Since 2019 the RBA created $508 billion out of thin air through electric journal entries. I have been warning the RBA directly that this money printing will contribute to the inflation we are experiencing.
What did Governor Phillip Lowe say? He acknowledged I warned about creating money, he acknowledged it was a mistake and he also said nation building projects like Iron Boomerang would help fix inflation.
Transcript
Senator ROBERTS : Thank you both for being here. Dr Lowe, in 2016, I had my first Senate estimates session. I asked the Treasury secretary, who at the time was John Fraser, a question about the huge increase in money supply. He pretty much dismissed me and said, ‘No, don’t worry about it.’ At the next Senate estimates session, he said yes; he acknowledged it. In the third one, he said, ‘Yes. The theory is that it will lead to inflation, you’re correct, but we haven’t seen it yet and we don’t know why.’ So I understand that it’s a vexing problem. You said that one of the solutions is to make the pie bigger. You are saying that the answer to the government’s funding dilemma is to grow the economy and, as a result, the tax base. Have you heard of the project Iron Boomerang? We’ve got the world’s best metallurgical coal for making steel in the east coast and the best iron ore in the west coast. It would build a railway line fully funded. The investors are ready to go. There is a Senate inquiry taking off on it pretty soon. It would take coal to the west and iron ore to the east. There would be massive steelmaking complexes both in the east coast and the west coast. It would remove shipping and road transport. It would be a huge investment. It would add $100 billion to our GDP, which is five per cent. It would open up the north and all of central Australia for the Indigenous living there and rural communities and agriculture. Is that something that we should be thinking about?
Mr Lowe : If the rate of return on that investment is as you describe it and both the financial and social returns are as you describe them, it is something to think about. There may be other projects that have better returns. I don’t want to endorse it, because I don’t know anything about it. But, in principle, we should be looking at the financial and social returns we get from these projects. If they are greater than the cost of funding and the economy has enough resources to do it, then certainly we should be thinking about it.
Senator ROBERTS: We’ve got investors, we’re told, from overseas lining up and also from within. I will come back to the formal questions I had. The Reserve Bank spent the COVID years increasing the money supply, as Deputy Governor Debelle said at the time, by electronic journal entry; they are his words. It is commonly called printing money. At an earlier estimates, I was given a figure of $508 billion as the total for electronic journal entries since 2019. Can you update that figure, please?
Mr Lowe : That’s still roughly the same. I think our balance sheet is a bit over $600 billion at the moment.
Ms Bullock: It is about $600 billion. Exchange settlement account balances are probably around $450 billion or something like that.
Mr Lowe : Our balance sheet has roughly $100 billion of banknotes on it. That is still $100 billion of banknotes. That is $4,000 for every person in the country, which I find extraordinary. That is one of the elements on our balance sheet. We have these exchange settlement balances, which is the electronic money that you talked about.
Senator ROBERTS: Thank you. So inflation has gone from not a problem to a 30-year high, 7.8 per cent in the December quarter. On 2 February 2022, Dr Lowe, you said that inflation had surprised on the upside. In March 2022, you predicted inflation would peak at 4.2 per cent. That was at the ABA, Australian Banking Association, conference that we both attended. Why were you surprised, Dr Lowe, when many, including myself, had spent 2020 and 2021 warning the Reserve Bank and the government, including at Senate estimates, that the sheer volume of this money expansion would inevitably cause significant inflation?
Mr Lowe : You were one of these people who were making the argument that the money supply expansion was ultimately going to be inflationary. That has played a role. As we were talking about before, at least half, maybe three-quarters, of the increase in inflation is due to what went on in Europe and the supply-side disruptions. The expansion of money supply, the low interest rates and, I would say, the government support during the pandemic have driven inflation. But it’s not the full story.
Senator ROBERTS: Is 7.8 per cent inflation the price the public is paying for the Reserve Bank supporting the government’s wasteful mismanagement of COVID using lockdowns and other restrictions, leading to JobSeeker, JobKeeper and mismanagement that the government caused, which is what necessitated the money creation? Did you even consider saying to the government, ‘No, I’m not going to print the massive amount of money, so perhaps reconsider your COVID strategy’?
