The GST would probably be a better means of controlling spending than interest rates as it would affect ALL consumers not just those with mortgages and and wouldn’t have as big an effect on businesses using debt financing.

Won’t happen though because of the BS promises about not raising the GST rate.

Yes: interest rates here affect the AUD. But so does the volume of trade and the prices (paid for imports, received for exports) too, oui?

They used to tell us that currencies were solely affected by balance of trade, but now I think huge (partly speculative) capital flows are a larger factor. Can someone put me out of my ignorance, please?

What they will be doing is banning grain exports; increasing bread subsidies etc. That’s the sort of shit you have to do in real economies. We haven’t yet felt enough pain to realise that we don’t control our economy by something as simple as flicking the interest rate switch. It gets a lot harder than that.

We have just sailed though many years of easy growth – that is coming to an end as other countries join our bread queue (and our oil queue etc.) We have become exceedingly fooled by the belief that the Market will provide.

The market does not provde – it just, on a good day, distributes. This planet is what actually provides.

http://www.roadtosurfdom.com/2008/04/28/liberal-economics/

The Reserve only has interest rates to use. So they use them. What I’m more interested in though, is what other tools Government has to reduce expenditure. They all seem like blunt instruments. It’s not like we can find the specific people who’re helping drive inflation, and ask them to spend less (and save more).

What mechanisms could be put in place to limit spending that work work in a market economy?

I should have made the additional point that what decides whether the dollar rises is what we do with interest rates. If we let interst rates rise than our dollar will go up too. If we hold interest rates then our dollar may not rise and we’ll get inflation.

If anyone has created the current inflation, it’s Wayne Swan, with his wild and irresponsible talk

Yeah, well you know, all this luvvie BS talk about discourse and all the rest of the cr*p is all very well in the groves of acadeem, but out here in the real world, where hard but fair pollies and savvy BS detecting journos ply their trusty craft, just talking about it is enough to bring it into being. That’s why it is important that only people who understand that fact should be allowed to talk.

“If anyone has created the current inflation, it’s Wayne Swan, with his wild and irresponsible talk,”

We’ve become used to the view taken by the neocons that reality is what they say it is. If they say there is no global warming then all the data in the world doesn’t mean there is etc, etc. This seems to be part of a trend for them to shift to “the world is what our opponents say it is so everything that’s wrong is because they pointed to it.” We saw it with Pearson’s talk about how the left had wanted Iraq to fail, with the clear implication that this was why it had.

It’s a logical next step I guess, but its really pretty weird when you think about it.

It would be hard for them to argue the opposite now, but I’m sure Nelson Muntz will find a way

The story was picked up in all the News Ltd. state-based tabloids as well.

So before the election we’re told that giving out $30bn+ in tax cuts is inflationary, but now giving thousands to working families is helping them fight inflation.

By what economic voodoo do inflationary tax-cuts become inflation-fighting working-family handouts?

I don’t believe the Tele came up with this spin all by themselves – they’re not that smart – so they must’ve swallowed the government press release hook, line and sinker.

I wonder if the voters will buy it? My guess is “yes”…