Posted by: graemebird | June 6, 2008

Reserve Bank Of Australia /Catastrophic Monetary Policy Continues And Worsens.

I have to keep bringing this one to the front, to show that you deal with a debt problem WITH LESS DEBT, but possibly with more cash (depending on circumstance). Here was a post where I advocated, that the Reserve Bank add 17.5 billion in cash to the system and RETIRING DEBT WITH IT.  So when you see sdfc or Cambria, advocating stimulus, or cheap interest rate policy, these are bad policies, because they are designed to increase debt. Now for fucksakes people.  The US and Europe are getting gang-raped by these bankers because they simply cannot seem to understand this. Well really they are being gang-raped because of the gang-rapers. But if we all faced up to logic and economic science, it would be far harder for the gang-rapers to operate.  Back in 2008 our Reserve Bank was actually letting our money supply collapse. If its not one thing its another. They can never get anything right. The main thread was written prior to the Global Financial Crisis. I knew what to do BEFORE the crisis. Yet we have people 3 years later who cannot get anything right even in retrospect.

>>>>>>>>>>>>>>>>>>>>>>>>>>

I’VE BROUGHT THIS ONE TO THE FRONT FROM BACK IN JUNE to show that we in no way had to participate in this financial crisis if we knew what we were doing in monetary policy.

The policy prescription that I advocated below had some people thinking I had turned into a rampant inflationist. This was not the case. I think FINALLY everyone realises that monetary policy early this year was too tight. Hopefully you can all now see that if my advice had been followed there would have been absolutely no reason whatsoever to guarantee our banks ponzi-loans and that we would now be in a position to deregulate. Here was my surprising advice at the time:

“So the answer is to flush an extra 17.5 billion AUD into the monetary base, and at the same time set up a reserve asset ratio that will not allow the money supply to overshoot the previous high too much. ……”

Surely we can see by this stage that had this been done we would be in better shape and without having to worry about any run on the banks.

On top of that this policy application would have made this rubbish about Keynesian fiscal stimulus entirely implausible, even to the laity.

Below is the post that I made at that time. As always no economic policy is complete without mass-sackings, ruthless financial triage,  and the closing of government bureaucracies by the bushel:

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

We have another month of figures out and the monetary policy has collapsed still further.  The Reserve Bank isn’t likely to do anything about it, because GDP growth was “strong” in the first quarter of this year. What the bank does not realize, and what stupid economists refuse to understand, is that as useless a figure GDP is in general, it remains still more useless for quarter-to-quarter comparisons.

AS USELESS AS GDP IS GENERALLY……… IT REMAINS STILL MORE USELESS FOR QUARTER-TO-QUARTER COMPARISONS.

In fact when we are talking comparisons between very short time periods, GDP is utterly perverse.

(A)  May (B)    37.4 (C)  37.9 (D)  170.3 (E)  207.8 (F)  210.3 (G)  43.3 (H)  253.5
Jun 37.9 38.0 188.1 226.0 220.6 43.7 233.9
Jul 37.7 37.7 181.4 219.1 218.1 44.1 246.9
Aug 38.6 38.6 181.8 220.3 222.4 46.3 237.0
Sep 38.9 38.7 185.5 224.5 223.0 47.6 234.4
Oct 38.7 38.8 182.7 221.4 223.0 45.7 227.5
Nov 39.2 39.1 187.1 226.4 226.2 47.9 242.3
Dec 40.0 39.3 191.3 231.3 226.5 51.8 232.4
Jan 39.4 39.5 186.7 226.1 225.1 48.4 252.5
Feb 39.4 39.5 181.0 220.4 223.0 47.0 258.8
Mar 39.3 39.5 181.4 220.7 223.0 49.0 251.5
Apr 39.3 39.3 177.6 216.9 219.3 48.3 262.0

A=DATE   B=CASH IN THE HANDS OF THE PUBLIC

D=BANK DEPOSITS     E=M1

F=M1 SEASONALLY ADJUSTED

G=MONETARY BASE

H=OFFSHORE BORROWINGS BY AUSTRALIAN FINANCIAL INSTITUTIONS.

When I had last months figures, before the April figures were published,  I pointed out that the money supply had collapsed since December. This had come to my attention as the result of an article by Gerry Jackson. But I said that the collapse had halted between February and March. And that there had been a rather pleasing increase in the monetary base in the difference between the February and March figures.

The reason I described this 2 billion AUD increase in the monetary base as “rather pleasing” is because it seemed to show that the Reserve Bank was on the job. It seemed to indicate that they had seen the monetary collapse, took it seriously, and were acting in a correct, if somewhat tepid way, in order to arrest the problem.