Mr Lowe : No. We did not do—I want to be very clear about this—the money creation at the request of the government. The nine people who sit on the board of the Reserve Bank decided to do this. We had meetings with the government and we understood—
Senator ROBERTS: Was it because the government had put in place so many onerous restrictions?
Mr Lowe : No. It is easy to forget this now. In early 2020, we were being told by the health people that tens of thousands of Australians would be dead within months. Remember that there were preparations for, including in the Reserve Bank, temporary morgues in our cities. Our borders were closed. We were told the vaccine was maybe three years or longer away. This was going to be something that would take the society a long time to get over. That is what we were being told. That was the information—
Ms Bullock: And we were observing what was happening overseas.
Mr Lowe : And we were seeing what was going on in New York and Italy. It was really terrible and scary. People were locked in their homes. That was the base upon which we made the decision to go on this route. It turns out that the scientists developed a vaccine much more quickly and the economy was more resilient and we did too much. But we didn’t do too much because the government told us to or we wanted to; we thought it was the right thing to do given the information we had at the time.
CHAIR: We’re out of time for this line; sorry, Senator Roberts.
So the RBA board of nine highly educated members together in a room and were fooled into injecting 600 billion dollars into the economy justified by the number of manipulated COVID deaths (all deaths were COVID deaths regardless of whether people died of respiratory failure or not) and via the now proven massive numbers of false positive cases generated by PCR tests and a newly invented term of asymptomatic cases, sensationalised by 24×7 media reporting and predictions of mass deaths based on Neil Ferguson’s failed epidemiology models that the Doherty Institute and the Burnet Institute used as the basis for their models that Australia’s governments state and federal used to justify the massive human rights abuses, shutting down of the country and paying people to stay home while real economic output was flat-lining but awash with money ?? Since when does the RBA take advice from Health authorities? If the RBA’s mandate is to keep inflation between 2-3% then that is its job, no more no less. If the government of the day wants the RBA by way of request that it requires money to be printed then that should be in the public domain so the public is made aware of what is coming down the road. For the RBA to abandon its mandate of keeping inflation between 2-3% by making decisions based on media reporting and advice from health bureaucrats that use worst case scenario modelling the board of the RBA should be sacked today. I dont buy Mr Lowes explanation at all. When I see the smugness of those who say that all Australians are feeling the consequences of this blatant incompetence most are on 6 figures and a few dollars in increased power bills and food costs etc are not such a big deal, however the median pay of 50% of Australians is $50,000 before tax and they are half of the Australian population and now we know how incompetent the board of the RBA is!!
It’s a pity that One Nation doesn’t dig a bit deeper and ask why are the RBA ‘printing money’ and how much inflation are we importing from the USA? To expand the money supply for good investments like infrastructure that increases productivity is one thing, but debt in US$ are another thing. In Australia we tend to look at the results of inflation, i.e. the increase in prices that erodes the purchasing power of wages and pensions thereby making us all poorer unless wages and pension rise. However, the fallacious argument that wage increases inflation holds sway in most of the legacy media propaganda. Then the RBA increases the cost of money by increasing interest rates! Hmmm I wonder how cutting demand/consumption ie our purchasing power of disposable income helps? Don’t you ever question why the RBA and Governments have an inflationary target of 2.5% to 3%? So a bit of inflation is OK but anything over our bench mark is bad. Yep inflation is a disease but the RBA has only one answer or one leaver to pull “increase interest rates” without ever saying from whence the disease cometh. Perhaps One Nation should look at expenditure to the MIC. AUKUS Nuclear-powered subs? FFS! In other words, look at the world wide spike of inflation. I was almost going to say the spiked protein. LOL
The RBA’s governor says, “It’s the job of the central bank to do sometimes what’s unpopular in the national interest…”, however he lacks the tools to fight inflation.
The RBA’s only tool is the interest-rate hammer when controlling inflation requires pliers, a magnifying glass, a drill, and some casting moulds.
Pliers to cut the cables to its money-printing computers, because quantitative easing devalues all dollars in circulation and causes inflation.
A magnifying glass to examine Planck’s Law, Wien’s Displacement Law, Kirchhoff’s Law of Thermal Radiation, and the Second Law of Thermodynamics to debunk CO2-warming so we can dump the renewables that force up power prices and destroy jobs and the environment.
