The Greens

[Johnny Bananas]

When we have high inflation and high housing prices then yes. We need high interest rates.

Can you please tell me how higher interest rates reduce cost-push inflation? I understand how they reduce demand-pull inflation, but not cost-push.

Can you also please tell me how much I can expect high interest rates to bring down the cost of houses by? Or are there perhaps other, more effective ways to manage that, like adding a massive amount of housing supply and reducing incentives for property investment to lower demand?

The greens say we need lower interest rates to improve housing affordability.

Where did they say this? I've only seen them say lower interest rates will provided cost of living relief for struggling mortgage holders. When it comes to housing affordability I've seen them call for fiscal policy solutions (such as investment in public housing and an end to negative gearing on properties) rather than monetary policy.

 

[Johnny Bananas]

What a BS response. The Greens are trying to blackmail the Treasurer into using a power that has never, EVER been used in Australia.

So what? If it exists, it can be used. They're within their rights to ask for the government to use powers that they have.

The political grandstanding continues. It's either good legislation, or it isn't. The Greens need to stop with this "we'll support x, if you do y" garbage, when y has nothing to do with x.

Funny, when people were condemning the Greens for not immediately expressing their enthusiastic support for Labor's emissions targets a few years ago, I remember those people saying "pass the bill now, then when Labor need a favour in future, ask them to increase the emissions target in return". Now I see someone suggesting the conplete opposite.

This view seems to me like it's demanding the utter supremacy of the two major parties, letting them set the agenda and not allowing any sort of negotiation. Albo's way or the highway. The thing is, each party's voters are voting for an agenda, and it's perfectly valid to make support on another matter a quid pro quo for more of that agenda. People are always welcome to vote for Labor if they think Labor policy is good and want it waved through, and to vote for the Coalition if they don't. Enough people didn't do that to allow room for negotiation and horse trading. That's democracy.

 

[Rustin Cohle]

Yes, yes, it’s all the majors’ fault and the poor widdle Greens are always negotiating in good faith. Lol

Them plucky underdogs would never grandstand or engage in bullshit populism.

All I see is straw-men, whataboutism and deflection in this thread about a pathetic, childish amendment from an unserious political party that will never be more than fringe movement.

 

[Gralin]

Yes, yes, it’s all the majors’ fault and the poor widdle Greens are always negotiating in good faith. Lol

Them plucky underdogs would never grandstand or engage in bullshit populism.

All I see is straw-men, whataboutism and deflection in this thread about a pathetic, childish amendment from an unserious political party that will never be more than fringe movement.

Ok

 

[Ghost Patrol]

Yes, yes, it’s all the majors’ fault and the poor widdle Greens are always negotiating in good faith. Lol

Them plucky underdogs would never grandstand or engage in bullshit populism.

All I see is straw-men, whataboutism and deflection in this thread about a pathetic, childish amendment from an unserious political party that will never be more than fringe movement.

The majors are what got us into this mess to begin with. Why keep doing the same thing when it's clearly not working?

 

[Johnny Bananas]

All I see is straw-men, whataboutism and deflection in this thread about a pathetic, childish amendment from an unserious political party that will never be more than fringe movement.

The ACT must make you shiver with fright, since the Greens are part of the government there.

 

[QuietB]

Tell me, are a group of well-off bankers going to prioritise what is good for ordinary people, or what is good for the finance industry?

They make their margins no matter what the rate is. It makes virtually no difference to them. In fact they will make more money as rates come down than they make with rates going up.

 

[Carn The Berries]

So what? If it exists, it can be used. They're within their rights to ask for the government to use powers that they have.


Funny, when people were condemning the Greens for not immediately expressing their enthusiastic support for Labor's emissions targets a few years ago, I remember those people saying "pass the bill now, then when Labor need a favour in future, ask them to increase the emissions target in return". Now I see someone suggesting the conplete opposite.

