Tag Archives: RBA

The Chart That Proves RBA House Price Policy Is Doomed

14 May

The RBA’s surprise decision to cut the official interest rate earlier this month has re-energised the housing-debt-spruiker community, who have begun forecasting house price rises of 8 – 12% per annum on the back of more interest rate cuts to come (they presume):

Stephen Koukoulas - economist and ALP apologist

Stephen Koukoulas – economist and ALP apologist

Close examination of just one chart — one drawn directly from RBA statistics — is enough to debunk those who still cling to the belief that the RBA’s cutting interest rates must inevitably result in rising house prices:

Click to enlarge

Click to enlarge

This chart shows the all-important annual growth rate in credit for “Owner-occupied” and “Investor” housing, for the period July 1992 to March 2013. As we saw in January’s very popular “The Easy Way To Know Where House Prices Will Go”, anyone can visit the RBA’s website and use their monthly updated Chart Pack to see the true reason why house prices rose so strongly for over twenty years. It was all about the annual growth rate in “credit” for Housing, which is presently five (5) times lower than the peak seen in February 2004.

In that January article, we used the RBA’s own data to discover that the twenty year boom in house prices was largely due to a stunning annual growth rate in so-called “Investor” housing credit…

Clearly then, house prices in Australia were not driven up over the past 15-20 years by “demand” from “population growth”, from people who needed somewhere to live (Owner-occupiers). On the contrary, by far the strongest rates of growth have – during the bubble phase – been driven by so-called “investors”.

… and that is where a closer examination of that one chart above demonstrates that the RBA’s house price policy — trying to pump up the housing bubble again, now that their recently preferred “make room for the mining boom” policy has proven to be seriously short-sighted — is doomed to failure.

Why?

Because using interest rates to influence demand for housing “credit” — especially with “Investors” — has lost its effectiveness. And we can see this clearly, simply by zooming in on the above chart to look at the period November 2007 through to March 2013…

Click to enlarge

Click to enlarge

… and then adding in the actual interest rate rises, and cuts, and rises, and cuts during this period immediately before and since the GFC:

HousingFinanceGrowth_07-13_InterestRates

Take careful note of the change in the growth rate of housing “credit” for “Investors”, as compared to “Owner-occupiers”, as interest rates moved.

As you can see, the three (3) interest rate increases in late 2007 through early 2008 tipped both “Investor” and “Owner-occupied” housing credit growth over the cliff. By October 2008, when the RBA began taking a chainsaw to interest rates, housing credit growth was practically in free fall, plummeting from 12% per annum (Total) to 6.3% per annum, before the total 4.25% in “emergency” interest rate cuts halted the decline.

Interestingly, you can see that both the rate of fall and the total decline in housing credit growth was greater for Investors than for Owner-occupiers. As we saw in our January article, this is also what happened in the brief early 2000′s recession:

The rate of growth in “credit” for housing “Investors” was, until early 2004, far in excess of that for “Owner-occupiers”, with the notable exception of the early 2000′s global recession that only briefly affected Australia. At that time, “credit” growth for “Investor” housing plummeted to the same level as the “Owner-occupier” rate, before recovering spectacularly to reach a whopping 30.7% annual growth in Feb 2004.

What prompted the recovery? John Howard’s introduction of the First Home Owners Grant in 2000, and in particular, his doubling it in early 2001. With a rush of newly-enslaved borrowers bidding up house prices, “investors” too rushed back into the welcoming arms of the bankers, as ever only too eager to lend “credit” at interest to willing borrowers against the “security” of “their” house.

We see a similar, though far smaller effect largely repeated in the post-GFC period. The Rudd Government further doubled the First Home Owners Grant. A modest influx of new “First Home Owner” buyers rushing out with their government-debt-financed mortgage deposit to bid for a house, drew the “investors” back into the market as well. By July 2010 the “Investor” housing credit annual growth rate once again overtook that of “Owner-occupied” housing.

But not for long.

As you can see from the chart, the annual growth rate in credit for “Investor” housing had already peaked in August 2010, and had begun to fall, 2-3 months before the RBA’s final 0.25% interest rate increase in November 2010.

