© 2019 by Henry Thornton. 

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House prices have soared, share prices have rocketed, resource company shares have glowed in the dark, but consumer prices are subdued.  The graph shows the extent of the dislocation between asset inflation and consumer inflation in Australian markets.

Take a moment to...

' “Too little, too late”.  That, surely, is the verdict on Ian Macfarlane’s Reserve.  Inflation globally

is on the rise and global inflation is set to rise further. 

The the big challenge for Governor Stevens will be to confront and subdue Australia’s current infla...

"Bubble, bubble, toil and trouble for the RBA Board and for borrowers."

 Bubble, bubble, toil and trouble .

.Today’s Reserve Bank Board meeting will be the most momentous since late 2003. The Board confronts scenarios that could substantially discredit government policie...

The RBA Board, meeting today, had better remember that it is important to stay on the road, even if it means not leading the race.

Global economic growth is now as strong as it gets, propelled by overheated China and booming America.  Japan is in strong recovery mode. I...

December 2, 2003

Henry's advice for the RBA Board meeting on 2 December 2003 is to tighten and explain why, accepting full responsibility and accountability for its action. Stand back and watch the political fireworks!

Congratulations to RBA Governor Ian Macfarlane, for finally biting t...

October 7, 2003

'Henry' provides advice to the Reserve Bank on how to persuade its political masters to allow a necessary rise in interest rates.

The Treasurer on his return from his recent trip was careful not to endorse the "no rate increase" line of his colleague Nick Minchin and hi...

... how high, how soon?

Despite the RBA Governor’s recent frankness on a ‘normal’ level of interest rates, there is still conjecture about the extent and timing of the coming rate rises. Applying a ‘forward-looking Taylor Rule’ that takes account of targets and current...

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The next financial crisis ... is inevitable

The weekend AFR's article reporting the GFC work to save our financial system was interesting. RBA chief Glenn Steven is reported as saying something like: 'We flooded the system with liquidity'. (An action recommended by Bagehot all those years ago.)

Coincidentally, this week's Economist looks at the global equivalent under the heading 'Has finance been fixed?'

It concludes: 'Policymakers have made the economy safer, but they still have plenty of lessons to learn. And fracturing geopolitics make globalised finance even harder to deal with. A decade after Lehman failed, finance has a worrying amount to fix.'

Deep within the article is a statement I have not heard before.

'The Fed acted as lender of last resort to the world, offering foreigners $1trn of liquidity.

[other sources say total swaps were more like $ 11 trn]   Since then, offshore dollar debts have roughly doubled. In the next crisis, America’s political system is unlikely to let the Fed act as the backstop to this vast system, even after Donald Trump leaves the White House.'

This is a truly scary remark.

Comments welcome. Contact Henry here.



Who is Henry

 Henry Then...

"Henry Thornton (1760-1815) was a banker, M.P., philanthropist, and a leading figure in the influential group of Evangelicals that was known as the Clapham set. His 'Enquiry into the Nature and Effects of the Paper Credit of Great Britain (1802)' is an amazing performance. "...it anticipates in some points the analytic developments of a century to come. No other performance of the period will bear comparison with it, though several, among them Ricardo's, met with much greater success at the time as well as later... He was one of those men who see things clearly and who express with unassuming simplicity what they see."

This is the judgment of Joseph Schumpeter, one of the twentieth century's finest economists, in his monumental 'History of Economic Analysis', Allen and Unwin, 1954, p.689.


Henry Now...


Henry Thornton is the nom de plume of a prominent economist. Like his predecessor the modern Henry Thornton has been a banker and an advisor to M.P.s although he is not a politician himself. He is no evangelist but is keenly interested in a wide range of economic, social and political issues... 

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