This view seems to me like it's demanding the utter supremacy of the two major parties, letting them set the agenda and not allowing any sort of negotiation. Albo's way or the highway. The thing is, each party's voters are voting for an agenda, and it's perfectly valid to make support on another matter a quid pro quo for more of that agenda. People are always welcome to vote for Labor if they think Labor policy is good and want it waved through, and to vote for the Coalition if they don't. Enough people didn't do that to allow room for negotiation and horse trading. That's democracy.

That's comparing apples and oranges. The Greens were against the fundamental structure of the emissions targets legislation (being the targets that were included in the bill itself). I haven't heard anyone from the Greens say they have any issues with the structure of this policy, they just want the government to intervene in a process that has been specifically set up to avoid political interference.

I get that horse trading is part of the political process, but to expect a government to do something like intervene in monetary policy is pie in the sky garbage, and isn't negotiating in good faith (they have stated they won't support the bill unless that happens).

 

[Saint]

I don't see this last-ditch effort by the Greens to get either the Govt or the RBA to do something about the impact of inflation and high interest rates on lower-income earners to be a real problem. I think they should have said loud and clear that they want either the Govt (who has more levers) or the RBA (who have one dumb lever) to do something, anything about the suffering of lower-income earners and the windfall the top 10% are getting because of the current policy settings of both Govt and the RBA.

The Greens might not be right on the mechanism, but they're the only ones who are actually talking about doing something about a crisis that the RBA and most politicians seem to be ignorant of.

 

[Johnny Bananas]

That's comparing apples and oranges. The Greens were against the fundamental structure of the emissions targets legislation (being the targets that were included in the bill itself). I haven't heard anyone from the Greens say they have any issues with the structure of this policy, they just want the government to intervene in a process that has been specifically set up to avoid political interference.

Not being against something doesn't mean being for it, unless one has a George W Bush view of the world. And if the process was set up to avoid any political interference ever, then the power to overrule the RBA wouldn't exist.

I get that horse trading is part of the political process, but to expect a government to do something like intervene in monetary policy is pie in the sky garbage,

Is it? Then why do they have the power, and why did Chalmers end up amending his bill to maintain that power?

And I'd argue this demand to intervene in monetary policy is a direct consequence of Chalmers and Labor failing to do their jobs on fiscal policy (which is why they're losing in the opinion polls to an evil sentient potato). People are hurting, and following the Greens' demand might actually save Labor from the wrath of the electorate at the next election. At the end of the day, the RBA only have one tool to carry out their goals (aside from open market operations which they're not engaging in right now), the government have two, and if they repeatedly refuse to use one, why shouldn't there be calls to use the other?

A lot of neoliberal economists and pro-establishment talking heads are vociferously scolding the Greens for not blindly following the high priests of interest rates no matter what they say. But none of those people, the economists, the talking heads, the RBA board members, are doing it tough. None of them truly feel the consequences of those decisions. And I think when one is insulated from the impact ordinary people feel, it is difficult to govern in a way that actually addresses their concerns. Because that is what the RBA are doing, governing, just in a specific way. And a lot of people are cheering for governance without democratic accountability on this.

and isn't negotiating in good faith (they have stated they won't support the bill unless that happens).

Please explain.

 

[Carn The Berries]

Not being against something doesn't mean being for it, unless one has a George W Bush view of the world. And if the process was set up to avoid any political interference ever, then the power to overrule the RBA wouldn't exist.


Is it? Then why do they have the power, and why did Chalmers end up amending his bill to maintain that power?

And I'd argue this demand to intervene in monetary policy is a direct consequence of Chalmers and Labor failing to do their jobs on fiscal policy (which is why they're losing in the opinion polls to an evil sentient potato). People are hurting, and following the Greens' demand might actually save Labor from the wrath of the electorate at the next election. At the end of the day, the RBA only have one tool to carry out their goals (aside from open market operations which they're not engaging in right now), the government have two, and if they repeatedly refuse to use one, why shouldn't there be calls to use the other?

