Famous Australians speak out

Several weeks ago I entered the Economic lists for the first time in years. I listed concerns of a fine Australian, name of Tom Switzer of the Centre for Independent Studies. He offered a list of four serious problems likely to bedevil the world economy. Please check his list in the accompanying article.

My comments on macroeconomic policy (17/12/21) were as follows:

‘Relative to these powerful hypotheses, a bit of inflation is presumably not highly relevant. Australia’s employment growth is good news, yet if inflation is out of control in the major nations, interest rates will need to rise noticeably. There will be a flow on even to Mr Lowe’s happy Australians.

‘My own concern is that this is likely to become a fifth wheel on the scary world economy. I’d be far happier myself if cash interest rates had been set at a minimum of 3 % and if budget deficits were rather smaller – including as well as the Federal budget deficit those of most states.’

Australian

Peter Costello and John Howard

Now two famous Australians, John Howard and Peter Costello have had their say. This was reproduced in today’s (2/1/22) Weekend Australian.

The front page heading is; ‘Economy needs new year ‘reset’.’

‘John Howard and Peter Costello have criticised the Reserve Bank of Australia for its management of interest rates that has contributed to the rapid rise in house prices and they rebuked governor Philip Lowe for saying the official cash rate would remain near zero until 2024.’

‘The former prime minister and treasurer have also urged the Morrison government to make fiscal repair and debt reduction a priority as Australia emerges from the pandemic, concerned that future generations may never see a debt-free government.

Several more criticisms follow, and this article needs to be read by every responsible Australian. I merely add one more paragraph, from Peter Costello:

‘The medium-term fiscal policy that I laid down was to balance the budget over the economic cycle. As you come out of recession, and start growing again, you should move back into surplus. That was my policy. But now the government says they won’t try and move towards balancing the budget over the cycle until unemployment goes below 5 percent’.

So far as I know, this is the first such savage criticism of the mighty RBA. It needs a thorough analysis and almost certainly the retirement of Dr Lowe. As I have said many times his own paper with a more senior American economist said interest rates should raise interest rates to curb Asset inflation.

Read the full article here, dear readers.

2001 cabinet papers: Economy needs new year ‘reset’, say John Howard and Peter Costello (theaustralian.com.au)

KULTURE

Fiona Prior traces the path of a possible Leonardo da Vinci work from its $1175 purchase from a New Orleans auction house in 2008 to its acquisition by a mystery bidder for US$450.3 million in 2017… quite an appreciation in just nine years! More here.