“Owner-occupied” housing credit growth, by contrast, had peaked back in October 2009 — the very same month in which the RBA first began to raise interest rates again, from their GFC “emergency low”. The First Home Owners Grant helped keep “Owner-occupied” housing credit growth relatively steady through to March 2010, when it resumed its long, steady post-2004 and pre-GFC decline. It has only now begun to flatline, in the first quarter of 2013.

The important observation to make about this chart, is that since the GFC “peak fear” in late 2008 and early 2009, things have changed. The world has gone past a point of no return, and the old “rules” of monetary and economic policy do not necessarily apply anymore.

While RBA interest rate increases still have the effect of reducing annual growth rates in housing credit, cutting interest rates no longer appears to have much effect in boosting housing credit growth back up again. Since November 2011, the RBA has cut interest rates seven (7) times — the most recent (May) not shown on this chart — to what are now lower than “emergency lows”, without causing an overall increase in the housing credit annual growth rate. Indeed, the RBA’s own Housing Credit growth chart in its Chart Pack confirms this:

9br-cgbys

The RBA now has the official interest rate at 2.75%. They have cut a full 1.5% since November 2011, without managing to “stimulate” a “recovery” in the growth rate of  house prices housing debt.

There are many more knowledgeable observers than I who have argued that 2% is as low as the Australian official interest rate can go; that 2% is effectively ZIRP (Zero Interest Rate Policy) for us.  The reason given sounds plausible enough; the Australian economy is essentially financed by borrowing “capital” from abroad, so with the rest of the West operating on ZIRP, we need a +2% interest rate difference in order to have any hope of continuing to attract foreign “capital”.

If the RBA is indeed “lower bound” by the 2% level, then the above chart makes one thing pretty clear.

At the present 2.75% cash rate, even another 0.75% in possible interest rate cuts is unlikely to “stimulate” much if any additional growth in Housing credit.

And with annual housing credit growth now running five (5) times lower than the February 2004 peak, and barely two-thirds the level when interest rates hit the 3% “emergency low” in April 2009, the RBA’s policy of trying to re-stimulate the housing bubble to support the economy after the mining boom … is doomed.

Simply, the RBA is pushing on a string:

This is the crux of the “pushing on a string” metaphor – that money cannot be pushed from the central bank to borrowers if they do not wish to borrow.

Don’t Buy Now.

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“You CAN Influence The Price Of The Dollar, If You Actually Want To” – Barnaby

7 May

black-check-mark-hi

Bookmark this post, dear reader. This is historic.

Once again, Barnaby Joyce is the first major party politician (to my knowledge) to speak truth to power concerning a(nother) vital economic parameter.

In late 2009 and early 2010 – before new Opposition Leader Tony Abbott wilted like a week-old lettuce leaf and sacked him – then Opposition Finance spokesman Barnaby warned of the dangers of Australia’s rising Federal and State government debt trajectories.  Only in recent weeks, some three years later, leading economists have begun to acknowledge that Barnaby was right.

Today, 7 May 2013, appearing on radio 2GB, he is the first major party politician to state that the government can bring down the exchange rate value of the Australian dollar, and tell the plain truth about why they (the ALP, Treasury, and RBA) have not done so:

The dollar, if you actually want to, you can actually affect it. It’s not written on tablets of stone and presented from Mount Sinai. You can influence the price of the dollar down if there is real motivation and desire to do so. One of the reasons they don’t do it is because they want to be economically pure. The way we’re going at the moment we’re going to be pure in debt, economically dead, so let’s make sure we keep our industry going.

Just so.

Over the past few years, our great economic leaders – the World’s Greatest Treasurer Wayne Swan, and the Million Dollar Man, RBA Governor Glenn Stevens – have deliberately chosen a policy of not joining the global currency wars.  Of deliberately allowing the AUD to rise and rise versus other currencies, and to remain at unprecedented elevated levels. Why?  In order to “make room for the mining boom”.

In other words, because of the inflationary impact of the mining (investment) boom, they have chosen to let a far-too-high AUD deflate the rest of the economy … to “make room for the mining boom”.

(Yes, the same mining boom that is now ending; the one that they so confidently believed would give Australia a period of “unprecedented prosperity”, a China-funded “golden age” lasting “to 2050″, according to former Treasury Secretary Ken Henry).