A lot of neoliberal economists and pro-establishment talking heads are vociferously scolding the Greens for not blindly following the high priests of interest rates no matter what they say. But none of those people, the economists, the talking heads, the RBA board members, are doing it tough. None of them truly feel the consequences of those decisions. And I think when one is insulated from the impact ordinary people feel, it is difficult to govern in a way that actually addresses their concerns. Because that is what the RBA are doing, governing, just in a specific way. And a lot of people are cheering for governance without democratic accountability on this.


Please explain.

I completely agree with this, which is why this pie in the sky demand for government intervention with the RBA is so absurd. The Greens should be focusing their pressure on the government to utilise the tools it has responsibility for to address the current economic issues.

Artificially forcing interest rates down, when the main economic indicators suggest you shouldn't, is just dumb. Crying out for it, when there are other (better) options available, just doesn't make any sense whatsoever.

 

[Johnny Bananas]

They make their margins no matter what the rate is. It makes virtually no difference to them. In fact they will make more money as rates come down than they make with rates going up.

I'm referring to the RBA board.

 

[Johnny Bananas]

The Greens should be focusing their pressure on the government to utilise the tools it has responsibility for to address the current economic issues.

They have been for two years now. Chalmers has taken as much notice of that pressure as he has of the Norwegian water-skiing championships, because the Greens have never taken the step of blocking budget appropriation bills in the Senate. But that would be the nuclear option. They've elected to choose a less drastic hill to make their stand on.

Artificially forcing interest rates down,

All interest rate changes are artificial.

when the main economic indicators suggest you shouldn't

Do they? For the CPI, as I've said above, the inflation we've been seeing is cost-push inflation, whereas interest rates are fundamentally a demand side tool. The ability of interest rates to send people into poverty is greater than its ability to affect underlying commodity and materials prices. So I wonder if the economic pain that the current level of interest rates are bringing is worth it given the lack of ability to address the causes of inflation.

As for the NAIRU, it's a garbage measure that has repeatedly been proven to be lacking.

RBA relying on outdated theory about inflation and employment

Central banks, including the RBA, subscribe to an old economics theory that unemployment must rise in order for inflation to fall. It's one they should consign to the dustbin.

www.abc.net.au

 

[Gough]

They have been for two years now. Chalmers has taken as much notice of that pressure as he has of the Norwegian water-skiing championships, because the Greens have never taken the step of blocking budget appropriation bills in the Senate. They've elected to choose a less drastic


All interest rate changes are artificial.


Do they? As I've said above, the inflation we've been seeing is cost-push inflation, whereas interest rates are fundamentally a demand side tool. The ability of interest rates to send people into poverty is greater than its ability to affect underlying commodity and materials prices. So I wonder if the economic pain that the current level of interest rates are bringing is worth it given the lack of ability to address the causes of inflation.

As for the NAIRU, it's a garbage measure that has repeatedly been proven to be lacking.

RBA relying on outdated theory about inflation and employment

Central banks, including the RBA, subscribe to an old economics theory that unemployment must rise in order for inflation to fall. It's one they should consign to the dustbin.

www.abc.net.au

Feels to me like the RBA is running on the same economic assumptions that I learned in high school in the 1980s and applying them to the present day.

 

[QuietB]

I'm referring to the RBA board.

It makes even less difference to them. They get paid the same no matter what happens.

Sure they are a bunch of nerds without a single one of humanity or charisma. But their sole job is to use interest rates as a tool to control inflation. That is all they have to do.

And they do this in the face of governments handing out endless supplies of cash, all sorts of interruptions to the economy, in the face of all sort of ridiculous policies, etc.

But they have one job, they exist entirely in a silo.

And the Greens and the Liberal Party are refusing any reform at all. Both for completely different but equally populist political purposes.

 

[Gralin]

It makes even less difference to them. They get paid the same no matter what happens.

Sure they are a bunch of nerds without a single one of humanity or charisma. But their sole job is to use interest rates as a tool to control inflation. That is all they have to do.

