billy blog ... some alternative economic thinking

Today's 0.25 per cent rise in interest rates by the Reserve Bank of Australia (RBA) is a sign of the madness that goes for macroeconomic policy these days. This is the third rate rise since May 2006 and short-term rates are now 6.25 per cent. The yield curve has been inverting for a while now - which means that short-term rates are higher than the longer term investment rates. When this happens the economy is slowing and typically sliding into recession.

The RBA defends its decision onthe basis of recent inflation figures which show that the acceleration in the price level rem  More ...