My little prediction of 1250 SPX coming close. It does not...

My little prediction of 1250 SPX coming close. It does not matter. What matters is what action I should take. Buy? or fear for more sell off? Even well planned scheme can be interrupted due to greed or fear.

Well, I have to talk a bit about our beloved Glenn Stevens. Talking up high rate to deal with inflation.

One of the benefit of higher interest rate is higher Aussie dollar. Higher Aussie dollar should help fight inflation.

Ironically, our high dollar did not bring any benefit to our own economy. People just fly out, travel around the world, and spent like crazy....... overseas.

The greedy middleman here take the advantage of the rising dollar, expend their profit margin at the expense of consumers.

The rule of thumb is you import 100 Chinese yuans worth of stuff from China, you could sell for $100 Australian dollars! If you don't know yet, $1=6.5 yuan.


Higher dollar should take care of inflation. But unfortunately, 70% of our economy is service based.

Check it out, 20% something increased power bill last yar, 17% to come;
Tuition fee, 7-10% up;
Account fee 5% up;
Transportation;

Bananas from $2 to $12 because of cyclone. Talking about bananas, our government is down to earth stupid, and we just put up with it. Because we cannot import it from South America, Everyone of us have to eat 1/5 of the amount we usually take. It has nothing to do with price, it has everything to do with limited amount of bananas available and limited consumption, and we have to eat a lot less!

(p.s. I eat zero bananas for 3 months, rather eat more apples, oranges, kiwis, and berries)

IMHO, lots of causes of inflation is temporary, such as electricity and bananas, and the others are self-promoted inflation. For example, government workers salary is indexed with inflation, so is the transportation tickets, tuition and administration fees, etc.

Higher interest rates will hurt everyone, Glenn Stevens is still want it higher.

Could he be right? Remember the famous two interest rate raises in late 2007, right before the GFC.

Inflation should be considered in full context, not just a number. Sometimes, numbers do lie.