13 March 2014

DSC rejects failed policy

Reserve Bank governor Graeme Wheeler has rolled out a tired, outdated, failed policy with today’s announcement of a .25 percent increase in the official cash rate, says Democrats for Social Credit Deputy Leader and Finance Spokesman, Chris Leitch today.

His plan to use higher interest rates as the only tool in an effort to hold down any increase in inflation proves that he is out of touch with modern economic thinking.

At a time when the country’s economy is finally starting to drag itself out of the doldrums, he is doing his best to strangle it and send it plunging back into recession.

Higher interest rates won’t help struggling families trying to pay off a mortgage.

Higher interest rates won’t help young couples trying to buy their first house.

Higher interest rates won’t help workers on low wage levels because the increases will be passed on by businesses into higher prices.

Higher interest rates won’t help small businesses running on overdraft finance, and will likely see more of them filing for bankruptcy.

Higher interest rates will help the Australian owned banks who will see already obscene profits skyrocket, and wealthy investors, mainly overseas, who will gain greater returns.

Mr Wheeler should look overseas at more creative solutions, and take a lead from the Federal Reserve, and central banks in Europe, Japan, China, and numerous other countries, and use the Reserve Bank he heads to provide low interest loans for local and central government infrastructure projects.

Such action would result in significant job growth and put real money in the hands of consumers rather than credit card debt.

Despite dire predictions by economists, and the scare tactics of politicians over many years, increases in the money supply implemented by overseas central banks have not flowed into higher inflation, rather they have resulted in the reverse.

A recent report by the International Monetary Fund backs up this approach.

It’s time Mr Wheeler dragged our central bank into the 21st century and started using its capability as it should be used.

ENDS

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