Talking Politics

[The Big Richo]

WTF are rising interest rates going to do, to rein in spending on electricity / gas and petrol.

This is my question as well. Don't pretend to know anything about economics but surely when those things are driving inflation all that happens by driving interest rates up is people find it harder to pay those bills.

Or is the idea that you kill off any spare money people might have after paying for essentials? In which case good luck to all the businesses most impacted by Covid who will be the first to feel that.

Even though higher interest rates are very good for my personal situation, I still can't understand the purpose of this.

 

[BT Tiger]

Chris Kenny reckons they weren't clear enough on their climate change response and it should be more like - Aust emissions have FA impact on the overall climate and reducing them will have FA impact on the climater so why should we do anything?

The tax I pay has FA impact on the Australian economy so why should I pay tax?

It *smile* me that the ABC host Sky News hacks like Chris Kenny, it's not like Sky News ever host any ABC personalities.

 

[shad]

I've posted my thoughts on this in the past, but look at the reasoning behind the RBA decision.

View attachment 15643

WTF are rising interest rates going to do, to rein in spending on electricity / gas and petrol. Seriously. If anything, as we enter winter spending on particularly gas is going to increase significantly (they will seasonably adjust, but with gas rates being significantly higher than they were this time last year. Also, with more people being pushed to get back to the office, how will increasing interest rates affect petrol prices downwards. If anything demand will increase for both of these areas, and with the supply chain driving the base prices higher, interest rate increases will do absolutely NOTHING to rein in spending in these areas.

All it will do, is ensure there is less money supply around, higher proportions of disposable income will go towards electricity / gas and petrol and less money will be spent elsewhere in the economy. They go on to say:

View attachment 15644

Whilst 3.3% growth is ok, remember the time period that this was over, covid affected years.

A 0.5% increase is a large increase, and with the macro economic environment, my view is this is a dangerous time to take such an aggressive step. It was clear there were some itchy fingers to increase rates, I'd have thought a softer approach may have been the more prudent move.

Time will tell I suppose.

I live off the grid and I reckon most Australian households could cut their electricity bill significantly if they were motivated.

 

[mrposhman]

I live off the grid and I reckon most Australian households could cut their electricity bill significantly if they were motivated.

I think you are right to an extent, but the reasons to live off grid are personal, as batteries at the moment are very expensive. I assume you need to use a battery for non daylight hours?

Whilst I get what you are saying, it will take a long while if everyone wanted to move off grid, so doesn't change the point I was making.

 

[mrposhman]

This is my question as well. Don't pretend to know anything about economics but surely when those things are driving inflation all that happens by driving interest rates up is people find it harder to pay those bills.

Or is the idea that you kill off any spare money people might have after paying for essentials? In which case good luck to all the businesses most impacted by Covid who will be the first to feel that.

Even though higher interest rates are very good for my personal situation, I still can't understand the purpose of this.

Agreed. I'm not sure the economy is actually as strong as they think it is but only time will tell on this.

The theory around rising interest rates to manage inflation levels is sound, when it is demand driving inflation. It doesn't work when it is supply chain driven which is what we are seeing right now. This will put pressure on the economy.

 

[Redford]

I don't think they'll fool most of the voting public though.

The Liberal party reaction to the election is quite revealing.

Is it ever. They’re continuing to make even bigger fools of themselves than before (if that’s actually possible) and validate for people, why they voted against them.

 

[shad]

I think you are right to an extent, but the reasons to live off grid are personal, as batteries at the moment are very expensive. I assume you need to use a battery for non daylight hours?

Whilst I get what you are saying, it will take a long while if everyone wanted to move off grid, so doesn't change the point I was making.

I'm off the grid due to my location so I have batteries with a generator fo back-up. This time of year we are pretty miserly with power, but the habits are easy to form and they don't really affect my quality of life. I always laugh when people complain about high power prices because they could easily cut their consuption in half.

