It seems all attention is on interest rates and how they are used to manipulate the economy and housing, but is it that simple?
The Australian Institute – a progressive think tank – says simply raising interest rates ignores excess profit taking.
“Attempts to dismiss the role of excess profits is a dereliction of duty on the part of monetary policymakers,” the report says.
“Workers have already paid once for the current inflation, through rapid erosion of their real wages. They are now being forced to pay again, through rising unemployment and further real wage cuts, in order to solve a problem they clearly did not cause.”
The institute argues that pent-up demand due to issues with global supply,due to the pandemic, forced households to spend more as companies took advantage by boosting prices.
It doesn’t take much of an online search to find plenty of consumer-orientated companies – including supermarkets, airlines and banks – that have made record profits as the cost of living surges.
And don’t get me started on excessive executive wages.
Do you agree? Is just raising interest rates ignoring other influences on our economy?
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