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RBA is lost in the frightening territory of full employment (www.rossgittins.com)

submitted 2 weeks ago by [email protected] to c/[email protected]

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The Reserve Bank’s behaviour last week can only be described as bizarre. It’s a sign that it’s lost its bearings and isn’t sure what’s happening in the economy or where it’s headed. What has caused its befuddlement? Our unexpected return to near full employment.

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[–] [email protected] 2 points 1 week ago

You've laid out the RBA position fairly enough.

Part of the subtext of this piece is an ongoing debate, historically through the second half of the 20th century and into the GFC it seems that countries that adopt excessively tight monetary and fiscal policy have a lower quality of life long term in a way that is difficult to reverse, whereas the long term consequences of a slower, or even labile, return to target levels of inflation is likely nothing.

This is something that professional economists disagree on and I abandoned economics the second I got my bachelor's but the historical evidence is compelling.