1 00:00:00,400 --> 00:00:02,360 Speaker 1: Well and Woody podcast Mini. 2 00:00:03,400 --> 00:00:05,800 Speaker 2: Let's be honest, we're all having very boring conversations right 3 00:00:05,840 --> 00:00:08,840 Speaker 2: now about the RBA, the Reserve Bank, and we came 4 00:00:08,840 --> 00:00:11,000 Speaker 2: in here today and our whole team is sitting here 5 00:00:11,039 --> 00:00:15,520 Speaker 2: saying that we have no idea what the RBA actually is, 6 00:00:17,800 --> 00:00:22,680 Speaker 2: apart from the bag that they're just taking out cash. 7 00:00:22,800 --> 00:00:25,560 Speaker 2: So Woods, I gave you the challenge three minutes, can 8 00:00:25,600 --> 00:00:28,920 Speaker 2: you tell me research as much as you can possible 9 00:00:28,960 --> 00:00:29,760 Speaker 2: about the RBA. 10 00:00:30,080 --> 00:00:32,280 Speaker 3: I was like the rain Man just then, wasn't I Well, 11 00:00:33,200 --> 00:00:34,120 Speaker 3: that was pretty amazing. 12 00:00:34,840 --> 00:00:36,760 Speaker 1: It was pretty good. But I feel to it again 13 00:00:36,800 --> 00:00:38,160 Speaker 1: though I've used all my energy. 14 00:00:39,240 --> 00:00:42,120 Speaker 2: So I asked you three really simple questions and I 15 00:00:42,159 --> 00:00:44,040 Speaker 2: think you I think you answered them pretty well. 16 00:00:44,080 --> 00:00:44,520 Speaker 1: Thank you. 17 00:00:44,560 --> 00:00:46,800 Speaker 2: But in order to find out whether or not you 18 00:00:46,920 --> 00:00:50,919 Speaker 2: actually nailed them, yeah, we've got Mike's second here from 19 00:00:50,960 --> 00:00:53,640 Speaker 2: the Saturday Paper and the seven Am podcast, or Mike 20 00:00:53,800 --> 00:00:55,080 Speaker 2: Sexy second. 21 00:00:54,840 --> 00:00:58,480 Speaker 1: As we've doug him here. Yes Magic Mike, Oh yeah 22 00:00:58,640 --> 00:01:04,959 Speaker 1: there he is. How are you mate? Thanks for coming 23 00:01:04,959 --> 00:01:05,360 Speaker 1: on the show. 24 00:01:05,920 --> 00:01:07,200 Speaker 4: I'm relishing my new nickname. 25 00:01:08,280 --> 00:01:10,400 Speaker 3: Hey Mike, did you did you just hear me before 26 00:01:10,560 --> 00:01:13,400 Speaker 3: sort of laying down what the RBA is and what 27 00:01:13,440 --> 00:01:15,480 Speaker 3: they do and how they impact inflation, and were you 28 00:01:15,560 --> 00:01:16,320 Speaker 3: quite impressed? 29 00:01:17,160 --> 00:01:19,759 Speaker 4: I was quite impressed. I thought you got it. 30 00:01:19,840 --> 00:01:22,759 Speaker 1: Holy wow. Yeah, I was invested, as Mike. You don't 31 00:01:22,800 --> 00:01:25,039 Speaker 1: know me, but that is like phenomenal that I managed to. 32 00:01:24,959 --> 00:01:26,920 Speaker 2: Now that, particularly given that, I mean, you need some 33 00:01:26,959 --> 00:01:29,520 Speaker 2: context here, Mike. But he lost a toosh off to 34 00:01:29,560 --> 00:01:32,040 Speaker 2: Andy Laire yesterday, so he needs everything you can get. Yeah, 35 00:01:32,040 --> 00:01:37,160 Speaker 2: that's anyway, confidence boost anyway, Mike, interesting introduction for you 36 00:01:37,200 --> 00:01:40,880 Speaker 2: to the show. Let's get down to what I would 37 00:01:40,920 --> 00:01:42,640 Speaker 2: love for you to answer a few questions on and 38 00:01:42,680 --> 00:01:44,560 Speaker 2: by the way, thirty and one I six five. If 39 00:01:44,600 --> 00:01:47,440 Speaker 2: you've got any questions for Mike or four two nine 40 00:01:47,520 --> 00:01:50,040 Speaker 2: thirty one six five, you can text us because I'm interested. 