 

[mrposhman]

I'm off the grid due to my location so I have batteries with a generator fo back-up. This time of year we are pretty miserly with power, but the habits are easy to form and they don't really affect my quality of life. I always laugh when people complain about high power prices because they could easily cut their consuption in half.

Yeah I agree and I live on a relatively low energy consumption lifestyle, and I'm looking at increasing my solar system. I moved into my current house in March and there is a legacy system here but I don't think its operating anywhere near where it should do (I check the inverter and through the middle of the day its generating about 200w so I think its well below where it should be. Its a small system (I think its 1.5kw based on the number of panels) but I don't think they are generating anywhere near what they should even accounting for it being winter.

 

[The Big Richo]

Yeah I agree and I live on a relatively low energy consumption lifestyle, and I'm looking at increasing my solar system. I moved into my current house in March and there is a legacy system here but I don't think its operating anywhere near where it should do (I check the inverter and through the middle of the day its generating about 200w so I think its well below where it should be. Its a small system (I think its 1.5kw based on the number of panels) but I don't think they are generating anywhere near what they should even accounting for it being winter.

Not sure where you live Mr P but in Victoria you can log on to your electricity distributor (as opposed to your retailer) and see your daily use and solar generation. That should give you some info but if you show it to a solar company they will be able to tell you for sure.

 

[shad]

Yeah I agree and I live on a relatively low energy consumption lifestyle, and I'm looking at increasing my solar system. I moved into my current house in March and there is a legacy system here but I don't think its operating anywhere near where it should do (I check the inverter and through the middle of the day its generating about 200w so I think its well below where it should be. Its a small system (I think its 1.5kw based on the number of panels) but I don't think they are generating anywhere near what they should even accounting for it being winter.

One thing you can do yourself is give them a clean which can make a 10-15% difference. Otherwise get someone to have a look as it could be a range of issues. It should have been functioning well enough in March-but the last few weeks have been pretty grim.

 

[mrposhman]

Not sure where you live Mr P but in Victoria you can log on to your electricity distributor (as opposed to your retailer) and see your daily use and solar generation. That should give you some info but if you show it to a solar company they will be able to tell you for sure.

I had no idea you could do that. Thanks TBR. I'm down on the peninsula and looks like United Energy provides what you say. Does this show the sola generation that has been used in your house or just that what has been fed back to the grid?

 

[The Big Richo]

I had no idea you could do that. Thanks TBR. I'm down on the peninsula and looks like United Energy provides what you say. Does this show the sola generation that has been used in your house or just that what has been fed back to the grid?

It only shows you the feed back to the grid but if you look at the daily figures it shows hour by hour so you can easily work out what your base line use is and then use that to check the solar.

 

[mrposhman]

It only shows you the feed back to the grid but if you look at the daily figures it shows hour by hour so you can easily work out what your base line use is and then use that to check the solar.

Thanks TBR, this is great data they provide. I got this from the Summary report they produce, so it shows the solar is definitely working, as you can see the drop in my nightly base load drop as soon as daylight hours kick in (I'm not an early riser as you can see haha). I should be able to use this to estimate my current usage excluding solar to see if its worth upgrading.

I do find it a bit dumb, that I can't receive the state government rebate if I've already got solar and want to either replace or expand my system.

 

[tigersnake]

funny story, I bought an old house with a small 1.5kw solar setup. It was deceased estate, old lady built the house in the 50s and lived there until her late 90s. Early adopter on solar, got in on the ground floor for a generous rate, 50c or more I think, before they realised how popular solar would become. Anyway, got a letter from the power co. ...Dear Mr Snake, the generous solar rate died with the old lady and is not available to you as the new owner, just letting you know you will be shifted to the new rate bah blah. yours sincerely, the power co.