And they do this in the face of governments handing out endless supplies of cash, all sorts of interruptions to the economy, in the face of all sort of ridiculous policies, etc.

But they have one job, they exist entirely in a silo.

And the Greens and the Liberal Party are refusing any reform at all. Both for completely different but equally populist political purposes.

Have you actually had a look at the RBA board?

Banker
Banker
Economist
Business person
economist
former Judge
business person
business person
busines person

the RBA board is largely stacked with people who are on multiple boards, generally corporate

they're not experts in monetary policy, something the review brought up, that they don't have the knowledge to challenge what is being proposed

they aren't money nerds, most of them do have a conflict of interest when it comes to workers wages though

something the RBA doesn't like very much as they tried to blame wages and not corporate greed for inflation

 

[QuietB]

Have you actually had a look at the RBA board?

Banker
Banker
Economist
Business person
economist
former Judge
business person
business person
busines person

the RBA board is largely stacked with people who are on multiple boards, generally corporate

they're not experts in monetary policy, something the review brought up, that they don't have the knowledge to challenge what is being proposed

they aren't money nerds, most of them do have a conflict of interest when it comes to workers wages though

something the RBA doesn't like very much as they tried to blame wages and not corporate greed for inflation

They don't have to be experts in anything. And it is not their job to do government policy. They don't set wages, they have no influence on fiscal policy, and they barely even do monetary policy.

They have one job - if inflation is high - put rates up. If inflation is low, put rates down. If it is all cool - leave rates alone.

It is not that hard.

 

[Gralin]

They don't have to be experts in anything. And it is not their job to do government policy. They don't set wages, they have no influence on fiscal policy, and they barely even do monetary policy.

They have one job - if inflation is high - put rates up. If inflation is low, put rates down. If it is all cool - leave rates alone.

It is not that hard.

oh so we're in the the central bank doesn't need to know what its doing its easy phase of this discourse

interest rate changes take months to flow through the economy

if they cut tomorrow we won't start seeing that until around Christmas

they have to make a choice based on what they think the economy will look like in 3+ months time

but yeah don't need to knowledge or expertise for that and its fine to stack the board with corporate interests and have the RBA bleat about wage inflation spirals

thought you were actually interested in talking about this properly

 

[Johnny Bananas]

It makes even less difference to them. They get paid the same no matter what happens.

Correct. And that's why I don't think they weigh the consequences of their decisions enough. The outcome doesn't affect them and they're not held accountable for their performance by anybody.

Sure they are a bunch of nerds without a single one of humanity or charisma. But their sole job is to use interest rates as a tool to control inflation. That is all they have to do.

That's what their mandate is, yes. But the point I'm making is it's a very blunt instrument to essentially be governing based on a very small number of metrics and no connection with the people the decision will affect.

I'll ask the same questions I've asked above, why does the government have the power to overrule the Reserve Bank? Why has Chalmers chosen to keep this power?

And they do this in the face of governments handing out endless supplies of cash, all sorts of interruptions to the economy, in the face of all sort of ridiculous policies, etc.

Voters at least have the chance to punish governments for bad policies. Nobody is holding the RBA accountable for their decision making.

And the Greens and the Liberal Party are refusing any reform at all. Both for completely different but equally populist political purposes.

So what? Populism isn't inherently bad. And I'd say there is a reasonable argument for populism in a context where a small group of well-connected people who are disconnected from the masses and not held accountable by them are making decisions that affect those same masses.

They don't have to be experts in anything.

That's very worrisome seeing as we're giving them power without accountability. I would only want that to be given to real, qualified experts like the Chief Medical Officer, and even then with restrictions on their mandate to ensure they're acting in the overall public interest and not just the interests of a minority of the population.

And it is not their job to do government policy.

I would argue monetary policy is an aspect of governing that the government has chosen to abrogate and farm out. This can be a good thing, but not always.

They don't set wages, they have no influence on fiscal policy, and they barely even do monetary policy.

They very much do monetary policy, it's their job.

