The RBA has played the only card it has in the deck in an attempt to curb inflation. The trouble is supply and demand seated across from Bullock at the card table know what's in her hand and that when she's lays it down it's going to be a loser anyway. But it's the only way she knows how to play "Inflation". Raise rates in order to raise the AUD making imports cheaper, curb mortgage holder's spending habits through increased repayments, lower business profits and investment as a result of declining consumer spending.
The trouble is it's all nice in theory, but it doesn't work.
When lettuce sored to $6 each post-COVID, it wasn't rising interest rates that brought them back down to $2. It was supply.
The correct approach is:
Supply constraint = inflation, therefore either increase supply to reduce inflation or reduce prices to reduce inflation.
Bullock's approach just makes stuff more expensive, except maybe mass-produced shit from Temu or PMs/crypto on the margins occasionally (ignoring the fundamentals that determine price).
The Federal government needs to take fiscal action to reduce inflation and they can start with the tax system:
Reduce the fuel excise tax
The trouble is it's all nice in theory, but it doesn't work.
When lettuce sored to $6 each post-COVID, it wasn't rising interest rates that brought them back down to $2. It was supply.
The correct approach is:
Supply constraint = inflation, therefore either increase supply to reduce inflation or reduce prices to reduce inflation.
Bullock's approach just makes stuff more expensive, except maybe mass-produced shit from Temu or PMs/crypto on the margins occasionally (ignoring the fundamentals that determine price).
The Federal government needs to take fiscal action to reduce inflation and they can start with the tax system:
Reduce the fuel excise tax
