deposit as (embarrassingly enough) it is now.
Interesting times, I feel I will be forced to hold a position soon enough and more and more it's leaning toward investment and NG?'
The big picture is that the GOVT & RBA will continue to collude, it aims to target positive inflation & encourage people's to take on more debt & the prices of real assets will aim to go up over time.
So any more waffle from Genn Stevens is just that, waffle.
The central banks are inflation targeters not inflation fighters when you think about it.
Ah yes, go into more debt, the very reason we are now stuffed.
That will solve of the problem of our high dollar, wages and jobs disappearing overseas.
Thats the answer blondie, borrow to the moon, the answer of idiots who don't have a clue about the bigger picture or long term.
RBA Begs You to Take On More Debt…Just Don’t Buy a House
Written on 23 August 2014 by Shae Smith
C’mon people, don’t you know the Reserve Bank of Australia has done enough?
The entire economy is resting on your shoulders.
All that matters is your actions.
Buy a house.
Scratch that. Don’t buy a house. That’s already the elephant in the room.
Instead, start a business.
Take a loan.
Take some risk.
But for crying out loud, just do something debt driven, will you?
I know that’s an odd rant to start your weekend. But I reckon that’s really what RBA governor Glenn Stevens meant. He spoke at a parliamentary committee on Wednesday and he had one message for the crowd:
‘What I mean is we need more of the sort of so-called “animal spirit”, or confidence if you like, that is needed to support not just a repricing of the existing stock of assets, but the investment that adds to that stock of physical assets.’
The point Stevens is trying to make is that he wants more entrepreneurial risk taking place in our economy.
After all, the historically low interest rates haven’t spurred Australia into new business investments outside of mining.
But it doesn’t stop there. Stevens telling-off for not taking on more cheaper-than-your-Nana’s-day type of credit gets, well, weirder:
‘From my perspective our society is becoming too risk adverse…and we are not paying enough attention to return and we are paying too much attention to risk.
‘I come back to what set of arrangements and what set of conditions are going to give people who are the risk takers the right set of incentives and confidence to say “I’m going to take that risk, I’m going to get that cheap money and build that plant, the factory, the whatever, employ the people.”’
Instead of investing in new ventures, we’ve driven dividend paying stocks higher.
Rather than use debt productively, people have taken the low interest rate debt and stuck it into houses.
Monetary policy isn’t and shouldn’t be a driver of economic growth.
For too long, these interest rate illusionists have fooled themselves into thinking that’s all it takes. Fiddle the rates up and growth slows…tweak the rates down and things speed up again.
Greg Canavan, editor of Sound Money. Sound Investments. summed up Stevens’ take on the economy best this week:
‘Without going into too much detail, interest rates are too low for financial markets and too high for the real economy. But central bankers don’t like to see this. All they see is “accommodative” financial conditions, and then scratch their heads as the economy remains sluggish.
‘But I take [their] point…we are not taking a risk on developing new products, new industries or competing on a global stage.’
The problem the Reserve Bank of Australia don’t see is that they’ve already distorted the market. A small boardroom of suits mistakenly thought cheap credit was all the incentive people needed.
Will Stevens’ stern talking-to suddenly encourage banks to lend to risky start-up ventures with nothing more than a brilliant idea?
I doubt it.
There is something that worries me though.
If we aren’t taking the cheap cash and investing, who do you think will?
For reasons I don’t understand, politicians love numbers. And right now those numbers aren’t as rosy as they had been…you know, during that mining boom we had.
So if the Australian people won’t stimulate the economy, then who will? Chances are the number-loving pollies will step in.
The statement from Glenn Stevens this week proves again how fractured our economy has become.
We rely on credit driven growth. This means we must increase the debt to achieve what we did in the past.
It reminds me of what Richard Duncan said at our World War D conference in April this year.
Duncan said that was the answer: more government spending using cheap money.
First off, Duncan explained how the US landed themselves in over $50 trillion of debt in 43 years. Then he said the obvious. There’s nowhere to go from here. The horrible reality for America was credit driven growth.
In fact, credit must expand at 2% per year after inflation to avoid a recession.
In other words, credit in the US must expand by US$2.4 trillion per year to stop the economy falling over.
However, the private sector can’t take any more debt. But Duncan said the government can.
Rather than build bridges to nowhere and ‘pave the country roads’like they did in Japan, America should invest in tomorrow, he told the audience.
Duncan said the US government should take US$2.4 trillion and spend it on solar, biotech, and radical new technologies. New cutting tech edge. The sort of stuff that could lead to a new era for Americans.
Duncan’s idea is controversial for sure.
The point he was making was the reliance on debt to fuel the economy is the problem. Now, according to Duncan, it might be the only way to ‘fix it’. I have my doubts that the way to fix a debt problem is through more debt.
The RBA can try to encourage private enterprise to take on more debt. However, it only adds to the idea that economic expansion comes only from credit.
As Greg Canavan signed off this week, he noted this was our problem. ‘When combined with poor policy, over reliance on it will eventually run the economy into the ground.’
There is no money in houses. My house costs me $2,000 per week in costs including opportunity costs. It is a loss an almost total wipe out of my money. There is a better way. Peter
Ned Flanders
24 Aug 2014, 10:35 PM
Do you think the Fed will unwind it's 4.5T balance sheet, or expand it further with some other type of instrument?
If you inject heroin into a dead body do you think it will do any good?? Peter
For the majority of people, they would be starting a small business, to get a business loan, you need equity of the loan amount which would mean putting your house on the line. Also 85% of small businesses fail, anyone who wants to borrow money to start a business is at a disadvantage to competing businesses that are not built on debt as they are more robust and flexible.
you dont need to use equity to get a loan, there is many ways of applying for business credit without equity. Most businesses carry a certain percentage of debt with them, it would be hard to find a debt free business.
Mustapha Mond
25 Aug 2014, 12:53 AM
There is no money in houses. My house costs me $2,000 per week in costs including opportunity costs. It is a loss an almost total wipe out of my money. There is a better way. Peter If you inject heroin into a dead body do you think it will do any good?? Peter
not that anybody working at the RBA would know the first thing about entrepreneurial risk !!!
One suspects most of the permanent staff at the RBA would fall flat on their faces if they ventured into private enterprise.
There you have a middle-aged guy who earns a million a year in the form of a regular deposit into his bank account telling the taxpayers who pay his astronomical salary that they ought to risk their finances for the good of the nation! This is a bloke who takes no risks in life apart from flying his helicopter or light aircraft or whatever it is he's meant to hold a license for.
And yes the GFC is old news, old news still going strong with interest rates still at zero six years later and the US alone now owe an extra 10 trillion on top of the 8 trillion they already could not pay back in 2008, bring the total to 18 trillion in debt now and with 50 million now on food stamps instead of the 17 million in 2008. Like I said , old news still going strong, never looked worse here, our jobs and businesses are dissapearing overseas or altogether as our wages can now longer compete.
Stop obsessing on the past alright, the future here is nothing like the past.
Zero interest rates mean the market is creating more goods and credit than the market has a stomach for. Germany has already been warned that it is creating too much capital in relation to the rest of Europe.
We could try and put the entire world on a 32 hour week?
Real demand rises when there is genuine market innovation. The oil production boom post WW2 was an example of this. The personal/office computer boom from 1980 to 2000 was another example.
The next trick of our glorious banks will be to charge us a fee for using net bank!!! You are no longer customer, you are property!!!
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