41 00:01:50,080 --> 00:01:52,280 Speaker 2: So the first question I asked Woods was what is 42 00:01:52,320 --> 00:01:52,880 Speaker 2: the RBA. 43 00:01:54,200 --> 00:01:57,480 Speaker 4: Well, well, he got that one pretty rights. It's essentially 44 00:01:57,520 --> 00:02:00,320 Speaker 4: supposed to bring financial stability to the country and sets 45 00:02:00,320 --> 00:02:04,200 Speaker 4: interest rates, and you know it puts them up and down, 46 00:02:04,320 --> 00:02:06,440 Speaker 4: up or down to keep the economy humming along at 47 00:02:06,760 --> 00:02:08,080 Speaker 4: allegedly an optimal level. 48 00:02:08,480 --> 00:02:10,799 Speaker 3: Can I ask a very specific question, Mike, just because 49 00:02:10,800 --> 00:02:13,360 Speaker 3: I'm a little bit advanced in the area now, But 50 00:02:14,160 --> 00:02:18,520 Speaker 3: is one of the reasons they lift interest rates because 51 00:02:18,680 --> 00:02:21,560 Speaker 3: the banks don't have as much liquidity or for those 52 00:02:21,600 --> 00:02:23,360 Speaker 3: plane at home don't have much money. 53 00:02:24,280 --> 00:02:31,040 Speaker 2: No, okay, you've obviously just read that and you wanted 54 00:02:31,080 --> 00:02:33,239 Speaker 2: to leave it in and it's nowhere. 55 00:02:34,960 --> 00:02:38,280 Speaker 4: It gets to be complicated. I mean, liquidity is the factor. 56 00:02:38,320 --> 00:02:40,440 Speaker 4: But essentially the reason they put interest rates up or 57 00:02:40,440 --> 00:02:43,839 Speaker 4: down is to encourage us to spend more or spend less. Yeah, 58 00:02:44,280 --> 00:02:46,800 Speaker 4: And the idea is, you know, if they whack interest 59 00:02:46,880 --> 00:02:49,320 Speaker 4: rates up and suddenly you're more which gets more expensive, 60 00:02:49,360 --> 00:02:51,079 Speaker 4: well then you've got less to spend on other things 61 00:02:51,600 --> 00:02:54,799 Speaker 4: and hopefully that that puts a bit of lood on 62 00:02:54,880 --> 00:02:56,280 Speaker 4: price increases. Yeah. 63 00:02:57,080 --> 00:02:59,200 Speaker 1: I like, so this is the bit that I heard. 64 00:02:59,200 --> 00:03:01,640 Speaker 2: So I heard join the semin Am podcast talking about 65 00:03:01,639 --> 00:03:06,359 Speaker 2: these does raising interest rates actually affect? 66 00:03:06,480 --> 00:03:08,480 Speaker 1: Like? Is it a good way to battle inflation? 67 00:03:09,960 --> 00:03:14,200 Speaker 4: It's a pretty blunt instrument, to be honest, but it's 68 00:03:14,240 --> 00:03:17,640 Speaker 4: the only one they've got. And you know, you know, 69 00:03:18,200 --> 00:03:20,680 Speaker 4: there were a whole lot of factors that contributed to 70 00:03:20,720 --> 00:03:24,440 Speaker 4: our inflation problem. You know, for a start, there was 71 00:03:24,520 --> 00:03:29,480 Speaker 4: there was COVID, right, which which brought supply problems. So 72 00:03:29,639 --> 00:03:31,720 Speaker 4: you know, things like building products went up about twenty 73 00:03:31,720 --> 00:03:34,280 Speaker 4: percent in a year, yep, because they are harder to get. 74 00:03:34,480 --> 00:03:37,360 Speaker 4: Then there was the Ukraine War, right, which which put 75 00:03:37,440 --> 00:03:40,440 Speaker 4: up energy prices tremendously, you know. And then there were 76 00:03:40,480 --> 00:03:41,960 Speaker 4: things like the weather, you know, which gave us the 77 00:03:42,000 --> 00:03:44,400 Speaker 4: eleven dollars less. So there are all the factors that 78 00:03:44,440 --> 00:03:49,000 Speaker 4: contributed to the inflation breaking out. None of them actually 79 00:03:49,000 --> 00:03:51,320 Speaker 4: the fault of the government, I might add, despite what 80 00:03:51,360 --> 00:03:53,520 Speaker 4: you