Quote Originally Posted by GoldfishMan View Post
That's exactly right, and the RBA being timid with interest rates is not their fault either. This is the doing of the governments of the day. When the RBA dropped rates to record lows, they did that with the expectation that the additional liquidity created would flow to productive use, to companies struggling during the pandemic as business loans, etc. Not funneled into buying ever more expensive non-productive assets like residential property.

Yet the governments didn't do anything to direct the liquidity. They simply let it flow where ever it went. You wouldn't believe how crazy it was back then. I was working in a big bank back then. We had people applying for "business loans" that were then actually used to buy residential properties. Can you believe that? The banks just turned a blind eye because they were making money, and what's the risk of buying good ol fashioned Aussie RE, right? It was a complete sham!

Ergo we're in this shitty position now. The RBA cannot increase interest rates because doing so would increase rents and mortgage service costs. Talk about being caught between a rock and a hard place!

The governments of this country are all idiots, regardless of which party they're from.
Agree on residential property and the tax breaks that assist in fueling it.

But monetary policy, which is poorly targeted, isn't the only way of addressing inflation, but governments are reticent to move on fiscal policy as politicians are invariably short term with a populist slant and one eye on yr 2/3 polls.

Real reform is unpopular, example the GST.