The drill can then be used to tap into Australia’s abundant oil and gas, beginning with the Arckaringa Basin deposits under Coober Pedy that hold more hydrocarbony goodness than the Saudis ever had.
Our freshly unlocked abundant wealth can then be used to purchase many tonnes of gold and the casting moulds can be put to work forming gold bars so we can return to a gold-backed currency, like the BRICS nations are doing.
Then we’d have a currency that was immune to supply chain disruptions caused by global panicdemics over rebranded flu seasons because as foreign inflationary pressures impacted gold our currency would rise with them.
Just don’t hold your breath waiting for our highly paid “experts” to figure any of that out.
Yes! It is infuriating to read the shonky prestitute reporting in rags like The Age and co that try and give the govt and Lowe a pass on this.
I have made several comments on such articles that remind the RBA governor that HE CAUSED THE INFLATION BY INFLATING THE MONEY SUPPLY over
Covid.
Of course the Age never published any truth or anything that challenges their narrative.
They printed notes backed by hot air like it was going out of style to cover their @rses when they unnecessarily locked everyone down and out of their jobs so that they could bribe and placate an angry and hurting people with $ so that they wouldn’t storm the Bastille and show them how much they appreciate the abuse. That’s what hungry people with nothing to lose tend to do historically.
It’s has now turned out that none of it was necessary.
So now the Governor, having lured the suckers into a housing market with very low interest rates and false promises of them staying that way now thinks that raising them unreasonably “to fight inflation” makes him some kind of hero.
Why should everybody else have to pay for his corruption?
It’s a huge bait and switch!
A lot of people are going to lose their homes and be homeless because of this piece of cr@p.
To try and pretend that inflation just magically happens and that he has no control over it is completely disingenuous.
He does! He and the govt under Morrison caused it.
Of course he’s not the only one to blame although he takes the lions share. There’s the government itself and the people who fell for the trap.
If they’d been paying attention over the last few years they would have known not to trust anything the govt or the RBA or banks say.
As soon as we heard them say that rates were going to stay low we said that what they mean is that rates are going to go high and that it was a trap.
And that’s what happened.
But one thing we can all rest easy about is that the govt and Lowe will never ever be inconvenienced or have to suffer one tiny little bit for the destructive policies that they’ve inflicted onto everybody else.
They’ve made sure of that.
But they “understand how hard it is”
Warms the heart doesn’t it.
Ok then. I see that you’ve “moderated”my comment right out of view.
I didn’t say anything that was untrue and there was no abusive language.
If you don’t want my comments then you clearly don’t want my support either.
So That’s ok.
I won’t be commenting anymore and I now withdraw my support.
I’ll be cancelling my subscription.
What ever happened to the new lady parliamentarian who suggested the Govt. simply print ore money to remedy various financial problems?
That suggestion was made many years ago.
What if WE ARREST the PRIVATE BANKERS of our Central Bank? Iceland Arrest their bankers, and threw out the “national debt”… Basically Said… WE REFUSE to PAY.
$5 trillion, 029 billion, 914 million, 480 thousands, 960 hundred.00 dollars is the worth of our nation.
Each Australian is worth $191,453.00 multiplied by population. The above is in dollars. WOW!!!
Our nation is in debt by $1.186 trillion to April 2026.
How to fix it and move on.
How about we introduce the Bradbury Pound which is real money measured by each person’s worth. This was an emergency system passed in England days before WW1 was declared for the banks never had enough gold to pay out the people with bank runs. England had to preserve its gold bullion stocks. People were scared and this was the best way to deal with it.
Our money today is backed by thin air, fake money and we are being conned by the Bankers who influence the politicians. This fake money has got to an unfathomable depths where the bankers only way out is to have a huge world economic crash so big never seen in history before. Why because they got greedy and now it is untenable. The fear of doom is being blamed on the conflict in Ukraine by Russia so we all say hallelujah a digital currency will save us all. Well in fact it will enslave us all to compliance and commissions shareholder profits. We will be slaves to the digital world.
All we have to do is not comply say NO NO NO…..