might hear from the opposition at the moment, you know, 81 00:03:53,600 --> 00:03:57,360 Speaker 4: it's not the government's fault. And then the third factor 82 00:03:57,440 --> 00:03:59,680 Speaker 4: is that during COVID, you know, during the lo lockdowns 83 00:03:59,680 --> 00:04:01,480 Speaker 4: and everything, and the government was pumping lots of and 84 00:04:01,520 --> 00:04:03,280 Speaker 4: so it's the bank pumping lots of money into the 85 00:04:03,320 --> 00:04:06,440 Speaker 4: economy because they're worried that everything was going to go 86 00:04:06,600 --> 00:04:12,080 Speaker 4: pear shaped. People people's bank accounts balloons, they've fattened up. 87 00:04:13,000 --> 00:04:15,720 Speaker 1: Right because we were spending Yeah, okay, so. 88 00:04:16,440 --> 00:04:18,159 Speaker 4: A lot of people had a lot of money to spend, 89 00:04:18,680 --> 00:04:20,240 Speaker 4: so you know, they went out and they spend it 90 00:04:20,240 --> 00:04:21,920 Speaker 4: on you know, now that we can travel again, they're 91 00:04:21,920 --> 00:04:25,200 Speaker 4: spending on overseas trips and the airlines are jacking up 92 00:04:25,400 --> 00:04:28,760 Speaker 4: float the cost of flying, so that contributes to inflation. 93 00:04:29,240 --> 00:04:31,200 Speaker 4: People are going out and having meals and restaurants and 94 00:04:31,240 --> 00:04:34,200 Speaker 4: the price of food. So so that's the sort of 95 00:04:34,240 --> 00:04:36,560 Speaker 4: thing they're trying to control. They're trying to stop us, 96 00:04:37,160 --> 00:04:38,640 Speaker 4: you know, spending like drunken sailors. 97 00:04:38,800 --> 00:04:42,040 Speaker 1: But so, Mike, if the prices, if they're accepting prices 98 00:04:42,080 --> 00:04:45,760 Speaker 1: spend all that much, by the way, when they get. 99 00:04:45,600 --> 00:04:47,800 Speaker 3: To a port, as if they wouldn't spend all their 100 00:04:47,880 --> 00:04:50,600 Speaker 3: shillings or whatever. Anyway, I have a serious question if 101 00:04:51,000 --> 00:04:54,040 Speaker 3: we're accepting that prices have gone up already and then 102 00:04:54,080 --> 00:04:56,520 Speaker 3: the Reserve Bank go, Okay, we wanted to stop your spending, 103 00:04:56,560 --> 00:04:59,440 Speaker 3: so we're going to increase interest rates. So not only 104 00:04:59,520 --> 00:05:02,000 Speaker 3: are people dealing with the fact that prices are already up, 105 00:05:02,000 --> 00:05:03,919 Speaker 3: but now are struggling to pay their mortgages. Isn't that 106 00:05:03,960 --> 00:05:06,040 Speaker 3: just a shocking way to effectively squash people? 107 00:05:07,040 --> 00:05:11,600 Speaker 4: Well, short answer is probably yes, it squashes. It squashes 108 00:05:11,640 --> 00:05:14,520 Speaker 4: some people. I mean, if you already own your own house, 109 00:05:14,560 --> 00:05:16,960 Speaker 4: right and you've got bank chares, if you're you're relatively 110 00:05:17,000 --> 00:05:19,840 Speaker 4: well off, well, it doesn't make that much of a 111 00:05:19,839 --> 00:05:22,040 Speaker 4: difference to you. You can still drun spending if you've got 112 00:05:22,080 --> 00:05:23,920 Speaker 4: a whacking great mortgage and you've bought your house in 113 00:05:23,920 --> 00:05:27,120 Speaker 4: a couple of years ago at the top of the boom. Well, yeah, you're. 114 00:05:26,920 --> 00:05:29,640 Speaker 1: You're in deep trouble getting squeeze. 