THE MEANING OF OZ - All you need to know!

Just before I go to bed ....
Is there an economist in the house who speaks plain English?
I have a question for you:

Inflation: Please explain to me how this situation will be remedied by a (likely, by the sounds of it) interest rate increase.
Yes, I know about the high cost of bananas & petrol, gas, electricity, water, etc, plus an Oz dollar which is now worth $US 1.10 ..... all of which have apparently caused the problem.
But how would increasing the cost of home mortgages, etc, fix things?
Seriously, I don't get it.
To me, an increase in interest rates would mean there would be even less money for ordinary people to spend, even more belt tightening than we're experiencing at the moment ... & an even harder time for retailers than the woes they're experiencing now. And probably more unemployment ...

How will that help matters? Confused

If it clear to you, I'd be interested to hear what you've got to say.
If it's too hard, I understand. Wink

Good night.

2 Replies

@msolga,

Thank you, Kath Wilcox (Sydney Morning Herald) for your swift response!
It should have been obvious, I know.
All we have to do is wait for the price of bananas to come down & we'll be laughing!
So simple! Very Happy

http://images.theage.com.au/2011/07/29/2523566/560718900-600x400.jpg

1 Reply

@msolga,

Quote:

But how would increasing the cost of home mortgages, etc, fix things?
Seriously, I don't get it.
To me, an increase in interest rates would mean there would be even less money for ordinary people to spend, even more belt tightening than we're experiencing at the moment ... & an even harder time for retailers than the woes they're experiencing now. And probably more unemployment ...

Hi Olgs - from high school economics the theory goes that if mortgage rates go up you reduce disposable income > less things are bought > supply outstrips demand > downward pressure on prices > inflation rate decreases.

That's the theory, and it doesn't pay attention to the microdisasters in people's lives it can cause, it only takes into account the bottom line. In a two speed economy it's even more 'fix a watch with a hammer'.

1 Reply

@hingehead,

Yeah, I remember high school economics, hinge. (Believe it or not, I actually received honours for HSC Economics, something which still mystifies & amazes me to this very day! Surprised

)

Quote:

.. the theory goes that if mortgage rates go up you reduce disposable income > less things are bought > supply outstrips demand > downward pressure on prices > inflation rate decreases.

Yep, that's the theory. Demand & supply. But the theory assumes that we all have adequate income to wear such a reduction in disposable cash & the steep rise in the cost of goods & services.

Quote:

That's the theory, and it doesn't pay attention to the microdisasters in people's lives it can cause, it only takes into account the bottom line. In a two speed economy it's even more 'fix a watch with a hammer'.

Seems to me that some serious tinkering needs to be done to make the pain more equitable. It's not as though all of us have benefited from the mineral boom in WA!

Some people are hitting the wall now. And that's the truth. I recently read a news report which said that record numbers of Victorian have been unable to pay for (hugely increased) gas, electricity & water bills. Those are essentials, the affected folk probably gave up on luxuries ages ago.
And let's not talk about credit card debt which desperate folk have used to keep their heads about water.
God knows what an interest rate increase will do to people like this.
(Thank the goddess I no longer have a mortgage to pay off & I live very simply, that's all I can say!)

1 Reply

@msolga,

I retired from my company 12 years ago, ( started it up over 32 years ago ) took my sons and I over 20years to build it up to a thriving business with a hard working staff... we supply building contractors, had over 40 of them, there is now little work around here for them, so the said contractors are leaving in droves to the mines and wherever they can get work. My sons are now working with only their bank overdraft to keep them afloat.... can't wait for the carbon tax to kick in, will really help us, I don't think.

2 Replies

@tenderfoot,

I'm really sorry to hear about the hard times your sons are going through, tenderfoot.
These are tough times for a lot of little people & small businesses, I know.
Sigh.

