The applicants may tell fibs but the process rectifies that. In the application only verified values are used for important assets and liabilities. They can still BS about the value of their furniture and art collection, but that's a value that no one takes any notice of.
On a personal balance sheet there are important items, and others that no one gives a toss about. We let them inflate the value of their stamp collection or antique furniture, it makes them feel better and it doesn't matter a hoot.
Dream on.
WHAT WOULD EDDIE DO? MAAAATE! Share a cot with Milton?
Over the past 150 years, Australia has experienced two macroeconomic depressions, both of which coincided with worldwide depressions.1 The first of these was in the 1890s and the second in the 1930s. These were also times of financial distress both domestically and in the rest of the world. For Australia there were many similarities across both depressions. Indeed Sinclair (1965, p. 85) suggests: ‘There is such an obvious similarity between the economic depressions which occurred in Australia in the 1890s and the 1930s that it is tempting to suggest that history was repeating itself in the latter case’.
Quote:
The central argument of this paper is that variation in the performance of the financial system across the two depressions was primarily due to variation in the condition of the financial system prior to each depression. We show this by examining the behaviour of a range of indicators of financial stability over the decade prior to each depression.4 These indicators are: (i) the level and nature of investment; (ii) property market speculation; (iii) credit growth; (iv) capital inflows; (v) degree of risk management within the financial system; and (vi) competitive pressures in the financial sector.
1890's 75% Private Debt to GDP 1930's 45% Private Debt to GDP 2016 125% Private Debt to GDP.........And climbing
So what you're really trying to say is the "Official Cash" Rate is the Market?
So the RBA sets the Cost of Money and the Risk Premium as well as the Yeild for Investors both Foreign and Local?
So the Banks Don't and Cant raise Rates independent of the RBA.............
What I am saying is the RBA sets the interbank rate. This in turn sets the vast majority of total Bank funding costs (locally and internationally held deposits). If you are unclear on this point I am happy to explain why.
What I am saying is the RBA sets the interbank rate. This in turn sets the vast majority of total Bank funding costs (locally and internationally held deposits). If you are unclear on this point I am happy to explain why.
Oh they only set the interbank rate............Not the International cost of money?
I have been saying the same thing for a day. Not sure why you didn’t get it.
So in summary - The RBA sets the official cash rate - They do so by manipulating the ESA balances by way of open market operations (buying and selling repos) - The cash rate sets the cost of funding for all variable AUD commercial bank liabilities - People waiting for "market forces" to increase interest rates will be waiting a long long time
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