interest rates
Published 1 year, 2 months ago in My life.I’m no financial guru but it seems to me that using interest rates to control inflation is a pretty blunt tool.
Raise the interest rate and people with mortgages pay more but also:
The value of the dollar increases, exports become more expensive and imports become cheaper.
So, whilst trying to slow growth they’ve actually made cars, white goods, electrical good etc. more affordable - if you’ve got the money.
Good times for the rich and powerful with small or no mortgages. Pretty grim times for Mr & Mrs Average Joe.
And if this doesn’t work, which looks like the case, there’s more pain on the way.
Don’t you just love pollies ?
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dave says they should be called disinterest rates. hes not innerested cos whatever happens costs him more money. hes not happy. cant wait to see what happens to little johnnys mate when he comes knocking on our door. better get the first aid kit ready.
When any Government body raises rates which adds to the financial burden on families, it just creates more stress, on already distressed families just with raising kids.
I shut my eyes and try hard not to think about what goes on as the bills rise, people use credit cards to pay debts, and generally stress out because we are a consumer driven society.
The majority of people are the Mr and Mrs Average Joe, but the rich are getting so greedy including corporations and their shareholders, the poor just “collateral damage” as the wining and dining of CEOs earning millions continue.
To add insult to injury the rich are becoming rich because we import cheap Asian products at the cost of Australian productivity and manufacturing.
No I don’t love pollies….they love themselves enough for both of us!
That’s capitalism for you. Some guy called Marx reckons it wil all come tumbling down one day.
here is some explanation of interest rates from economist perspective. good luck to you to understand this gobbledygook me thinks;
Monetary policy is the process by which the government, central bank, or monetary authority manages the supply of money, or trading in foreign exchange markets.[1] Monetary theory provides insight into how to craft optimal monetary policy.
Monetary policy is generally referred to as either being an expansionary policy, or a contractionary policy, where an expansionary policy increases the total supply of money in the economy, and a contractionary policy decreases the total money supply. Expansionary policy is traditionally used to combat unemployment in a recession by lowering interest rates, while contractionary policy has the goal of raising interest rates to combat inflation (or cool an otherwise overheated economy). Monetary policy should be contrasted with fiscal policy, which refers to government borrowing, spending and taxation.
Fiscal policy refers to the federal government’s use of its annual budget (usually ‘handed down’ in May each year) to affect the level of economic activity, resource allocation and income distribution. The budget strategy can also influence the achievement of the government’s objectives of internal and external balance and economic growth. The two main instruments of fiscal policy are government spending and taxation. Changes in the level and composition of taxation and government spending can impact on the following variables in the economy:
- Aggregate demand and the level of economic activity;
- The pattern of resource allocation; and
- The distribution of income.
DOES THAT HELP YOU IN DECIDING WHO TO VOTE FOR? HMMMM ….
I understand that - to a degree. But monetary police and fiscal policy are not independant, they each affect the other. The ‘goal’ of a contractionary monetary policy should be to reduce inflation and the raising of interest rates is a very blunt tool to achieve this. Fiscal policy can also be used to reduce inflation but this would require adjustments to the annual budget. Unfortunately our pollies just put this in the “too hard” basket and rely on stiffing Joe Average. Given what they are paid, its a bloody disgrace !
hi ‘hannasgrappa’, good to see someone understands economy! i always had a problem with economists, who in in the feudal system were simply the supervisors of workers in the field on behalf of landowners. somehow i feel the same way when people are telling me that the sconomy is great! for whom? i as the Joe Average do not seem to get much out of the great economy! i like one woman that when asked who she is likely to vote for answered ’show me the money and i will vote for you’.
SHOULD WE BE SELFISH IN DECIDING WHO TO VOTE FOR?
BUT IF YOU OR I ARE NOT FOR OURSELVES THEN WHO WILL BE FOR US?
hmmmm …. seems like a hamlet type of question … ‘to be or not to be?’ ha, ha, ha
I may have mentioned this before but there is no government like no government!
Apparently we’ve never had it so good. But average people can’t afford homes, or anything else anymore it seems. So how exactly is it that we are better off?