My time in Japan this year has come to an end (sob). It is back home for me and I will have to wait until next year before I return. At any rate, today I have no time to write a post so you will have to be content listening to the music I have ready for the flight.
Episode 5 in our new weekly Manga series – The Smith Family and their Adventures with Money – is now available. Have a bit of fun with it and circulate it to those who you think will benefit …
Today (November 16, 2023), the Australian Bureau of Statistics released the latest – Labour Force, Australia – for October 2023. Employment rose by 55 thousand and unemployment rose by 27,900 on the back of a 0.2 points rise in participation – usually a sign of a healthy situation. But the special monthly factors (referendum and elections) which impacted positively on employment growth make it hard to assess where the labour market is at. I am guessing that November’s employment growth will be much lower and participation will fall again. In October, noting the special factors, employment growth was not strong enough in September to absorb the rise in the labour force as participation rose by 0.2 points. If the participation rate had not have changed, then the official unemployment rate would be 3.4 per cent rather than the official rate published of 3.7 per cent. There are now 10 per cent of the available and willing working age population who are being wasted in one way or another – either unemployed or underemployed. Australia is not near full employment despite the claims by the mainstream commentators.
It’s Wednesday, and today I discuss the latest US inflation data, which shows a significant annual decline in the inflation rate with housing still prominent. But for reasons I discuss, we can expect the housing inflation to fall in the coming months. I also discuss how on-going fiscal ignorance allows the Australian government to avoid investing in much-needed fast rail infrastructure which would solve many problems that are now reducing societal well-being. And then some of the best guitar playing you will ever hear.
This Tuesday report will provide some insights into life for a westerner (me) who is working for several months at Kyoto University in Japan.
The resurgence of economic orthodoxy is a great example of how declining schools of thought can maintain dominance in the narrative for extended periods of time if the vested interests are powerful enough. In the case of the economics profession, mainstream New Keynesian theory persists because it serves the interests of capital. Recently, the IMF urged the Australian government to engage in ‘fiscal consolidation’ in order to support further interest rate hikes by the RBA aimed at reducing inflation quickly. In general, the IMF is urging nations to engage in fiscal austerity in order to bring their public debt ratios down. The problem is that even their own research shows that these fiscal adjustments on average do not succeed. And, usually, they leave a damaged society where the lower income and disadvantaged cohorts are forced to endure the bulk of the negative effects.
Episode 18 of my – Podcast – Letter from The Cape – is now available. Coming today from Kyoto, Japan
Episode 4 in our new weekly Manga series – The Smith Family and their Adventures with Money – is now available. Have a bit of fun with it and circulate it to those who you think will benefit …
Given yesterday’s detailed monetary policy analysis, I am using today to present an array of news items and some brief analytical thoughts on central bank monetary policy. The latter is based on a very interesting speech that the governor of the Bank of Japan gave in Nagoya earlier this week. The juxtaposition with the way the Western central banks are behaving at present is stunning. There is also some self promotion and some announcements. Then we get to listen to Ron Carter. A good day really.
Yesterday (November 7, 2023), the Reserve Bank of Australia raised its policy rate target for the 12th time since May 2022 by 0.25 points to 4.35 per cent. It was an unnecessary increase, just like the eleven increases that preceded it. And, from my perspective it represents a broken policy model. The RBA policies are transferring income and wealth from poor to rich at rates not seen before in this country. They are pretending that the inflationary episode is demand-driven (excessive spending) whereas the data shows that it remains a supply-side phenomenon and the major drivers will not fall as a result of interest rate increases. In fact, one of the major drivers – rents – are rising because of the interest rate rises – RBA is thus causing inflation. The RBA is systematically wiping out wealth at the bottom end and transferring to the top end. The cheer squad for these rate hikes are the wealthy shareholders of the major banks who are recording record profits. A broken model indeed.