115 00:05:29,720 --> 00:05:32,920 Speaker 4: So yeah, it affects. It affects different people differently. Yeah, 116 00:05:33,560 --> 00:05:35,719 Speaker 4: and that's part of the problem I think here is 117 00:05:35,760 --> 00:05:38,720 Speaker 4: that some people are getting squashed and other people are 118 00:05:38,720 --> 00:05:42,800 Speaker 4: still spending, and they keep whacking up rates in the 119 00:05:42,800 --> 00:05:45,520 Speaker 4: hope that sooner a lot of people will stop spending, right, 120 00:05:45,800 --> 00:05:46,080 Speaker 4: But the. 121 00:05:46,200 --> 00:05:49,719 Speaker 2: Richer getting richer, and so they're not stopping spending, right. 122 00:05:50,440 --> 00:05:52,280 Speaker 4: I think that's there's there's a bit too. 123 00:05:52,240 --> 00:05:55,760 Speaker 2: Data and case final question, Mike, and I know, sorry 124 00:05:56,000 --> 00:05:57,800 Speaker 2: we are running out of time here, but I just 125 00:05:58,160 --> 00:05:59,600 Speaker 2: I heard this, and I think this is probably the 126 00:05:59,640 --> 00:06:02,200 Speaker 2: most ra link thing for me that I heard you 127 00:06:02,240 --> 00:06:03,680 Speaker 2: talking about last time you were talking about this. 128 00:06:03,720 --> 00:06:05,240 Speaker 1: But we're talking about the Reserve Bank. 129 00:06:05,480 --> 00:06:09,600 Speaker 2: And it's true that the Reserve Bank's not like an 130 00:06:09,600 --> 00:06:13,919 Speaker 2: elected body either, Like this is largely just a bunch 131 00:06:13,960 --> 00:06:16,760 Speaker 2: of people who are ex financiers, et cetera, et cetera, 132 00:06:16,800 --> 00:06:19,320 Speaker 2: who sort of come together and advise the government and 133 00:06:19,400 --> 00:06:22,480 Speaker 2: ultimately make a really big decision about how much injuries 134 00:06:22,560 --> 00:06:23,120 Speaker 2: we pay. 135 00:06:24,600 --> 00:06:27,000 Speaker 1: Without kind of like a mandate, if that makes any sense. 136 00:06:27,600 --> 00:06:30,760 Speaker 4: Well, they have a mandate, but they're not ex financious. 137 00:06:30,760 --> 00:06:32,760 Speaker 4: I mean, that's the thing is when I was learning 138 00:06:32,800 --> 00:06:34,640 Speaker 4: that's through I talked to a bunch of economists about this. 139 00:06:34,720 --> 00:06:36,960 Speaker 4: One of them actually said, if you actually know anything 140 00:06:37,000 --> 00:06:40,200 Speaker 4: about monetary policy, well you probably wind up on the 141 00:06:40,240 --> 00:06:43,839 Speaker 4: Reserve Bank board. There's nine people on the board, three 142 00:06:43,839 --> 00:06:46,840 Speaker 4: of whom are bureaucrats who actually know something about policy, 143 00:06:47,440 --> 00:06:49,920 Speaker 4: and the other six are usually selected from business or 144 00:06:49,960 --> 00:06:52,160 Speaker 4: sometimes during the periods of labor government, there might be 145 00:06:52,320 --> 00:06:55,520 Speaker 4: a trade unionist on there. But they might know a 146 00:06:55,560 --> 00:06:58,200 Speaker 4: lot about how to run their individual businesses, but as 147 00:06:58,920 --> 00:07:03,120 Speaker 4: to expertise runningbal economy, not very much. And they make 148 00:07:03,160 --> 00:07:08,040 Speaker 4: the decisions, well, they're consulted on the decisions. I mean, 149 00:07:08,279 --> 00:07:11,600 Speaker 4: ultimately had seen that they're kind of rubber stamps for 150 00:07:11,960 --> 00:07:15,000 Speaker 4: what the governor decides. But you know exactly how they 151 00:07:15,000 --> 00:07:18,080 Speaker 4: make their decisions is one of the great mysteries. Oddly enough, 152 00:07:18,080 --> 00:07:20,640 Speaker 4: the only really good insight we've had into what goes 153 00:07:20,640 --> 00:07:22,760 Speaker 4: on in board meetings was back in two thousand and nine, 154 