They have one job - if inflation is high - put rates up. If inflation is low, put rates down. If it is all cool - leave rates alone.

It is not that hard.

What you're essentially describing is just a basic computer program made out of a few if statements. We may as well not have an RBA board in that case, just a computer spitting out an action.

Except, computer programs are not infallible in practice - they are only as good as they are written. If they just apply a blanket action to a situation regardless of context and other factors that they haven't properly incorporated, then what they spit out can be wildly unsuitable.

For example, a computer program written with the sole goal of getting an economy humming as fast as possible would likely suggest implementing economic shock therapy. But the experience of countries like Russia in the 90s shows us that economic shock therapy often has a massive human cost and creates social problems that result in people failing to reach prosperity and falling short of their potential.

In this case, I don't think the code for this "computer program" is written well.

Firstly, it isn't suited to the current context, because monetary policy is much less effective at curtailing cost-push inflation than demand-pull inflation, and we're experiencing cost-push inflation. Measures that actually work on cost-push inflation include price controls or the government adding supply of vital goods to the market themselves. But we have two neoliberal political parties who refuse to consider those ideas.

Secondly, it relies on the outdated, misleading and nebulous concept of NAIRU, essentially saying not enough people are unemployed to suit our theories so we must put more people out of work. That has a human cost that isn't being considered.

Thirdly, even if it did dispense with NAIRU and recognise the ineffectiveness of monetary policy, it's still problematic because it doesn't consider the people who will go to the wall with higher interest rates. Defaults happen sometimes, but they can push people into poverty or housing insecurity, and those are things a government should be seeking to prevent growing. If a government refuses to do what is necessary in fiscal policy to provide relief, than monetary policy can perhaps provide some.

What do we do when computer programs have bugs? Well, oftentimes there is a manual override available where an operator can assume control and take more appropriate actions when necessary. That's what the power for the government to overrule the RBA represents. And since the government won't change the program to account for more variables, it's fair for someone to ask for the manual override to be enacted.

 

[Seeds]

Have you actually had a look at the RBA board?

Banker
Banker
Economist
Business person
economist
former Judge
business person
business person
busines person

the RBA board is largely stacked with people who are on multiple boards, generally corporate

they're not experts in monetary policy, something the review brought up, that they don't have the knowledge to challenge what is being proposed

they aren't money nerds, most of them do have a conflict of interest when it comes to workers wages though

something the RBA doesn't like very much as they tried to blame wages and not corporate greed for inflation

There is a problem with too many business people on the rba board. Those business people want to keep interest rates low to pump up the economic cycle. If there were more experts on the board interest rates would of gone up even higher/quicker and inflation would of come down quicker limiting the size of the cost of living crisis we have just had.

I would also like to think if we had more experts on the board macro prudential policy would be more commonly used restricting loans for housing which would of prevented the housing bubble from inflating to such a degree in the first place.

 

[Gralin]

There is a problem with too many business people on the rba board. Those business people want to keep interest rates low to pump up the economic cycle. If there were more experts on the board interest rates would of gone up even higher/quicker and inflation would of come down quicker limiting the size of the cost of living crisis we have just had.

I would also like to think if we had more experts on the board macro prudential policy would be more commonly used restricting loans for housing which would of prevented the housing bubble from inflating to such a degree in the first place.

i do love how you continue to prove you know literally nothing about your pet topic of economics

or how the RBA works

or our banking regulations

 

[Johnny Bananas]

There is a problem with too many business people on the rba board. Those business people want to keep interest rates low to pump up the economic cycle. If there were more experts on the board interest rates would of gone up even higher/quicker and inflation would of come down quicker limiting the size of the cost of living crisis we have just had.

Except, we're already in a per capita recession (and have been for nearly two years now), and the inflation is largely driven by supply shortages, which aren't effectively addressed by rising interest rates, as their main effect is on demand. So raising interest rates faster would have just pushed us into a deeper recession with not that much change in inflation. That's a lot of people out of work and into poverty.