Well wishful thinking THAT turned out to be. No-ones minding the store. This is an absolute disaster.

Notice that in April, not only did the money supply continue to collapse, but the monetary base fell also. M1 can be seen as THE PUBLICS MONEY in terms of predicting how business and the public will behave in the subsequent time periods. But the MONETARY BASE ought to be seen as THE BANKS MONEY in terms of how we might expect the banking system to behave down the track. And so the signs are that the money supply will continue to collapse even further. This is all coming about in the context of the Reserve Bank and our Australian economists farcically looking at first quarter GDP growth, and assuming that the economy is “strong”. When in reality, if we could get hold of business-to-business spending (aka “PRODUCTIVE EXPENDITURE” aka “GROSS INVESTMENT”) we would find out that the economy has collapsed all around us or is beginning to do so.

Any discussion with local economists about the reality of the situation is going to fill anyone who actually understands things with utter despair. The attitude of these otherworldly know-nothings is simply: “Listen here buddy. I HAVE A DEGREE.”   We are going to watch this slow-motion disaster open up before our eyes like being forced to watch James Camerons “TITANIC” every day for the next several years.

So what needs to be done? Well we see that the money supply has collapsed almost another 4 billion AUD in a single month. The money supply is down 17.5 billion or so, from its previous December maximum of 231.3 billion.  So the answer is to flush an extra 17.5 billion AUD into the monetary base, and at the same time set up a reserve asset ratio that will not allow the money supply to overshoot the previous high too much. You might set up a reserve asset ratio so that the money supply cannot go over about 235 billion or so. Then once this has been achieved, in the shortest possible time, the Reserve Bank must recompile all their figures to be able to chart the progress of GROSS DOMESTIC REVENUE and PRODUCTIVE EXPENDITURE (aka business-to-business spending) so that in future they can have these measures growing as slowly as possible. Growing as slowly as possible but MOST IMPORTANTLY growing as slowly as possible without ever actually falling.

It is from the persistent glacial growth of these metrics that we can have an economy progressing in a sustainable way , without ever having a recession….. and with living costs falling most of the time.

Advertisements

Responses

  1. Two words, wise sir – GOLD STANDARD
    anything else to be said about monetary policy is the intellectual inheritance of that over-rated sodomite from Cambridge

  2. Right. It has to be 100% backing though. And that would take quite a while to introduce smoothly without risk. But to say that Keynes is “over-rated” is to commit pretty severe understatement.

  3. We definitely need 100% backing Mr Bird. We cannot have these Rothschilds and Shylocks funding more Bolshevik revolutions with their ill gotten usurious gains. We may allow these so-called people of the book to live and work under our laws but they must not be given an ounce of privilege through printing fake money.

  4. Right. And how about this stock options racket our CEO’s pull?

    If Gross Domestic Revenue was pretty static then you’d want to shower your CEO’s with stock options as part of the package. Since the stock options would be worthless unless he could increase the value of the company. Supposing that stable money lead to reasonable pricing of the company.

    But if you have high and unstable fractional fiat as a result the share price is bound to jump way up high sooner or later. The money supply is near double digit growth on average. And so its no trick to increase the share price. You would have to be pretty useless not to.

    So these CEO’s just make an absolute killing on these stock options because of COMPULSION-CASH and this funny-money counterfeiting racket.

    So Sol Trujillo walking away with 93 million dollars is in no way a reflection of the free market. His stock options would probably be almost worthless had GDR been stable during his tenure.

    Its one of the most slipperiest looting mechanisms ever invented.

    And this stock options business is just one way amongst many in which the fractional fiat system starts funelling up vast amounts of loot to the already rich.

  5. I see you appear to endorse Wanker Quartermain’s anti-semitic comments about the Jews funding the Bolsheviks, Graeme.

  6. Hmmmmmmm. I don’t know the actual history of it. But if it has an historical basis its not “The Jews” is it? Its a handful of rich Jews if the story is true at all.

    Jewish people make up some of the most powerful theorists of liberty. Well in actual fact THE MOST POWERFUL. But then again its hard to make the case that the population as a whole wasn’t disproportionately afflicted with the socialist philosophy up until pretty recently.

    So I cannot endorse it one way or another. But its plausible history from where I sit that a handful of rich Jews might have got involved in this thing. After all the Jews weren’t treated well by the Czars. If they knew how the communists would treat their people …… well at this point I’ve got to cut out because I just don’t know the micro-history.