But, I have to say (without wanting to be too "political", OK?) that I'm relieved that an Australian government has finally begun to act on carbon pollution.
I'm hoping & expecting that it will be the big polluters who do most of the paying & that, as a result, new technologies will be developed so that they won't have to pay nearly so much in the future.

I just can't argue against protecting our environment for future generations.
I believe we should have acted well before now. But at least this is a start ...

I'm also hoping that, as outlined in the government's proposal, the most financially vulnerable in our community will be protected from the cost burdens associated with tacking such a serious situation.

1 Reply

Shocked!

http://www.aflsweden.se/

2 Replies

@tenderfoot,

Unless of course TF the building contractors you supply start making wind farms....

1 Reply

@hingehead,

hingehead wrote:

Shocked!

http://www.aflsweden.se/

Wow! Be a summer sport there, though!

1 Reply

@msolga,

msolga wrote:

I'm really sorry to hear about the hard times your sons are going through, tenderfoot.
These are tough times for a lot of little people & small businesses, I know.
Sigh.

But, I have to say (without wanting to be too "political", OK?) that I'm relieved that an Australian government has finally begun to act on carbon pollution.
I'm hoping & expecting that it will be the big polluters who do most of the paying & that, as a result, new technologies will be developed so that they won't have to pay nearly so much in the future.

I just can't argue against protecting our environment for future generations.
I believe we should have acted well before now. But at least this is a start ...

I'm also hoping that, as outlined in the government's proposal, the most financially vulnerable in our community will be protected from the cost burdens associated with tacking such a serious situation.

If.... and expecting and foreseeable, are good words, unfortunately they are like the way we had "global Warming " then altered to Climate change then that terrible word Carbon that is such a danger , then us Aussie carbon makers being the "biggest" polluters, when the whole of Europe would fit into Australia and then some, thus making them smaller polluters...... words- words- words. and the statement that the big polluters will pay for it all and the man in the street won't, to me is as per usual a half truth that politicians use to cover their arsess . them's my words : - ).

1 Reply

@hingehead,

Yeah they could fit em on their trucks and employ someone to drive around while they do the work : - ).

0 Replies

@tenderfoot,

Ah well, tenderfoot.
I am not going to get into whether we are "the biggest polluters" or not ... I don't see much point in weighing up our contribution toward damaging the air we breath & the impact of pollution on our environment against what others have done. We've all contributed.But at this point surely, the question is: what are we going to do about it?

I sincerely believe we have a responsibility to do something about it.
I figure that if China & India are now addressing the problem, & the European Union has had an Emissions Trading Scheme since 2005, then it is not exactly like we are going it alone. Or that our government, creditable scientists (& others, including Malcolm Turnbull ) imagined the problem exists.

0 Replies

@hingehead,

Quote:

Shocked!

http://www.aflsweden.se/

Now why would you be shocked, hinge?
Why shouldn't the Swedes adopt the best football code in the world?
Makes perfect sense to me! Smile

They'll be really sorry if they adopt the culture, too! Wink

1 Reply

@margo,

Quote:

Be a summer sport there, though!

A three week season?

0 Replies

@msolga,

Did you see the pitch on Gruen tonight - last word on Melbourne! Razz

2 Replies

@hingehead,

out last night - have it recorded - will see it tonight!

0 Replies

@hingehead,

Ha, I saw that, hinge.
Spot on!
Melbourne is the perfect place for boring federal politicians to do their stuff.
But it's not just the weather.
This place is obsessed by politics. It wouldn't stop us obsessing, no matter how boring they are!

I like the NSW advertisement, too.
Very funny!

0 Replies

@msolga,

http://resources3.news.com.au/images/2011/07/28/1226103/739287-110729-kudelka.jpg

1 Reply

@msolga,

http://resources1.news.com.au/images/2011/07/27/1226102/999081-110728-kudelka.jpg

1 Reply

@msolga,

http://images.theage.com.au/2011/08/08/2542886/pettymon-620x0.jpg

1 Reply

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