They have pursued an economic policy of allowing the rest of the Australian economy to be hollowed out, white-ant style, so that their precious little (bogus) economic performance figures for “inflation” (ie, the CPI) would not get too far beyond their arbitrary boundaries of preference.

While the rest of the country (except mining and related industries) has watched countless businesses, and whole industry sectors such as manufacturing, slowly getting squeezed towards, and in a record number of cases, into bankruptcy, our ivory-towered boffins have sat back applauding themselves for their ideological purity, self-congratulating for their not acting to influence the AUD exchange rate.

Despite the fact that practically every other nation in the world who can, is.

As usual, it takes the little ol’ bush accountant to bell the cat.

Barnaby for PM.

He’s the only one with both brains, and b***s.

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Swan Siphons RBA In Failed Attempt To Reach Surplus

23 Feb

the.simpsons.s20e05

And here you were believing our politicians and media parrots, when they say that the Reserve Bank of Australia is “independent”.

From The Age (via MacroBusiness):

TREASURER Wayne Swan defied objections from the Reserve Bank governor and siphoned half the central bank’s profits into the Budget bottom line to fulfil his political commitment to achieve a surplus.

The Reserve Bank governor, Glenn Stevens, told a parliamentary inquiry that he wrote to Mr Swan, asking him to direct all of the bank’s $1 billion 2011-12 profit to its critically short reserve fund, needed to absorb changes in the value of the bank’s foreign currency holdings. Normally worth around $6 billion, the fund had dwindled to $2 billion.

”It’s a key part of our capital. It has been depleted considerably by the effects of the rising exchange rate,” Mr Stevens told the inquiry. ”I believe the prudent course is to rebuild it as quickly as we can but I am not subject to the other pressures that the government is.”

Mr Swan denied the request, and insisted on taking half the profit as a dividend to help achieve his promise of a budget surplus this financial year.

That promise has since been dumped, leading to the opposition mounting a sustained attack on the government’s fiscal credibility.

”In the end it was his prerogative,” Mr Stevens said. ”He made a judgment, and I had to accept that judgment.”

Another day, another epic fail by our World’s Greatest Treasurer.

080723-gas-shortage

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One Chart Debunks Wayne’s Lies On Interest Rates

20 Feb
Click to enlarge

Click to enlarge

Treasurer Wayne Swan has never tired of telling the Australian people that interest rate cuts are a sign of the government’s good economic management:

Dec 4, 2012 – Treasurer Wayne Swan says the central bank’s decision to cut the cash interest rate follows the federal government’s prudent management…

“Today’s rate cut from the Reserve Bank is the early Christmas present that hard-working Aussies deserve,” Mr Swan told reporters in Canberra.

“We’ve now had the equivalent of seven rate cuts over the past year and of course that’s been made possible by the government’s economic management, strong budget management and of course, contained inflation.”

I could include many more examples. Except there would be no point. If you have heard Swan making these self-congratulatory noises once, you have heard it many times.

The truth, of course, is completely different.

When interest rates are cut, it is not a sign of good economic management.

It is a warning sign that things are going to poo:

Dec 4, 2012 – The Reserve Bank has cut the cash rate to its lowest level since the global financial crisis, following a raft of weak economic data that showed pessimism in the jobs market, a slowdown in mining activity and lower-than-expected retail sales.

The RBA cut the cash rate by 25 basis points, or 0.25 percentage points, to 3 per cent, which is the lowest the rate has been since the central bank started setting rates in 1990.

It matches the setting in April 2009 at the peak of the GFC, when the global financial system was in meltdown and the RBA was trying to prevent Australia slipping into recession.

That’s right. It is the important fact that Wayne and the rest of the Labor Party are conveniently forgetting to mention. The present official interest rate is deemed by the RBA to be an “emergency low”.

Take another look at the chart above.

See that little bump up, brief plateau, then fall in interest rates following the big GFC cliff dive?

Technical chart analysts call that a “dead cat bounce”.

2010-314--political-party-dead-cat-bounce-

Now, lest any reader think to accuse your humble blogger of partisan bias against Wayne and the ALP, let us not forget the LP’s history of lying on this topic.

Many will recall John Howard’s claim that “interest rates will always be lower under a Coalition government than under a Labor government”.

Think about this.

If that were true – and the chart above proves it is not – then what Howard was really saying is that “the economy will always be weaker under a Coalition government than under a Labor government”.

