Why Glenn Stevens made us all gloomy

BITTER pills administered by the Reserve Bank means Australians are slowing getting more reluctant to splurge at the shops.

Why Glenn Stevens made us all gloomy

YOU’VE noticed the prices of vegetables creep up. Your mortgage payments are higher. Generally you feel okay about your money but something, somehow, is stopping you from splurging in the shops on a Saturday the way you were splashing out this time last year.

Is this you? You are a typical Australian.

Why do I feel like this?

There’s a bloke called Glenn Stevens who has given you some medicine. As the nation’s top banker, he’s like the economy’s doctor and he’s telling you it’ll get worse before it gets better.

Yeah, my mortgage costs more. Why is this?

Glenn Stevens has been increasing interest rates. “Doctor” Stevens uses them to control the country – rate cuts are like injections of adrenaline; rate rises are like horse tranquilizers. Lately, he’s been dosing up on the tranquilizers because we’re too flash with the cash. He’s trying to calm us down. Our hyper spending has led to inflation.

I’ve heard about that. Why does it matter?

Inflation is the rate at which prices go up. Noticed petrol prices at the bowser nigglingly creeping up week after week? And the same with the price of milk and bread? That’s inflation. And if the milk gets too expensive too quickly, people will run out of money. Then we’re all in trouble.

And how do the rate rises affect inflation?

Stevens uses the rate rises to take money out of our pockets. If we have less money, we’re spending less, and prices won’t rise as much.

Er, why?

There’s an economic term you’ve probably heard called supply and demand – when demand drops, so do prices.

Yeah, but now I’m all p*ed off.

That’s exactly how Glenn Stevens wants you.

Bastard!

You’ll thank him. Or so he hopes. He’s been raising rates to make you feel like this and it looks like it’s working. Some numbers out this week showed that the last time we were this p*ed off was in June 1993. And that was when Paul Keating was prime minister.

Basically because we’re in a bad mood and not spending as much, this should take the pressure off the milk prices, so Stevens can take the pressure off rates. In a few months Stevens can think about a spoonful of sugar with his medicine – by cutting rates. Presto, your mortgage repayments will go down, and you’ll have more money for milk. And booze and shoes and hats and TVs.

Won’t that make you happy again?