Reserve Cuts Interest Rates by a Whopping 1%

Karl FitzgeraldCommentaryLeave a Comment

Economic Apocalypse
Creative Commons License photo credit: azrainman

Will it ever be learnt? The Greenspan playbook of cutting interest rates pushed the asset bubble ever higher and higher in the early to mid 90’s. Now Australia’s Reserve Bank governor Glenn Stephens is endeavouring to do the same. And gee whizz the markets rally. Surely this is an act of panic. Yet again a central bank backflips for the financial sector. But to whose advantage?

Once again, the real estate interests and their financial symbiants will get rescued from the folly of ignoring the inevitable real estate cycle. The real estate cycle is caused by government and gets rescued by government. This indicates the real purpose of government: to protect and subsidize the landed interests, including lenders who use land as collateral. Since land values periodically crash, the real interests need to be bailed out if they are to keep being protected. Meanwhile, worker-tenants pay not only taxes but higher rents to the landed royalty.

taken from If you’re going to bailout anybody

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