It means way too much money is tied up in real estate which produces nothing...zilch.
If that money were directed towards new technology we could produce something tangible that would benefit all Australians and not just the rich or well off.
When I worked with Elders in WA a local farmer told me that when interest rates were low farm sale prices increased and when the rates increased prices dropped. I wonder what will happen when interest rates increase and banks revalue houses. Many foreclosures?
According to the Reserve Bank (RB) guy, interest rates are used to control inflation. The RB's policy is working. There hasn't been a decent increase in the general population's wages for decades except for the very wealthy.
What we need to control is population to manage the demand for houses.
Correct Buzz I watched a program that dealt with trickle down economics which worked after world war 11 but has trickled off to zero 25 or 30 yrs ago, so most workers wages have stayed static or not even kept up with cpi. Young people are able to borrow eyewatering amounts over the last few years because interest rates are so low the number could crawl under a snakes belly, if you think back to our day double figure interest rates were nearly normal, I reckon if most of them are paying 3% at the moment, and mortgaged up to the hilt imagine if the interest rate increased just 1% a year?