The usury rate formula is very simple to understand.

When the economy is strong, the vested usurers raise usury rates, to increase their profits.

When the economy is weak, they reduce usury rates, to “support the economy”. That is, to prevent their Ponzi scheme from imploding.

When interest rates are falling, it is not a great time to take out a loan. Despite what the vested usurers and their many mouthpieces in the media and real estate sales industry tell you.

It is arguably the worst time to take out a loan.

It is a warning sign that the economy is weak. That unemployment is likely to rise. That your job may be at risk in coming months.

And that the vested usurers are on the back foot, trying to prop up their Ponzi scheme.

DON’T BORROW NOW!!

 

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It’s Not Worth Anything

8 Feb

For more, see The World’s Most Immoral Institution Tells You How and
Think You’ve Got Cash In The Bank? Think Again

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The Easy Way To Know Where House Prices Will Go

19 Jan

Want to know whether Australian house prices will rise or fall?

The RBA has the answer.

Just go to their website, and click on “Chart Pack” under “Key Information” -

RBA_chartpacklink

Then click on “5. Credit and Money” -

RBA_chartpacklink2

… where you will see this chart -

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This chart tells us the growth rate in the amount of “credit” and “money” in the economy.

As you can see, the growth rate in “credit” has plummeted to less than 5% per annum.  In the period where Australian house prices rose the most in history, the annual growth rate in “credit” was three to four times higher than the present rate.  Without strong growth in new “credit” issued to borrowers, house prices can not rise much.  If at all.

Indeed, unless there are enough new buyers – armed with enough newly-issued “credit” – out and about and actively purchasing houses, then house prices must eventually fall.

For over twenty years, housing in Australia has been a banker-profit-driven “bubble mania” scheme, you see.  To drive up prices, the #1 and absolutely essential ingredient is more and ever more new “credit” – debt – with which bright-eyed and dull-brained buyers – debt slaves – can outbid each other to buy a house.

The RBA has another chart that shows this.  It will help you to see more clearly exactly why Australian house prices rose so much … until the GFC struck.

In the main menu of the Chart Pack, select “3. Household Sector” -

RBA_chartpacklink3

Then select “Household Finances” -

RBA_chartpacklink4

… where you will see this chart -

6tl-hhfin

As you can see, Household Debt (ie, “credit” offered by banks) as a percentage of disposable income rose dramatically for nearly twenty years.

Until the GFC.

It turned down sharply as Australians wisely responded by tightening their belts, and paying down their debts.  Then began to climb again – but only a little – thanks to the Rudd government offering “free money” in the form of a doubling of the First Home Owners Grant.  This handout of what amounted to a free home loan deposit kept the bubble from collapsing.  It encouraged thousands of new buyers – mostly young people with little or no savings – to go to their bank and borrow hundreds of thousands in “credit” to go and bid up the prices of houses again.

Unfortunately for them – and the bankers – this could only last for as long as the government was willing, and able, to find more “new home buyers” – new debt slaves – to dangle “free” money in front of.  As you can see from the chart, the level of Household Debt to disposable income has now bounced off the ceiling for a second time.

And so, as most Australians know, house prices in most areas of Australia have basically gone nowhere in the past year or two.  Some rises here.  Some falls there.  But overall, house prices have simply mirrored the Household Debt level … falling as debt levels fell, and rising (briefly) to bounce off the underside of that invisible private debt ceiling, thanks to that brief inflow of new “credit” that was borrowed by the government, and then handed out to First Home Buyers as deposits enabling them to apply for new mortgage “credit” from banks.  And yes, the RBA has another chart that confirms this -

6bl-dwelpri

Now, it might interest you to know exactly when Australia’s private debt-fuelled, bankster-enriching house price bubble scheme actually hit the ceiling.

No, it was not when the GFC struck; when many Australian households began to wake up, and realise that paying down their debts might just be a good idea.

Our housing bubble actually hit the ceiling first in early-to-mid 2004.  That is when the all-important rate of growth in housing “credit” topped out, and began to fall.

