If Inflation Fails To Appear Government Will Provide It

SOURCE:NEWS WEEKLY 12 AUGUST 1995

THE GOVERNMENT INFLATION MACHINE

"What logically follows is that practically the entire increase in prices (aka inflation) during the quarter derived from interest rate increases imposed by the banks at the instigation of the Government (which was 'advised' by the banks to do so) and through direct increases in government charges and taxes. Otherwise there was practically no increase at all.

Government policies were thus totally responsible for whatever price rises there had been.

The dramatic rise in interest rates and indirect taxes fuelled claims for higher wages, which came after, not before, the interest rises".

'CELEBRATED ECONOMIST COPY-CATS'

The process began in the United States. By April 1994, the US Federal Reserve had already twice raised interest rates.

It had claimed that this was necessary because it had seen "signs of an incipient inflation". Nobody else did!

Nevertheless, on 18 April 1994, the Federal Reserve raised interest rates again - and kept doing so, until there had been a total increase of some 3%.

Australia's 'celebrated' economic commently put on the same spectacles as their American counterparts. Their excuse was, the "rapid fall in unemployment levels". Most of the jobs were female, and part-time.

This indicated the need for anticipation, and prevention of inflation! The preventative measure? An increase in interest rates!

Except for Germany and Japan the rise in interest rates was worldwide. Japan actually countered with lowering of interest rates down to %, and harvested a 13% growth rate of the economy as a result. In Australia interest rates went up by 3%. Homeowners had to find an average of an extra $60 per week to service the debt on the house. Government ignored advice that there was no threat of inflation and no argument for increased interest rates. It ignored advice that the extra charges would actually produce the very inflation which neither existed nor was otherwise threatened. The US Treasury reported the smallest quarterly rise since 1982! In other words there was no inflation! I.e. there was no justification for the US interest rate rises which spread worldwide in 1994, unless there was some other undisclosed reason. The "undisclosed reason" is perhaps discovered by contemplating the question "Cui Bono?". "Who benefits?" The Banks of course! Anyone owing $100,000 on the security of the home was up for $10,000 a year interest alone! The housing industry went flat, homeowners and investors suffered substantial losses as a result of decline in property values, bankruptcies followed in its wake. While as a result of interest rate rise, prices of goods and services increased, the "celebrated economists" pointed to the possibility of "further rises in interest rates to dampen down a new threat of inflation", Japan in the meantime continued to grow without inflation! Germany lowered its already low interest rates to prevent the collapse of small and medium enterprise which employs the greater part of labor.

INTEREST RATES & CHILD DELIQUENCY

In Australia, due to the government's contractionary economic policies, there exists massive un- and under-employment. The nation while not producing enough to give all citizens a decent living standard, is being bled by cartels and through financial manipulation. Home ownership has become a practical impossibility for the family with children and only one bread winner. The problem of child care and delinquency can be directly attributed to government bank interest rate policy, which favors cartels and insider speculation. Housing, small and medium enterprise, agriculture, and other productive sectors of the economy need long term low interest credit. It is a crime against humanity to use the subterfuge of "curbing inflation" to drive up charges, interest rates, and consumption taxes, just so that the banking system can rip deeper into the people of Australia. In the present situation, of economic decline induced by government contractionary policy, such measures do not cure inflation. They cause it! diar0919.htm

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