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Australia’s Fake Quantitative Tightening Program

Next week Australian households will be looking closely at the RBA and waiting to see what interest rate increase they will announce.

With the economic growth and wages data out this week, ANZ has joined Westpac calling for a 0.4% increase to 0.75%, while CBA and NAB have kept to their call for a 0.25%. Stephen Koukoulous has called for a 0.65% increase next week, follow-up by two rounds of 0.5% increases. Some are even calling for a 0.85% increase in the official cash rate next week.

These increases are a complete sea change to monetary policy in recent years. Prior to the raising of the cash rate in May 2022, the last such increase was in November 2010 – i.e., a 12 year gap which for many Australians is a lifetime ago (especially for new entrants to the housing market).

Market economists are now calling for aggressive moves from the RBA given that the RBA kept official interest rates too low for too long.

Importantly, no one at the RBA has a precise understanding as to what the impacts will be interest rate increases will be as outlined in the minutes of the RBA board meeting. Even, with respect to the US Federal Reserve, there is significant uncertainty as to what are the impacts of their current monetary tightening campaign.

For many people within the establishment, there is little recognition and acknowledgement of Martin North’s DFA dataset. Time will ultimately be the judge as to how many and how much interest rate rises will households be able to absorb before it becomes too much to bear.

https://www.adamseconomics.com/post/australia-s-fake-quantitative-tightening-program

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Caveat Emptor! Note: this is NOT financial or property advice!!

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  1. This is a very similar scenario to what is happening in the US. Like the RBA the Federal reserve argued that inflation risk was low and then changed and said oops we got it wrong. Is it just a coincidence?

  2. appreciate everything you guys do to present honest information. You have been correct or on the right path so often, i think the government should be following your advise. Keep up the great work guys and well done.

  3. Both US & Australia Reserves had done a bad job of predicting the state of the economy of their country and globally.

    Same with UK Exchequer.

    They are still screwing us all the way.

    That is the way when Reserve is not answerable to Parliament and Minister of Finance as even the Reserve screw up, they cannot be taken to task or responsible for the botch up.

  4. Just look at China – Central Bank and now Russia.
    That will give viewers an idea that there are real life alternative financial systems besides the Keynesian System.

    Elon Mask didn't become what he is now by following the Keynesian System but operate out of the BOX ideas and circumvent the Orthodox System and thinking.

  5. Prices won't fall by much. As mortgage foreclosure increases the hedge funds and super wealthy will buy them up. A new class of kings and queens. I don't own property.

  6. It makes me uncomfortable that politicians and economists are blamed for the problems when it was 95% of the people supporting all this policies directly or indirectly.

  7. While we had really low rates over the last years..i paid all my debt off..everything..I didn’t buy a bigger house, go on holiday ever, get a car on credit & i can tell you now i feel extremely glad i took that path…just seemed the logical thing to do to me..

  8. These banks, politicians and the RBA know exactly what's going to happen from their decisions..
    They all run 2 books. These groups want people to look at them and believe they know nothing and are dumb. BUT ITS THE OPPOSITE!!
    They are running a dam country. You don't get into these positions in life from being a dumb ass!
    And if people think otherwise, you're dumber than you think these groups are. LoL
    When you know, you know! 👍

  9. Awesome show gents, if you think the last 2 years has been tough then the next 2 are going to blow your mind.
    Central Banks are destroying the globe.

  10. I spend many hours viewing this program many times listening very carefully to everything discussed before making the following comments. I will be as brief as possible and highlight just 2 very different types of tradesmen but often cross paths in manufacturing businesses and building construction projects. Both are generational family operated businesses that proudly started before federation (1901) and usually employ about 6 people each. I have known them for at the very least 20 years and witnessed the younger generations taking on apprenticeships and keeping the families businesses to flourish. As you can imagine , they have faced many hard and challenging times , just as many other thousands of similar businesses of all types have also experienced. I would say without any hesitation that one of the most important things to both families was their reputation for fairness , honesty , caring and pride in always doing the best work a tradesman can do. Such is their reputation , that even in the toughest of times , they were always in high demand. Imagine my dismay when recently we hired both to do renovation work and , only to be informed that both are in great trouble and highly likely not to survive and possibly could end up homeless. Without going into great detail with reasons why , the stunning fact is the how quickly this situation arose with companies going broke , unable to pay on time , inflation and essential work fixtures and supplies are simply nonexistent. Your program , and every topic you touched upon was as always very well received , along with your constant reminders about debt and uncertainty etc.,. But the really staggering thing , was the short period of time that all this has taken place , I think it’s around a 6 or 7 weeks time frame. Where is everything headed. With Respect , From Robert Of Australia 🇦🇺..

  11. In the end it's going to be a bunch of fuckwits pulling levers that don't work. It will end in inflation or possibly hyperinflation. A meltup is as bad as a meltdown. 9999999999 to the power of infinity is still 0.

  12. Increasing interest rates wont stop inflation in Australia. Inflation is supply side and Australia imports many finished products from overseas. I was speaking to a manufacture in Australia recently he almost went under when the supply of microchips and other raw materials went down. He couldn't make his products and sell to customers, this is the same issue in the construction industry. The supply chain is broken and this is making it harder to produce products the result is more demand for less supply. Until the supply chain and oil prices return to normal expect continued inflation, especially for imported products. The only side effect of increasing interest rates is there will be less consumption and drive down demand but international demand will remain.

  13. How do we know when interest rates have reached the "top"? Do you mean the 6-7% that you mentioned? Sorry for those who are and will suffer but this is my strategy. I've sold my house for more than double what I bought it for but I had a huge mortgage. Now I'm waiting in the hopes i can buy debt free if/when the prices drop due to interest rates rise. Just wondering how we know when we've reached that point? 🤔

  14. None of this strategy is a mistake by bumbling bureaucrats, it is a long term plan to transfer all property out of the public’s hands and bring in a global communist government. I don’t agree with John in that I dont believe the elites will save the banks. They want everyone to have a direct account with one central bank for ultimate control.

  15. ‘They don’t know what they are talking about’

    Adams throws this statement around so often and it really destroys his otherwise robust presentation. He need to stick to the logical facts that are so clear and independently verifiable instead of discounting the opposing arguments through credibility attacks, without robustly demonstrating their lack of credibility.

  16. The central bankers learnt from past mistakes and pay close attention to the markets.

    The last thing you want to do is leave them to their own devices.

    “Everything is getting better and better look at the stock market” the 1920’s believer in free markets

    That belief will be gone by the end of the decade.

    "Stocks have reached what looks like a permanently high plateau.” Irving Fisher 1929.

    This 1920's neoclassical economist that believed in free markets knew this was a stable equilibrium.

    He became a laughing stock.

    Better shelve this for a few decades until everyone has forgotten.

    Now everyone has forgotten we can use it for globalisation.

    A whole new generation of suckers will be easy meat.

    So, if stock markets crash, people stop believing in the markets.

    What can we do this time?

    Get the central bankers to keep pumping in liquidity.

    Any sign of collapse and the central bankers are ready with more liquidity.

    Now look what’s happened!

    The US stock market is at 1929 levels.

    If you let the markets correct, people stop believing in the markets.

    If you keep pumping up the markets, they become detached from reality.

    Trying to maintain the illusion inflated asset prices are real wealth isn’t easy, but the central bankers have been doing their best.

    Let’s hope they don’t get distracted by something else like inflation.

  17. Except, as I said before, it's not the cash rate or the gov 3 yr rate per se that matters, yields have risen substantially all ready and the sky hasn't fallen.
    It's the spreads that matter, asset prices can still rise with rising yields.

  18. All the property specualtors and that includes anyone who spruiked "Houses always go up" at the BBQ and bought into the last gasp of the housing ponzi should not be saved from there own stupidity by power hungry governments using tax payer money.

  19. What is happening is a direct result of the elites at the Davos juncket. Its time to stand up and say NO to these bad actors. I refuse to "own nothing and be happy" my relatives did not fight for our freedoms to allow these muppets to take it away. I remember well 17% interest rates and do not wish that on my children and grandchildren

  20. Corker of a show lads. I agree, I think the RBA will reverse when the heat gets turned up. I'll be renting out my Principal place of residence soon with a 290k mortgage on variable with my fingers crossed. I can't believe the average mortgage in Sydney is 800k. There has gotta be some pain there.

  21. Modelling is NOT the reality, it's just a guess, an opinion. See how often they got it wrong in the past in different areas. Different folk, different guesses/opinions and that's all.

  22. What inflation? What interest rates? Today shopping centres were full of people buying all kinds of stuff, it was so busy I thought it was week before Christmas.

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