Who works for whom

If there is one thing in the Australian economic discourse that drives TAFKAS batty it is the authority and deference afforded to the Reserve Bank of Australia and its officers.

(and when TAFKAS say batty, that does not mean coughing and sputtering with respiratory failure).

Breaking news – RBA officials are humans, flesh and blood with no special powers of insight and prediction.  They have (presumably), 2 arms, 2 legs, 10 fingers and 10 toes.

There is nothing special about these people.

Perhaps they have access to better data than the rest of us, but that’s it.   They don’t have a monopoly on wisdom or intellect.  In fact, given some of their actions, there is evidence of a deficit on wisdom or intellect, but nevertheless.   Their forecasts are as regularly wrong as those of the rest of the economic chattering class.

Despite this, they are too often offered privilege and protection by too many.  Take for example this from Labor Senator Katy Gallagher questions at the Senate Inquiry into COVID-19:

Governor Lowe, I ask this in the most humblest of ways, but is there a way you could tilt your camera down a bit better.

It’s a request from the media.

My apologies for having to start that way.

The humblest of ways.  Governor Lowe is a public servant not the Queen of England.

Oh Governor Lowe.  Please.  Pretty please.  If you would grace us with your sapience?

Would Senator Gallagher be so deferential to any other public servant?  Unlikely.

Governor Lowe is appearing at the inquiry because he was directed to and not the other way around.

For Pete’s sake!

This entry was posted in Uncategorized. Bookmark the permalink.

24 Responses to Who works for whom

  1. John Bayley

    Yes, but he’s the one who can print money in unlimited quantities!
    No wonder the politicians are grovelling.

  2. Professor Fred Lenin

    An English comedian said the world was run on “Reckonomics”by “Reckonomists “ , they dont know exactly whats going to happen but the Reckon they do, maybe he has found out their secret ? They are like horse race punters ,think they know the results . Just a thought .

  3. Professor Fred Lenin

    John Bayley he should be charged with forgery and debasing the currency.

  4. Pyrmonter

    @ TAFKAS

    The RBA staff are extensively credentialled. While I am not convinced their credentials mean what some of them think they mean, there is danger flirting with the Maoist derision of expertise: the humblest peasant doesn’t know all there is to running monetary policy; and on various institutional interpretations of the prevalence of central banks (does any country with a population of 100,000 or more not have one?) managing monetary policy seems to be something requiring specialist skill.

    In the past two decades, a plausible case can be made that we’ve been well served by the minions of Martin Place; it has been made here: https://www.themoneyillusion.com/why-australia-hasnt-had-a-recession-in-26-years/ I am not however sure that that service has continued. In particular, both Lowe and his deputy, Debelle, have given speeches that could be mistaken for the works of HC Coombs or Geoff Harcourt.

  5. Hay Stockard

    Labor entities are always grovelling arselickers to people they think more important than they are.
    And treat the hoi polo as filth.
    Socialist social climbers.

  6. @Pyrmonter

    The RBA staff are extensively credentialled (sic).

    So were JFK’s “best and brightest”.

    Not interested in credentials. That is a call to authority. More interested in results.

    Also, and whilst TAFKAS did not exactly criticise the “expertise” of the central bankers, where is the expertise in printing money and manipulating markets?

    Not sure who makes the case that the “minions of Martin Place” are doing a good job, but there are others who suggest otherwise. For example, not sure if you noticed, Australia’s official interest rate is essentially zero.

    The RBA’s constant monetary stimulus has not only inflated Australia’s debt bubble to the point where Australian households have the highest levels of debt in the world, but it has also inflated asset prices. And more importantly, it has bailed out successive Commonwealth Governments from undertaking the necessary economic reforms and masked the true cost of the regulatory Columbian necklace given to the Australian private sector.