Unfortunately, the RBA does not make it easy for you to see this critical economic parameter.  The Chart Pack only gives you “Credit” growth in aggregate – that includes other forms of borrowing like business loans and credit card “credit”.  They even give you a chart for the number of “housing loan approvals”. But they do not give you a chart specifically for that all-important rate of growth in housing credit.  You have to dig into their statistics, and construct the chart yourself (click to enlarge) -

Click to enlarge

Click to enlarge

As you can see, the rate of growth in “credit” for both “Owner-occupier” and “Investor” housing peaked in Feb-Mar 2004, and has been falling ever since.

It is particularly interesting to consider the magenta line showing “Investor” housing “credit”. The rate of growth in “credit” for housing “Investors” was, until early 2004, far in excess of that for “Owner-occupiers”, with the notable exception of the early 2000′s global recession that only briefly affected Australia.  At that time, “credit” growth for “Investor” housing plummeted to the same level as the “Owner-occupier” rate, before recovering spectacularly to reach a whopping 30.7% annual growth in Feb 2004.

What prompted the recovery?  John Howard’s introduction of the First Home Owners Grant in 2000, and in particular, his doubling it in early 2001.  With a rush of newly-enslaved borrowers bidding up house prices, “investors” too rushed back into the welcoming arms of the bankers, as ever only too eager to lend “credit” at interest to willing borrowers against the “security” of “their” house.

Or houses.  How many people do you know who (used to) boast about their “investment property portfolio”?

From early 2004, the well began to run dry.  The rate of growth in “credit” for “Investor” housing began to fall steeply.  It fell well below the “Owner-occupier” rate, which was also declining.  This overall decline in the growth rate for housing credit has continued ever since.

However, thanks to the “stimulus” provided by Kevin Rudd’s further doubling of the First Home Owner’s Grant in 2009 – again, using borrowed money – aided and abetted by the RBA slashing interest rates in response to the GFC, both “Owner-occupier” and “Investor” credit growth bounced briefly.  Indeed, “Investor” credit actually overtook “Owner-occupier” credit again for a very short time in 2010, before both continued falling together.

Clearly then, house prices in Australia were not driven up over the past 15-20 years by “demand” from “population growth”, from people who needed somewhere to live (Owner-occupiers).  On the contrary, by far the strongest rates of growth have – during the bubble phase – been driven by so-called “investors”.

Speculators, in other words.  People who have come to believe that borrowing money to “invest” in property is a guaranteed path to riches, because house prices “always go up”.  Meaning, they believe that if they can only buy now, they can sell later for an easy profit.

Sadly, it is not just “investors” who have come to believe this.  Most Australian owner-occupiers have come to believe the same thing.  It is the very definition of a “bubble mania”, when most people have come to believe they can profit from buying and later selling an “asset”.

Who benefits most from a “bubble mania”?  Who has the most powerful vested interest in ensuring that the bubble does not burst … that is, not until they are positioned to profit from the “downside” as well?

The banks.  The same World’s Most Immoral Institution that has been given the power to create “money” – digital book-keeping entries – and lend it to others in the form of “credit”, at interest.

And so, dear reader, I suggest that you bookmark this post.  In the weeks and months ahead, the powerful banking and property (sales) industry will undoubtedly ramp up the propaganda – and the pressure on government and the RBA to “do more” to support “home buyers”.

Meaning, do more to prop up the Ponzi scheme that keeps them all in caviar, Bollinger, and the latest Aston Martin.

You will hear all kinds of oh so plausible-sounding reasons and statistics, presented by “experts”, encouraging you to believe that house prices will soon go up, and that now is a good time to buy (meaning, to “borrow”).

Whenever this coming bombardment of propaganda causes you to wonder if what they are all saying might just be true; when the charts and statistics and testimonials from credible-sounding people causes you to start feeling “con-fident” about Australian housing, come back and read this post again.  Or visit the RBA’s website, and click on the Chart Pack to see the Credit and Broad Money Growth chart.

Because the simple truth is this.

Unless the government can find a new source – a BIG source – of new people willing to borrow enough “credit” to keep bidding up house prices, there is only one way for them to go.

Unless the government can find a way to reverse the trend of that last Housing Credit chart, then in time, there is only one way that house prices can go.

And “up” it is not.

Finally, although I am loathe to ever suggest that anyone heed what the RBA Governor says, here is one exception.

In July last year, Glenn Stevens warned that -

“It is a very dangerous idea to think that dwelling prices cannot fall,” RBA governor Glenn Stevens said in a speech today. “They can, and they have.”

