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Paddles B'mere said..
Betting on the RBA having to raise interest rates within the next 12 months would have pretty short odds I reckon Main, do you think it won't happen?

Can't see it !
Where I'm operating at the cold face in a number of different businesses involved in construction, development and property financing there is a bleak/panicked outlook. Really no different to the GFC at a ground level - the cracks are appearing and it's surprising similar. Especially for those who are leveraged and have been bullish. The mezz/equity lenders are sh$tting themselves. Assets have been overpriced for 5 years !

The man for the job

Oh yeah, he presided over some pretty good inflation figures

hyperinflation would only occur if the printing of money also coincided with the private enterprise also generating income, hence too much money in the economy.

The govt is handing out money as the economy is not generating sufficient income due to shutdown on tourism, sports, etc.

it is simply to offset the loss of income to prevent recession.

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Gboots said..
The man for the job

Actually I just decided to read this article, and it was interesting

en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe

Why is it that all these crazy countries try to blame others when things go wrong. The same is happening/has happened in Venezuela, where the government is saying that other countries are destabilising their currency, but it really can't happen like that unless the other countries actively try to sell them, which does nothing because they have to buy them first.

The important thing about hyperinflation is that once the public think the money will drop in value, it keeps dropping in value... for fear that it will drop in value. Smart countries would eject straight away and fix to the USD or Euro, or in that case, the Rand.

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FormulaNova said..

Gboots said..
The man for the job

Actually I just decided to read this article, and it was interesting

en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe

Why is it that all these crazy countries try to blame others when things go wrong. The same is happening/has happened in Venezuela, where the government is saying that other countries are destabilising their currency, but it really can't happen like that unless the other countries actively try to sell them, which does nothing because they have to buy them first.

The important thing about hyperinflation is that once the public think the money will drop in value, it keeps dropping in value... for fear that it will drop in value. Smart countries would eject straight away and fix to the USD or Euro, or in that case, the Rand.

Pegging theirs to stronger currencies has always been done w every country who faced the problem and alone never fixed the problem (From literally A to Z) Argentina to Zimbs had tried that before...

Returning to the gold standard stuffed up England in the Great Depression, too.

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Tequila ! said..

FormulaNova said..

Gboots said..
The man for the job

Actually I just decided to read this article, and it was interesting

en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe

Why is it that all these crazy countries try to blame others when things go wrong. The same is happening/has happened in Venezuela, where the government is saying that other countries are destabilising their currency, but it really can't happen like that unless the other countries actively try to sell them, which does nothing because they have to buy them first.

The important thing about hyperinflation is that once the public think the money will drop in value, it keeps dropping in value... for fear that it will drop in value. Smart countries would eject straight away and fix to the USD or Euro, or in that case, the Rand.

Pegging theirs to stronger currencies has always been done w every country who faced the problem and alone never fixed the problem (From literally A to Z) Argentina to Zimbs had tried that before...

How so? Does it create problems in the economy itself because of low value products and services?

The wiki article mentioned that they switched, but then went back and I assumed that this was due to another example of stupidity...

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Bara said..
inflation will go up as measured by our CPI - its inevitable after a 15% to 20% currency devaluation. Well past the RBAs target.

Just look at the UK and pound post GFC for a guide. Currency devaluation followed by inflation into a weak economy.

We have no knowledge of this here in oz as we were either saved by rudd or by china depending on your level of economic knowledge.

The RBA will ignore our coming inflation spike though and call it transitory.

This will mean even more asset inflation.

is basically eppos golden age.

Ill take that bet paddles and ill even give 2 cases of corona to your 1 if im wrong

Not my golden age. It's just history repeating. And around we go .... weeeeeeeeeeeee

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FormulaNova said..

Smart countries would eject straight away and fix to the USD or Euro, or in that case, the Rand.

To "fix" your currency to another, you need vast reserves of the currency you wish to fix it to, so that you can buy your currency with their currency when yours is under pressure. If the market doesn't believe you have the necessary reserves, your currency will be shorted, making the situation even worse.

This also works in reverse, such as when the Chinese keep buying USD and selling RMB to keep their currency artificially low (or so they are accused of doing).

How long do you reckon the RBA might ignore it for Bara? I thought they'd jump on it pretty quickly.

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AUS1111 said..

FormulaNova said..

Smart countries would eject straight away and fix to the USD or Euro, or in that case, the Rand.

To "fix" your currency to another, you need vast reserves of the currency you wish to fix it to, so that you can buy your currency with their currency when yours is under pressure. If the market doesn't believe you have the necessary reserves, your currency will be shorted, making the situation even worse.

This also works in reverse, such as when the Chinese keep buying USD and selling RMB to keep their currency artificially low (or so they are accused of doing).

Ahh, thank you for explaining it.

I guess I was writing one thing and thinking another. I meant actually using the other nations currency, not just pegging it to the other ones. I have seen Venezuela try to do this (pegging), and yes, it was a complete failure for exactly the reason you outlined. The government had no intention in actually swapping their currency for hard USD to customers at the rate they were trying to fix it. Apparently they do exchange, but if they actually do, its no doubt to the dodgy government officials so that they can go on holidays OS.

In Venezuela, the public actually use the USD as long as the officials don't catch you. In Argentina the official rate is also way off the black market rate. In Panama, they actually use the USD and some sort of combination where it is a local denomination, but is for Panama only even though its using the USD. I am not sure if its just the coins they do this for or the notes too.

Pegging... *giggle*... gross