  7. Cynic of Ayr

    Perhaps one of the thing that annoys us – well, it freakin annoys me! – is that advisers such as the Reserve Bank are not accountable. They have NO skin in the game.
    When was the last time a higher up public servant was sacked for being wrong, being incompetent, or even for causing harm?
    If your local garbage truck driver makes a really bad mistake and crashes the truck into a kindergarten, he is both sacked and charged.
    If a well paid, higher-up Public Servant does the same with the economy, the worst he can expect is a job shift.
    I am sure this particular set of circumstances is politically motivated, because Politicians are constantly terrified of Public Servants spilling the beans on them!
    Scratch my back and I’ll scratch yours.
    It’s a stinking pile of shit. It just happens to be our stinking pile of shit, and doesn’t stink as much as, say, China’s stinking pile of shit.
    That’s the problem. There is NO penalty stupid, ignorant, careless of just plain wrong. Even Politicians themselves are – perhaps – sacked, but that’s it! Attached to that are nice little Super benefits awating.

  8. Pyrmonter

    @ TAFKAS

    The problem with the interpretation of economic data is that there is so much going on. Yes, we’ve had low interest rates for some time; we’ve also had low inflation; in both cases, they have been ‘stable’ by historical measures. Why assume that the status quo of, say, 1985, 1995 or 2005 was a natural level of indebtedness? The high and volatile inflation from 1965 to 1990 taught two generations of Australians to fear sudden high interest rates: Pyrmonter can remember interest rates in the mid-20s on top quality secured debt, and stories of unsecured borrowing at 30% or more from lenders who weren’t OMGs. As time passed, many have forgotten, or have come to disdain the horror stories related by their elders: are they wrong?

  9. Roger

    Perhaps one of the thing that annoys us – well, it freakin annoys me! – is that advisers such as the Reserve Bank are not accountable. They have NO skin in the game.

    Indeed; cf. Thomas Sowell’s aphorism to the effect that we should not allow people who pay no price for being wrong to make important decisions.

  10. @Pyrmonter

    Pyrmonter can remember interest rates in the mid-20s on top quality secured debt, and stories of unsecured borrowing at 30% or more from lenders who weren’t OMGs

    TAFKAS can remember that also. But more to the point, the exorbitantly high interest rates to which you refer were a function of choice and not chance. They were a policy of the Commonwealth and not a function of the supply and demand for money – or they would have been had not the RBA jumped into the market to effect the result they wanted. The RBA deliberately jacked them up too much for too long. Recall PJK’s recession we had to have or more accurately the recession he chose to give us.

    As time passed, many have forgotten, or have come to disdain the horror stories related by their elders: are they wrong?

    TAFKAS also presumes that ones perspective on those interest rates is a function on whether one was a borrower or a saver. Presumably the savers were happy as larry and not victims.

  11. Biota

    Not with you on this one TAFKAS. I have been the recipient of expert care by a cardiac surgeon who gave me a successful 5x bypass a few years ago. Recently a good friend went for a routine and died in theater with all the resources of a top hospital doing their best to save her. So do those medical professionals get branded failures because of the result? Maybe some things are really hard to get right even by the best trained and most experienced.

  12. Squirrel

    “… I ask this in the most humblest of ways, but is there a way you could tilt your camera down a bit better….”

    Sounds like something out of Kath and Kim – and so over the top that we might wonder whether the Senator’s ingratiation was in the hope that the mighty Gov might be lulled into a false sense of security and say things that would not be entirely helpful to the government, which could be used in zinger sound-bites and Question Time efforts from the Labor leader-in-waiting.

  13. Bruce of Newcastle

    Breaking news – RBA officials are humans, flesh and blood with no special powers of insight and prediction. They have (presumably), 2 arms, 2 legs, 10 fingers and 10 toes.

    Is that why they can count up to really big numbers like 24?

  14. Tim Neilson

    They were a policy of the Commonwealth and not a function of the supply and demand for money

    That’s certainly how John Button presents it in his autobiography. He describes how Treasury’s near-fanatical belief in the virtue of high interest rates survived several changes in the rationale for imposing them.

    TAFKAS also presumes that ones perspective on those interest rates is a function on whether one was a borrower or a saver. Presumably the savers were happy as larry and not victims.

