October 17, 2019

On Tuesday, 1st October 2019, the Reserve Bank of Australia cut the cash rate to 0.75% in order to stimulate the economy. Their objective was to reduce the unemployment rate to 4.5% and to increase wages. Over dinner that night, my daughter Kate quizzed me and Frank about how that worked. It turns out that it is not as obvious as Dr. Lowe suggests.

Kate:

I see that the Reserve Bank has dropped the cash rate to 0.75%. What is the cash rate?

Frank:

It is the rate that the Reserve Bank charges the banks for overnight loans.

It is the basis on which other interest rates are set. For instance, if the ra...

July 14, 2015

I exhort the politicians and bureaucrats of Europe to think again, to do better. The proposed Greek bailout entails too much intervention into the Greek economy and too many restrictions on the sovereignty of the Greek people. It will not work. The difficulties will endure for too long. It will all unravel.

 

A much better and more effective solution is possible. The Europeans should employ the well-proven and effective economic theory of Quantitative Easing .

 

I am surprised Paul Krugman and Joseph Stiglitz have not already recommended this.

 

The European Central Bank should simply print another...

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