00:07:22,800 --> 00:07:26,680 Speaker 4: and that was course some WikiLeaks got a leak from 155 00:07:26,680 --> 00:07:30,000 Speaker 4: the American embassy, and the story there was that there 156 00:07:30,040 --> 00:07:32,160 Speaker 4: was a dispute between the government the bank about how 157 00:07:32,200 --> 00:07:36,880 Speaker 4: fast rates should be going up, and someone from I 158 00:07:36,920 --> 00:07:38,920 Speaker 4: think it was the Prime Minister's office at the time, 159 00:07:39,600 --> 00:07:42,240 Speaker 4: was indiscreet enough to tell someone from the US embassy 160 00:07:42,240 --> 00:07:44,400 Speaker 4: who wrote it all down in a cable, send it 161 00:07:44,400 --> 00:07:47,120 Speaker 4: off to Washington, and then it was leaked. And that was, 162 00:07:47,240 --> 00:07:50,520 Speaker 4: honest to God, the best insight we've ever had into 163 00:07:50,560 --> 00:07:52,640 Speaker 4: the internal workings of the bank board. 164 00:07:53,080 --> 00:07:53,680 Speaker 1: Wow. 165 00:07:54,040 --> 00:07:55,680 Speaker 2: So as far as we know, they could all just 166 00:07:55,720 --> 00:07:58,160 Speaker 2: be like playing a game of foosball and whoever, if 167 00:07:58,280 --> 00:07:59,920 Speaker 2: the governor wins and the interest rates go. 168 00:07:59,880 --> 00:08:05,000 Speaker 1: Up, if you want to put that way, yeah, Jesus Christ, 169 00:08:06,240 --> 00:08:06,840 Speaker 1: and they need. 170 00:08:06,920 --> 00:08:08,520 Speaker 4: There needs to be reformed. That seems to be the 171 00:08:08,640 --> 00:08:11,000 Speaker 4: general consensus among experts that there should be a bit 172 00:08:11,040 --> 00:08:13,360 Speaker 4: more expert ad price there. We should have a little 173 00:08:13,360 --> 00:08:16,440 Speaker 4: more insight into how they go about the process of 174 00:08:16,480 --> 00:08:17,360 Speaker 4: making decisions. 175 00:08:17,520 --> 00:08:18,920 Speaker 1: You know, it's amazing. 176 00:08:18,920 --> 00:08:21,120 Speaker 4: We should we should have a vote of the board, 177 00:08:21,120 --> 00:08:22,800 Speaker 4: for example, or we should at least know what the 178 00:08:22,840 --> 00:08:23,960 Speaker 4: individual board members think. 179 00:08:24,000 --> 00:08:26,120 Speaker 2: Well, particularly if we're all if they're the ones in 180 00:08:26,200 --> 00:08:28,040 Speaker 2: charge of raising interest rates totally. 181 00:08:28,080 --> 00:08:29,240 Speaker 1: Mike. It's been fascinating. 182 00:08:29,240 --> 00:08:31,520 Speaker 2: We've got to keep moving on. But thank you so 183 00:08:31,600 --> 00:08:33,480 Speaker 2: much for joining us, Mike. I really appreciate it. 184 00:08:33,960 --> 00:08:35,120 Speaker 4: Oh, it's great pleasure. 185 00:08:35,000 --> 00:08:36,160 Speaker 1: It was really awesome, Mike. 186 00:08:36,480 --> 00:08:38,480 Speaker 2: Mike on the Saturday Paying the semin Am podcast, I 187 00:08:38,520 --> 00:08:40,600 Speaker 2: reckon on for the research you did, you could almost 188 00:08:40,640 --> 00:08:42,000 Speaker 2: find yourself on the Reserve Bank. 189 00:08:41,840 --> 00:08:45,040 Speaker 1: For I would love to apply. I don't think yous 190 00:08:45,080 --> 00:08:45,280 Speaker 1: like that. 191 00:08:45,360 --> 00:08:47,680 Speaker 3: Do you go seek dot com? 192 00:08:47,760 --> 00:08:53,200 Speaker 1: Well, how do you apply? You wouldn't be I heard that. 193 00:08:54,120 --> 00:08:56,960 Speaker 4: Hear more of the boys on the Full Show podcast 194 00:08:57,120 --> 00:08:58,800 Speaker 4: all on the iHeartRadio app. 195 00:08:58,920 --> 00:09:00,720 Speaker 1: Oh, I mean get a podcast.