MAN Financial chief economist Dr Frank Shostak has a warning for investors. The Reserve Bank’s monetary policy is “out of control” and that means inflation is heading up, interest rates are set to rise and the share market is only being supported by excessive money supply.
He believes the Reserve Bank uses incorrect definitions of inflation and even money itself. As a result, he says, the bank is actually causing inflation, rather than combating it.
“The Reserve Bank claims that it does not print money, but merely accommodates demand, but printing money is exactly what it is doing,” Shostak told The Australian in Sydney this week.
FULL INTERVIEW at the Australian
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I guess that explains why my precious metals funds are doing sooo well and real estate doing soo poorly. The funny part is that quite a few, a majority, a for more money creation to help the housing and realestate sectors.
I guess I should stay long in gold….
Well we in the US should be glad as this can’t possibly happen here. Why Ben the almighty would never dump currency from helicopter. That would not get to his friends first. He will just add more zeros onto a computer screen.
“The Reserve Bank balance sheet has increased by over 35 per cent and, according to my measurements, during the year to February there has been in excess of a 21 per cent increase in money supply.”
Holy crap. This is not too reassuring to hear as an Aussie, *gulp*. It’s great to see an Austrian economist (or should I, perhaps, say an economist who uses Austrian theory and insights) interviewed in our press. Also, I must say that I found it a little odd that the journalist felt it necessary to use apostrophes in the title – RBA policy ‘causing inflation’?
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