Indeed.

To quote Mr David Collyer of Prosper Australia …

Don’t Buy Now!

UPDATE:

Correction – how careless of me! The RBA does indeed provide a chart in their chart pack that shows the growth rate in “credit” for housing.  Simply select “5. Credit and Money“, then choose “Credit Growth by Sector” -

9br-cgbys

As you can see, the annual growth rate for Housing “credit” is in a long and steady decline.  It is presently less than a quarter of the rate of lending that the bankers achieved at the peak.

So, The Easy Way To Know Where House Prices Will Go, is to visit the RBA’s Chart Pack and look at that particular chart.  If it hasn’t started shooting back up again, to the kind of pre-2004 levels that financed the near twenty-year “boom” period, then you know where house prices will go.

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The World’s Most Immoral Institution Tells You How

1 Apr

To understand why The Banking System is The World’s Most Immoral Institution, you need only to understand how it actually works.

Not how it works in the lofty, rarefied atmosphere of incomprehensible acronyms like ARM and RMBS and CFD and CDO and QE and LTRO.

Just the basics of banking.

The works that you and I deal with every day, at our local bank.

Fortunately, The Banking System has grown so proud of its near God-like power, it is happy to tell us how the basics really work.

From Modern Money Mechanics – A Workbook on Bank Reserves and Deposit Expansion, a complete booklet originally produced and distributed free by the Public Information Center, Federal Reserve Bank of Chicago, now out-of-print (emphasis added):

Who Creates Money?

Changes in the quantity of money may originate with actions of the Federal Reserve System (the central bank), depository institutions (principally commercial banks), or the public. The major control, however, rests with the central bank.

The actual process of money creation takes place primarily in banks. As noted earlier, checkable liabilities of banks are money. These liabilities are customers’ accounts. They increase when customers deposit currency and checks and when the proceeds of loans made by the banks are credited to borrowers’ accounts.

In the absence of legal reserve requirements, banks can build up deposits by increasing loans and investments so long as they keep enough currency on hand to redeem whatever amounts the holders of deposits want to convert into currency. This unique attribute of the banking business was discovered many centuries ago.

NB: This is why governments the world over are so obsessed with maintaining public “con-fidence” in the banking system. It is why they so fear any hint of a “run on the banks”. As we have seen previously ( “Think You’ve Got Cash In The Bank? Think Again” ), the Australian banking system only has around $183.50 in stored ‘reserve’ cash for every employed person in the country.  According to Australia’s central bank, the RBA, there is only $53.2 billion in actual cash notes in existence (or $4,655 per employed person) … even though Australian households and non-financial businesses believe that they have a combined $986 billion in total Deposits. If 1 in every 19 Aussies insisted on withdrawing their bank “Deposits” at the same time … all the cash would be gone. To add injury to insult, The Banking System is “earning” (?!) interest (thus, profits) from a grand total $1.95 Trillion in “loans” created out of thin air, and “lent” to Australian households and businesses.  Interest on “money” that does not exist … except as a series of electronic digits that a banking clerk typed into a computer.

It started with goldsmiths. As early bankers, they initially provided safekeeping services, making a profit from vault storage fees for gold and coins deposited with them. People would redeem their “deposit receipts” whenever they needed gold or coins to purchase something, and physically take the gold or coins to the seller who, in turn, would deposit them for safekeeping, often with the same banker. Everyone soon found that it was a lot easier simply to use the deposit receipts directly as a means of payment. These receipts, which became known as notes, were acceptable as money since whoever held them could go to the banker and exchange them for metallic money.

Then, bankers discovered that they could make loans merely by giving their promises to pay, or bank notes, to borrowers. In this way, banks began to create money. More notes could be issued than the gold and coin on hand because only a portion of the notes outstanding would be presented for payment at any one time. Enough metallic money had to be kept on hand, of course, to redeem whatever volume of notes was presented for payment.

Transaction deposits are the modern counterpart of bank notes. It was a small step from printing notes to making book entries crediting deposits of borrowers, which the borrowers in turn could “spend” by writing checks, thereby “printing” their own money.

Consider what this really means.

A bank creates “money”, authorised by your signature on a loan document.

Your signature is your legally-binding agreement, to become the bank’s debt slave.