 

[Johnny Bananas]

I think this is who he is.
Bandt isn't new to politics, this isn't an independent getting talked into doing something.

This is the greens literally not doing what they were elected to, what they promised to and acting like they did

They're not the answer to the problems with the system, they're part of the system.

When you're key pillar is the environment and you're helping pass this kind of shit you're a wasted vote.

Bob Brown had balls and Principles, not seeing either from Bandt on too many issues at this point

Would you say your views of Bandt and the current Greens have changed since then?

 

[Gralin]

Would you say your views of Bandt and the current Greens have changed since then?

No
I don't trust them

 

[QuietB]

Correct. And that's why I don't think they weigh the consequences of their decisions enough. The outcome doesn't affect them and they're not held accountable for their performance by anybody.


That's what their mandate is, yes. But the point I'm making is it's a very blunt instrument to essentially be governing based on a very small number of metrics and no connection with the people the decision will affect.

I'll ask the same questions I've asked above, why does the government have the power to overrule the Reserve Bank? Why has Chalmers chosen to keep this power?


Voters at least have the chance to punish governments for bad policies. Nobody is holding the RBA accountable for their decision making.


So what? Populism isn't inherently bad. And I'd say there is a reasonable argument for populism in a context where a small group of well-connected people who are disconnected from the masses and not held accountable by them are making decisions that affect those same masses.


That's very worrisome seeing as we're giving them power without accountability. I would only want that to be given to real, qualified experts like the Chief Medical Officer, and even then with restrictions on their mandate to ensure they're acting in the overall public interest and not just the interests of a minority of the population.


I would argue monetary policy is an aspect of governing that the government has chosen to abrogate and farm out. This can be a good thing, but not always.


They very much do monetary policy, it's their job.


What you're essentially describing is just a basic computer program made out of a few if statements. We may as well not have an RBA board in that case, just a computer spitting out an action.

Except, computer programs are not infallible in practice - they are only as good as they are written. If they just apply a blanket action to a situation regardless of context and other factors that they haven't properly incorporated, then what they spit out can be wildly unsuitable.

For example, a computer program written with the sole goal of getting an economy humming as fast as possible would likely suggest implementing economic shock therapy. But the experience of countries like Russia in the 90s shows us that economic shock therapy often has a massive human cost and creates social problems that result in people failing to reach prosperity and falling short of their potential.

In this case, I don't think the code for this "computer program" is written well.

Firstly, it isn't suited to the current context, because monetary policy is much less effective at curtailing cost-push inflation than demand-pull inflation, and we're experiencing cost-push inflation. Measures that actually work on cost-push inflation include price controls or the government adding supply of vital goods to the market themselves. But we have two neoliberal political parties who refuse to consider those ideas.

Secondly, it relies on the outdated, misleading and nebulous concept of NAIRU, essentially saying not enough people are unemployed to suit our theories so we must put more people out of work. That has a human cost that isn't being considered.

Thirdly, even if it did dispense with NAIRU and recognise the ineffectiveness of monetary policy, it's still problematic because it doesn't consider the people who will go to the wall with higher interest rates. Defaults happen sometimes, but they can push people into poverty or housing insecurity, and those are things a government should be seeking to prevent growing. If a government refuses to do what is necessary in fiscal policy to provide relief, than monetary policy can perhaps provide some.

What do we do when computer programs have bugs? Well, oftentimes there is a manual override available where an operator can assume control and take more appropriate actions when necessary. That's what the power for the government to overrule the RBA represents. And since the government won't change the program to account for more variables, it's fair for someone to ask for the manual override to be enacted.

Right now we 100% know that the next RBA move is a rate cut. The only decision they need to make is the timing.

Regarding the RBA being held accountable for their performance - what are their performance objectives?

They have one performance objective with regard to how the system currently works - to control inflation. That is it.

This sums up my view on finance people - they are nothing more than bog average administrators who make obscene money by skimming margins. There is nothing special about what they do.