Indices 06/03, page-69

Today, interest rates rose by another token 0.25%. It's not going to kill inflation because inflation is still more than double the interest rate.

Yet, within seconds, all the usual media drivel.

"Oh it really hurts. Our house is only worth a few million dollars and now we have to pay more interest on the loan we took out to buy it, and it has only gone up in value by $500,000 since we bought it. We don't know what we are going to do. Property experts say it could be worth another 20% in three years time, but how are we going to get through the next three years? We can't sell it now because we wouldn't get much interest on all the profit we would make. Who in their right mind would sell now with inflation at nearly 8%? The government ought to bail us out with subsidies, or force interest rates lower. It's just not fair, why do savers have to get any interest anyway? If savers have got any money at all then they have got more money than us."

"We borrowed millions to buy our big house of our own free will, and now that we can hardly afford it we might have to sell it - completely against our free will. How can this be fair?"

Most of the media circus perpetually encourages borrowers to believe that they have a divine right to become ridiculously wealthy simply by sitting on expensive property that they bought with borrowed money that they did not earn, at the expense of savers who actually worked hard to earn their savings which are now dissolving in front of their eyes because of high inflation. What are the idiot hacks going to tell their audiences when inflation doesn't fall in line with the fairyland predictions of the RBA?


Sooner or later, the XJO will probably experience a massive correction when interest rates eventually rise high enough to kill inflation, as they will inevitably have to do. But not just yet. The market rollercoaster rolls on for now. In Australia, money is ridiculously cheap compared with inflation, and it is likely to remain cheap for at least another six months while the RBA twiddles its thumbs waiting to see if its token rate rises will do the job. It really is ****ing fairyland.