With a few taps on the keyboard and clicks of a mouse, the “loan” that you must pay back, with interest, is created right out of thin air.

An electronic book-keeping entry is made under your name, as a new bank “Deposit”.

And another electronic book-keeping entry is made under the bank’s name, as an “Asset”.

Your legally-binding agreement to pay back the “loan” … with interest … is the bank’s “Asset”.

Every person, every business, every nation with a debt to a banking institution, is in plain truth a slave to their own wilful ignorance.

Working and slaving away, day after day, to pay back with interest something that came from nothing.

While the “Big Club” of elite bankers stride the earth like princes, on the back of everyone else’s daily toil and trouble.

Producing no thing.

Gaining every thing.

The Banking System.

It is the World’s Most Immoral Institution.

It is also the World’s Most Unnecessary Institution.

Here is my solution, for how we should do it.

Some of you, we all know, are poor, find it hard to live, are sometimes, as it were, gasping for breath. I have no doubt that some of you who read this book are unable to pay for all the dinners which you have actually eaten, or for the coats and shoes which are fast wearing or are already worn out, and have come to this page to spend borrowed or stolen time, robbing your creditors of an hour. It is very evident what mean and sneaking lives many of you live, for my sight has been whetted by experience; always on the limits, trying to get into business and trying to get out of debt, a very ancient slough, called by the Latins aes alienum, another’s brass, for some of their coins were made of brass; still living, and dying, and buried by this other’s brass; always promising to pay, tomorrow, and dying today, insolvent; seeking to curry favor, to get custom, by how many modes, only not state-prison offences; lying, flattering, voting, contracting yourselves into a nutshell of civility or dilating into an atmosphere of thin and vaporous generosity, that you may persuade your neighbor to let you make his shoes, or his hat, or his coat, or his carriage, or import his groceries for him; making yourselves sick, that you may lay up something against a sick day, something to be tucked away in an old chest, or in a stocking behind the plastering, or, more safely, in the brick banks; no matter where, no matter how much or how little.

I sometimes wonder that we can be so frivolous, I may almost say, as to attend to the gross but somewhat foreign form of servitude called Negro Slavery, there are so many keen and subtle masters that enslave both North and South. It is hard to have a Southern overseer; it is worse to have a Northern one; but worst of all when you are the slave-driver of yourself.

- Henry David Thoreau, Walden; or, a Life in the Woods, 1854

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Dollar Shoots A Hole In Farmers’ Confidence

30 Mar

Stock & Land has more on how the too-high Aussie Dollar is impacting the rural sector:

AUSTRALIA’S shooting star dollar has shot a hole in rural sector morale.

Despite good seasonal prospects, farmer confidence is deflating as exports fail to deliver much farmgate price value because our high flying dollar is hovering uncompetitively above parity with the US exchange rate.

Faltering farm commodity prices in the past five months – particularly in the grain trade – have also hit farmer confidence hard.

“Not surprisingly farmers are becoming more concerned with the strong Australian dollar’s knock-on effect on the competitiveness of our exporters,” said Rabobank’s rural general manager, Peter Knoblanche.

NSW farm supplies retailer Greg Rout summed up the mood saying farmers were “a bit disillusioned and frustrated with the way prices are going against them at the moment”.

Although farmers have emerged from the past decade’s drought with plenty of soil moisture and stored water supplies, Rabobank’s latest quarterly rural confidence survey results are dipping into negative territory.

Producers who now expected farming conditions to deteriorate in the year ahead outnumbered those who saw improvements, according to Rabobank’s findings.

Mr Knoblanche said about 28 per cent expected the farm economy to worsen in the next 12 months, compared to 20pc just three months ago.

“Mixed farmers tend to be happier than the grain-only guys but most people are still spending cautiously,” said CRT retailer Mr Rout, who owns Central West AgriCentres at Parkes, Forbes and Peak Hill.

“I wouldn’t say anybody’s beaming with confidence – even after a couple of good seasons – but I’d put the general consensus around 60 out of 100, which isn’t too bad.”

According to Rabo only about 30pc of farmers expected an improved business performance or higher incomes in the coming year – down from about 39pc in December.

About 55pc tipped business performance to be the same.

It’s study of about 1200 farmers Australia-wide found 40pc of those expecting farm economic conditions to slide primarily blamed the dollar and 32pc nominated falling commodity prices.

