“Do you think if Scott Morrison went to the Australian public and asked the people for $300 billion dollars with “no security”, to pay other people to stay at home and get brain washed by the premiers about Covid the people would have lent him the money?
I don’t have a comment on that Senator.”
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Well of course the RBA Governor has no comment to make.
Because what can you say about the economic stupidity of paying people billions of dollars to do nothing?
Of course no one in their right mind would do such a thing, except for of course the RBA.
You know the “experts.”
But will they issue assets “secured “against sovereign building infrastructure such as dams and power stations that will provide essential services to the people.
No – because apparently that’s not their responsibility and they don’t have the Infrastructure to do that.
And therein lies the solution. We need an Infrastructure Bank that lends to State and Federal Governments against Sovereign Infrastructure – Dams, Power stations, Airports, Ports, Roads, Rail and Telecommunications.
The RBA can’t keep pretending that supply side solutions (Quantitative easing) aren’t their responsibility.
Australia needs productivity solutions not speculative solutions which is what changing interest rates is.
Changing the price of a piece of paper will achieve nothing other than enrich speculative traders of financial interests.
If the RBA could fund the destruction of Australia’s economy through Covid they can fund the rebuild of Australia’s economy after Covid.
Economics Legislation Committee
07/11/2024
Estimates
TREASURY PORTFOLIO
Reserve Bank of Australia
Senator RENNICK: I want to follow up on that bond issue throughout COVID. If Scott Morrison had gone to the Australian public and asked the public for $300 billion to lend to the government, with no security, basically, to pay people to stay at home and get brainwashed by the premiers, do you think the people would have lent the government $300 billion?
Ms Bullock: I don’t have a comment on that.
Senator RENNICK: My point is that it’s probably fair to say that the people wouldn’t have lent the government $300 billion, but the RBA did. That’s a fair statement, isn’t it?
Ms Bullock: We purchased, in the secondary market, government bonds, and that was designed to lower the interest rate structure in the economy.
Senator RENNICK: Yes, exactly. If you can do that and issue bonds that aren’t secured against anything—unsecured bonds—wouldn’t the RBA, as a form of dealing with inflation, go about issuing infrastructure bonds that were actually secured against the nation’s infrastructure? By issuing infrastructure bonds, it builds infrastructure to increase supply, and you would actually be doing something productive rather than something speculative, because lowering interest rates isn’t actually solving the underlying productivity issue, is it?
Ms Bullock: It’s not our role to finance infrastructure; it’s the government’s role to decide what infrastructure it wants to build and how to finance that infrastructure. It is not the Reserve Bank’s role.
Senator RENNICK: Isn’t it your role, however, to deal with prices and inflation?
Ms Bullock: It is, and the way that we do that is through our primary tool, which is the interest rate.
Senator RENNICK: But you also have two other tools at your disposal, which is quantitative easing as well as macroprudential controls; is that not correct?
Ms Bullock: We don’t have macroprudential controls. Macroprudential controls are more in the line of APRA’s work and not ours. We do purchase bonds, but that was an extraordinary circumstance, which I personally hope we never find ourselves in again, and it was when we were at the lower bound of interest rates. We are not at the lower bound of interest rates now. Interest rates are higher than that, and the appropriate tool is the interest rate.
Senator RENNICK: I would disagree with that because, when you manipulate interest rates, you’re manipulating the price of money; that is a speculative lever and not a productive lever. When you say that you don’t do it, the fact is that other central banks do issue bonds—namely, the Federal Reserve, the European Central Bank and the Japanese central bank. The government can either go offshore and borrow that money that’s been created out of thin air, or it can issue its own equity. I might say that if companies can issue their own equity in their own wealth—for example, BHP wanting to issue new shares for a coalmine; they do that all the time—why can’t you issue infrastructure bonds, on behalf of government, to the state and federal government, rather than their going offshore and borrowing money from other central banks?
Ms Bullock: That’s a matter for the government. If the government wants to task us with some different legislative responsibilities, then the government can do so.
Senator RENNICK: You have no capacity or authority at the moment to issue infrastructure bonds?
Ms Bullock: I don’t believe that we have, but—
Dr Kent: I don’t think we do. We have no need to.
Ms Bullock: Quite frankly, we don’t even have the infrastructure internally to issue those sorts of things.
