eli5: who or what is profiting from the MASSIVE interest rate rises in Australia? Is it the banks holding your mortgage? The Government?!.. basically, who is loving life right now?
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I don’t think anyone benefits from interest rate based monetary policy in this day and age.
There was some guy (John Keynes), who thought he new how to prevent another great depression. So in in the 1930’s he wrote a book about his ideas. Central to it all was using interest rates to stabilise inflation and unemployment. It was just another economic model and despite being controversial at the time, it gained acceptance.
And since then we have been drowning in economic stability… nah just kidding. Things like stagflation in the 1970’s showed his ideas didn’t really work. They they kinda worked just enough to stop capitalism falling over. The ideas lost traction with competing theories influencing economic thought, In the 80’s we tweaked Keynes’s ideas a little bit and said “that’l fix it”. It didn’t really work; but apparently it somehow fixed the GFC; dunno how they figure that.
Now we live in a world vastly fucking removed from the 80’s; but unfortunately grandpa’s still running the joint. So they still fiddle with interest rates, because that’s never gone wrong… except for that time, and that other time, and that other time…Maybe I’m a bit harsh. Back in the 80’s sure “one leaver” kinda worked; esp as most businesses and householders , were heavily effected buy interest rates. It was also about the most complex model you could work out using a slide rule.
But it’s 2020’s now and there are a lot of levers to throttle/manage an economy (GST, Tax rate, tariffs, even postal charges have huge effect on the direction of consumer spending). We should acknowledge 90 years of mathematical / computing advances since Keynes “saved Capitalism”. We can and should do better than primitive models that destroy lives (of families with mortgages) to sometimes obtain economic stability.
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