Although it dipped last week well below recent highs around the $US1.07 mark, the seemingly bullet-proof Aussie dollar was again back above $US1.05 early this week and forecasters tip it will stay strong against the US greenback for at least a year.

However, while Rabobank expected strong investment into Australia would keep the dollar to be above parity “for the foreseeable future”, Mr Knoblanche believed it would soften by mid year on the back of a strengthening US currency and lower terms of trade.

The high exchange rate’s competitive advantage for machinery importers helped drive a burst of machinery investment last year, but newly-elected Tractor and Machinery Association (TMA) chairman, Steve Wright, believed a lower dollar would be best for the farm sector’s long term health.

“Buyer inquiry levels are generally still strong and I think the low dollar will help make 2012 a strong year for machinery sales, but buying commitment has definitely eased lately,” Mr Wright said.

“The dollar’s taken the shine off farm returns and grain prices are not as good as farmers are wanting to see before they commit to ordering new gear.

“And with growers reluctant to sell at recent lower prices, a lot of last season’s crop is still in storage which means they haven’t been paid for their grain yet.”

This is just one of many reasons why your humble blogger has advocated voting for the KAP.

Because Katter’s Australian Party is the only political party in the nation (that I know of) that has demonstrated a firm willingness to take on the clueless blinkered ideologues in the Treasury and the RBA, in order to follow the lead of other “advanced” economies such as Switzerland and Norway, and directly address the problem of a speculator-driven Aussie dollar hollowing out vast swathes of the Australian economy. From agriculture, to tourism, foreign education, manufacturing, and retail.

Journalist and presenter Peter van Onselen recently hit the nail on the head, when he described the AUD exchange rate as “Australia’s most pressing dilemma”.

The “major” parties are unforgivably negligent, and incompetent, in their spineless, mindless obeisance to the RBA and Treasury doctrinal line.

On this single issue alone, they are all wholly unworthy of your vote.

In my firm opinion.

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Late Surge For Thinking KAP

24 Mar

From the Australian:

A LATE surge in support for Bob Katter’s Australian Party has set the stage for it to win seats today in One Nation’s former heartland of regional Queensland.

The party has lifted its support to 9 per cent statewide in today’s Newspoll, nearly double what it registered at the start of the campaign.

KAP’s base vote spikes to 12 per cent outside Brisbane, putting it in the running to win up to five non-metropolitan seats, said Newspoll chief executive Martin O’Shannessy.

This suggests Mr Katter has attracted part of the blue-collar base of Labor in the regions as well as more conservative supporters of the Liberal National Party.

Hmmmm.

“Blue collar base of Labor”.

“More conservative supporters of the LNP”.

Salt of the earth.

Go QUEENSLANDERS!

UPDATE:

From the hustings -

Mr Katter, who was handing out how-to-vote cards with his son and Mount Isa candidate Rob, said he was impressed with the progress his party had made since it was formed less than a year ago.

“About a week ago I realised that we’ve got a huge, powerful machine out there,” he told AAP.

“It’s working now completely independently of me. It was a bit of a ramshackle thing put together on my back, but it’s not now.

“Every poll that comes out, our vote has increased. There’s some that have us on nine per cent, there’s some that have us on 28 per cent.”

Mr Katter said his party was now a legitimate option for voters.

“The important thing is to provide Australia with an alternative to the free trader or traitor policies of the major parties,” he said.

“It may well be that they get rid of the ALP today, but they won’t get rid of the ALP policies.”

Federal Liberal MP George Christensen tweets:

An insightful observation, and a perfect analogy:

[KAP state leader] Mr McLindon said it was now up to the voters but he hoped they would put into State Parliament a corrective against the expected overwhelming force of a new LNP government.

“Do the people really want a massive LNP government breaking promises the way they are doing in NSW?” Mr McLindon said.

“‘Or do they want a band of people in there like the KAP who will keep the bastards honest?”

Bob Katter, who will be in Brisbane tonight, said his aim in trying to establish a third political force was to break out of the “Woolies and Coles” cycle of Australian politics.

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Put On Your Thinking KAP

23 Mar

From today.

Put down your biases, prejudices, stereotypes … and your Ego.

Put on your thinking KAP.

And listen up:

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