Fair enough, whatever, I thought to myself. But they never changed it! 2 years went by, then 3, then 4. Never got a bill, always had healthy credit. then I got another letter. Dear Mr Snake, we stuffed up. Because its our mistake, we will not bill you for the previous 4 years, but the party is over, yours sincerely, the power co.

cie la vie. Good while it lasted.

 

[tigersnake]

Yeh, and I imagine that's in part because of the shortage of overseas working holiday makers and students.

They've been sold a pup.

I watched Q&A last night, there is little doubt the LNP are going to move further to the right based. Chris Kenny reckons they weren't clear enough on their climate change response and it should be more like - Aust emissions have FA impact on the overall climate and reducing them will have FA impact on the climater so why should we do anything?

Its amazing they are still peddling that argument, it didn't hold water 10 or 15 years ago, but now its just ludicrous.

 

[Sintiger]

Agreed. I'm not sure the economy is actually as strong as they think it is but only time will tell on this.

The theory around rising interest rates to manage inflation levels is sound, when it is demand driving inflation. It doesn't work when it is supply chain driven which is what we are seeing right now. This will put pressure on the economy.

Yes, conventional wisdom was that interest rate increases curbed demand and restored the balance between supply and demand. Certainly that is what we were taught when I studied economics many years ago.
As you rightly point out not all the inflationary pressures are demand driven but some still are. Housing is a key part of the CPI calculation for example so I think interest rate rises will have some effect.
Years ago it was accepted that wages growth was a key driver of inflation but I am not sure now. It is still a driver but I suspect not to the same extent as it was in the 1980s as we have an economy now much more susceptible to imported inflation
One other thing to remember is that we have another 20 cents or so to be added to the price of fuel when the excise reduction the Libs brought in ends, I think soon?
Economics is not an exact science so who knows for sure? As one of my economics lecturers once said “economics is one of those subjects where we ask the same exam questions every year, we just change the correct answers”

 

[TT33]

The Opposition are warning the Government against any "unnecessary spending" I nearly choked on my weaties .

 

[tigersnake]

The tax I pay has FA impact on the Australian economy so why should I pay tax?

It *smile* me that the ABC host Sky News hacks like Chris Kenny, it's not like Sky News ever host any ABC personalities.

The ABC have a charter that forces them to include far right hacks on every single discussion panel they have to ensure 'balance'. A Howard masterstroke.

Sky on the other hand...

 

[mrposhman]

Yes, conventional wisdom was that interest rate increases curbed demand and restored the balance between supply and demand. Certainly that is what we were taught when I studied economics many years ago.
As you rightly point out not all the inflationary pressures are demand driven but some still are. Housing is a key part of the CPI calculation for example so I think interest rate rises will have some effect.
Years ago it was accepted that wages growth was a key driver of inflation but I am not sure now. It is still a driver but I suspect not to the same extent as it was in the 1980s as we have an economy now much more susceptible to imported inflation
One other thing to remember is that we have another 20 cents or so to be added to the price of fuel when the excise reduction the Libs brought in ends, I think soon?
Economics is not an exact science so who knows for sure? As one of my economics lecturers once said “economics is one of those subjects where we ask the same exam questions every year, we just change the correct answers”

Yes you are right, housing is part of it but the CPI calculation doesn't include rents etc, it includes new housing and renovations, so in a way it is demand driven, in other ways, less so. The 5 key areas of the inflationary increase are Food, Transport, Energy, Education and Housing.

You are right on the fuel excise duty. This expires I think in September (I think it was provided for 6 months), so this in itself will result in inflationary rises in the September quarter unless oil prices reduce which seems unlikely.

The biggest concern with rising interest rates, is if this curbs spending, it could lead to a deflationary cycle if it reduces disposable income enough, whereby people completely rein in spending particularly on consumer goods. I think we are already seeing concern in this space in the market, with the level of sales that are on right now.

 

[BT Tiger]

Not a big Perrotet fan but this is pretty funny.

https://twitter.com/i/web/status/1534361680582692866