    No doubt, at least if after-tax interest sufficiently exceeded inflation, but savers can change investments more easily and quickly than someone who had committed to a mortgage or a business loan can switch status to a “saver”.

  15. John Bayley

    “Monetary policy” is a socialist oxymoron.
    Anyone with even a remote preference for free markets should be able to see why.

  16. Professor Fred Lenin

    Comparing Reckonomists with transplant surgeons is stretching it a bit ,we can do without Reckonomists ,wonder when they were invented >

  17. John Bayley

    I have been the recipient of expert care by a cardiac surgeon who gave me a successful 5x bypass a few years ago

    The rather obvious difference here is that your heart will not fix itself, hence seeing a specialist who can do so is a sensible choice.

    Even there though, a free market for such specialists will deliver better results than if the government simply ordered you to see one of their choice.

    In contrast, the price of money, which is essential to optimal allocation of scarce resources, can only operate effectively in a free market. No “experts” are needed, unless you believe that socialist top-heavy central planning can deliver better outcomes across the myriad of human beings and their individual preferences than what they would be able to do for themselves.

    I actually don’t see why even the current system of unbacked fiat money could not work reasonably well – if, and that is a big “if” – commercial banks that overstretch themselves in credit creation would just be left to go broke.

    How anyone can think that printing literally tens of trillions of dollars/euro/whatever to prop up and distort asset prices, repressing interest rates to the utterly nonsensical “negative rates” and bailing out corporations & governments at an ever greater scale will in any way be preferable to a free market is beyond me.

    And one other thing, to all those “…but we have very low inflation” crowd: Check out Mx, check out asset values in comparison to profit projections and if you still think inflation is low, then I have a very nice bridge in Charleville to sell you.

  18. John Bayley

    Presumably the savers were happy as larry and not victims.

    And, as Steve Kates keeps reminding us, you cannot have consumption without production (saving), what exactly is worse about that picture than the punishment those same savers have been receiving over the past few years?

    (BTW TAFKAS: Thank you – of course you are entirely correct.)

  19. Pyrmonter

    @ Tim N

    The sophisticated (and debtors) could find ways around the adverse effects of inflation; savers far less so.

    @ TAFKAS

    Those interest rates were the price of wringing out inflationary expectations, something to which only serious nerds now refer. It went badly; but inflation should never have been allowed out of control, something which started under Gorton and reached its height, or, better, low point, under Whitlam. Fraser, Lynch and Howard never had the bottle to do it.

  20. egg_

    The RBA staff are extensively credentialled.

    Good ol’ Credentialism.
    Economic “Scientists“?
    Plenty of “theory” and no evidence Richard Feynman: if the results* don’t agree – throw out the theory!
    From the school of thought of “I’m from the Government and I’m here to help!”**.

    *Precious little evidence and different camps of thought – just like Politics.
    **”The most dangerous words in the English language”.

  21. egg_

    Comparing Reckonomists with transplant surgeons is stretching it a bit

    Surgeons are Tradesmen, get your hand off it, Theoreticians.

  22. Leo G

    Breaking news – RBA officials are humans, flesh and blood with no special powers of insight and prediction. They have (presumably), 2 arms, 2 legs, 10 fingers and 10 toes … Their forecasts are as regularly wrong as those of the rest of the economic chattering class.

    The oblique reference to Shylock’s speech reminds me that Shakespeare’s worst fools give the best advice, then ignore their own wise words.

  23. Peter Greagg

    My very strong preference for monetary policy is to follow something like proposed by John Taylor.

  24. Spurgeon Monkfish III

    How anyone can think that printing literally tens of trillions of dollars/euro/whatever to prop up and distort asset prices, repressing interest rates to the utterly nonsensical “negative rates” and bailing out corporations & governments at an ever greater scale will in any way be preferable to a free market is beyond me.

    Indeed, John. Presumably you’re not an “extensively credentialed” economist, which is why you don’t adhere to such idiocy. In the meantime, we remain in the bestest of hands.

Comments are closed.