The RBA governor is clueless.
He has no understanding of monetary policy.
He cannot distinguish between lending to the private sector and the public sector. He also cannot distinguish between secured and unsecured debt.
He contradicts himself so many times in this conversation it is embarrassing.
First he says the RBA shouldn’t subsidise governments yet he is more than happy to subside private banks. (see prior posts)
He then says the RBA doesn’t decide what projects it should lend on. No one said it should decide what projects it should lend on. However it should lend on projects that governments need to build to provide essential services such as dams and power stations.
Having said the RBA can’t lend to governments, he then admits that the RBA did actually lend to the government in order to destroy the economy because of C vid. In other words he print and spent rather than print and built. Dumb move.
Finally he tries to dismiss my statement that the taxpayers have to pay a mark up on their own currency to the banks by claiming governments don’t borrow from banks they issue bonds. He has no idea. The banks who buy those bonds charge interest on them that is ultimately underwritten by the taxpayer. The banks gets to make a profit on government paper. If the RBA issued the bonds via an infrastructure bank, the interest charged could be returned to the government costing the taxpayers nothing.
The RBA also has no idea of the meaning counter cyclical. Why are they raising interest rates if the cost of everything else is rising. They are only compounding cost of living pressures.
They should expanding the volume of credit to fund the supply of more electricity into the grid, rather than senseless austerity measures that only hurt hard working taxpayers.