  7. At last a joint where like minded folks can chew the fat. A concern for the financial vigour of the country. Because this ultimately determines the political direction of the country. But hey, that’s the eqivalent of a very fundamental grasp of the rudiments. I see you’re either discussing a whole myriad of concerns or else, you’re a gaggle of right wing nerds immersed in anti-Semetic/weird conspiracies. Boy I sure hope it’s the former, as I refuse to repeat an earlier mistake of encountering a blog full of really catty Hets.

    Look, any chance of enlarging that pic. Graeme?

  8. Neville
    Mr Bird’s fat ass is not for sale

  9. Thank you Jason. Although I’m confident that Neville is not a homosexual. Still one can never be too sure and it pays to be preemptive about things. So good on you for putting the boot in right up front, though you’ve never heard of this fellow before.

    Neville don’t be put off. Hang out. Its pretty good to see the often weakass Jason going for the kick in the throat as if to say “Hello” like that. Just up and at you with the abuse as if he was part of the Ulster-Scots diaspora, that produced my line and that of Andrew Jackson. For in the past the only pre-emptive action I’ve seen Jason get up to is preemptive surrender.

    “Preemptive”. What a magnificent word. Thank you Mr President.

    Now as tp the Hebrew thing. No putative extant conspiracy I know of involves semites of-the-many-books (as opposed to semites of the Koran). No putative Jewish conspiracy that I know of in the past involved more than a handful of Jews except perhaps if you characterise the Zionist cause as a conspiracy (which I don’t.)

    When I look at movements involving great harm to people, like the environmentalist movement, I tend to think I’m out of my league when it comes to distinguishing a conspirator from an “useful idiot.”

    Debates between patriots which centre around discussing whether some lefty or other is a TRAITOR ………………………………………… or merely an USEFUL IDIOT. …………. Well these are all very healthy debates. I commend human beings to spend time involving themselves in these debates as often as they can. It is good to have these debates where we ponder whether Bahnisch and others are committing treason or whether they are just mindless zombies.

    But as healthy as such debates surely are, it is a sport where there is no need to keep score, and no particular advantage in figuring out who has the better case. These movements must be stopped, nullified and turned around. The precise nature of these movements doesn’t alter that imperative

  10. Goodness you’re certainly not short of words are you Graeme. In spite of the vast spiel, one can’t help noticing that instead of directly answering my question, you’ve managed to rave like a loon with verbal diarrhoea…Zionist Hebrews & Jews with an appropriate amount of conspiracies mixed with Patriotism…etc.

    Either you’ve got a twisted amalgam of ideas that want unload to the world or you’re shy & can’t handle a compliment.

    So for the 2nd time, I’m asking

  11. I tend to take the “useful idiot” view of things. But I don’t look down at people who take the conspiracy view of the situation. I just don’t know where the Jewish people come into these things. If these people are engaging in intrigue to control the world they sure did a bang up job. It would have to make them the most unsuccessful conspirators in the world given how things have worked out for them so badly.

    I tend to think the world is run by a few old farmers from the South Island of New Zealand. These guys have got it sorted. And they don’t even need to pay very much for the defense of their nation.

  12. Mr Soon
    If indeed you deserve the honorific, go and do some careful reading and study before writing absolute tosh. The hand of the Hebrews in various red revolutions in the past is self evident. And some of my best friends are Jews but we must be wary of this long persecuted race because their paranoia leads them down some very wrong schemes. Mr Bird as usual is the fount of wisdom.

    And Neville, we do not tolerate any open expression of sodomy around these parts and I suspect Mr Bird is too manly to engage in such pursuits.

  13. I figured that communists must have killed Patton. But could it have been from the American side?

    A new book says so and it ought not be discounted outright. Since until McCarthy went to work communists seemed to basically have Washington under control at least enough to establish the ruling group-think.

    http://www.telegraph.co.uk/news/worldnews/northamerica/usa/3869117/General-George-S.-Patton-was-assassinated-to-silence-his-criticism-of-allied-war-leaders-claims-new-book.html

    It must be remembered that his boy was also killed in an alleged vehicle accident prior to that. And also someone who worked close to him and was then in Korea was killed by way of vehicle accident.

  14. We have to now see if McCarthy was murdered. The idea that the Soviets and the communist party would not at least attempt to murder key Americans is without credibility.

  15. Complete logic fail by the over-promoted Davidson. He’s supposed to be a Professor of Economics. But he cannot handle simple logic:

    http://catallaxyfiles.com/2011/11/29/making-your-own-luck/comment-page-2/#comment-349677

    Our manufacturing is struggling but in absolute terms we manufacture a little bit more all the time. I point out that the economists are antagonistic to manufacturing, and with a total logic fail the doofus says:

    “What you talking about? Australian manufacturing is growing.”

    Its not a good thing to keep on promoting stupid people.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

%d bloggers like this: