Rates cut again but banks play their own game as usual
Another rate cut by the Reserve Bank of Australia (RBA) – to a new historic low of 0.75 per cent – and another case of the big four banks failing to quickly pass on the cut, in full, to consumers. Situation normal?
None of the big four had passed on the rate cut in full as their interest margins become squeezed and profits trimmed, Nine is reporting. Commonwealth Bank of Australia (CBA) was the only one of the big four to move, offering a 0.13 percentage point cut on standard variable lending rates. Investor-only loans will get the full 0.25 percentage point reduction while deposit rates will be reduced by 0.05 per cent.
“What this means for an Australian family with a mortgage of $400,000 is $720 less a year in interest payments,” said Treasurer Josh Frydenberg.
What this means for retirees with money in the bank is a further challenge.
KPMG chief economist Brendan Rynne said “a short, sharp fiscal boost” was missing and that raising the Newstart allowance was a way to achieve that.
Government house economics committee chair Tim Wilson described the rate cut as “disappointing” and said: “The price of money is not an issue. I’ve yet to be convinced cuts have any positive impact. The reverse is likely by discouraging savings and those who have to spend.”
The RBA will reportedly consider implementing “unconventional monetary policy measures including printing money to buy government bonds if interest rates hit 0.5 per cent” as expected in February.
Mr Frydenberg said the Government was focused on creating more jobs and ensuring the economy continued to grow.
How do you plan to grow any savings that are currently sitting in a bank account?
Just a soft reminder that we don't have to accept the current monetary system.
Confessions of a former fiscal conservative
Yes, I used to be so proud of the elevated moral ground I stood on when proclaiming my fiscal conservatism. I mean what can be more right than making "hard decisions" to "get our house in order", right?
Yeah, I knew that meant the most vulnerable will probably feel the pinch the worst, but I had worked hard and it paid off for me - why couldn't they just do the same? Ugh!
So why do I say "former" fiscal conservative?
It's quite simple, really. The fatally flawed premise of fiscal conservatism is that the federal government is like a business (or household if you prefer). That is, it earns revenues and has expenses, and like all of us, it has to balance it's check book or it will get in trouble. Yep - I did say fatally flawed. It's complete nonsense - and we all know it if we just sit and think for a moment about what it means to have a legal money printing press.
A currency-issuing sovereign nation is nothing like a business. It operates on a completely different fiscal paradigm. It has been granted monopoly control of a national monetary system that provides the ability to create spending power out of thin air whenever directed to do so for the common good. What business or household has this power? None!
How did we come to forget this? It would be funny if it weren't so tragic.
What we think of as fiscal conservatism is, in reality, nothing less than the reckless waste of valuable resources. We fail to maintain and enhance critical infrastructure that powers our economy and serves our peoples needs; we abandon large portions of our population to live on welfare, refusing to employ and educate them so that they could enhance their own lives and those of others in the community; we let capital and businesses sit idle when they could be put to productive use; we lay off scientists and close labs that could be inventing the next medical or technological breakthrough.
This is the height of fiscal irresponsibility. There's no moral high ground here - only a web of misinformation and folly that has entrapped western civilization in a cycle of impoverishment and inequality.
Real fiscal conservatism in a nutshell is this: utilize fiscal policy to whatever measure is necessary to ensure that the private sector is fully employed.
Period. No irrelevant squabbles over debt-to-GDP ratios and arbitrary debt ceilings. No meaningless metaphors of deficit black holes, drunken sailors, or per-capita debt burdens on our descendants. No hysteria over imaginary fears of hyperinflation. It's all irrelevant.
We can and we should debate all the other government investments, programs & benefits on their merits, but never on the question of affordability or with arbitrary limits based on annual tax receipts.
So take it from a former fiscal conservative: if you want to balance taxes and government spending with zero regard for the impact that has on the economy, employment, and the lives of citizens, you are neither conservative nor fiscally responsible. Rather, you are harming the economy, people's lives, and contributing to the destruction of capitalism.
Let's redefine REAL fiscal conservatism, and return our economy to full capacity. And any time you see someone talking about balancing the federal budget, please kindly educate them about how a sovereign currency works!
PS. if you want to look at other opinions from the originating website,
http://itsthepeoplesmoney.blogspot.com.au/2014/11/confessions-of-former-fiscal.html Lookfar.
Well we can bitch and moan all we like about the banks but nothing will change what is happening unless we go back to the days of government owned banks and the finance industry being regulated and folks, that ain't gonna happen. Back when we were all much younger there was the government owned Commonwealth Bank and each state had its own bank as well. The Reserve Bank controlled interest rates and when they decided to move rates up or down all of the banks had to fall into line. The state banks gave competition and as they didn't have to keep shareholders happy they were able to keep the fee structure low thus forcing the private banks to follow suit.
Fast forward to what we are having thrust at us today we have gone from 8 major banks, some private, some government to 4 private banks appearing to ignore customers and politicians and maximising the return to shareholders. We can yell and scream all we want but banks, just like big oil, are only answerable to shareholders and nobody else. I have just lost 5 minutes of my life writing this because no matter what is said or written, nothing will change. The only people who can change what is happening is the banks, not politicians, not shock jocks and certainly not the little people like you and me.