9 things government can do to reduce your living costs

Risk-averse investors, such as pensioners, need to have an asset class that gives them a reasonable return, and which is liquid. That is cash or bonds.

While an asset could wear a return of 0.1 percent if there was a reasonable chance of capital gains, at that rate there is a more than reasonable chance of a capital loss.

In fact, the RBA is apparently sitting on around $45 billion of unrealised losses because it invested in its own paper at this absurdly low rate.

The rate is also important because the government bond rate tends to be priced off it, and the return on government bonds is used as a hurdle rate by investors to gauge the return they need from an investment to make it viable.

When the official cash rate is too low people, businesses and governments invest in too many marginal projects which add nothing to national productivity and income, and often freeze out riskier, but ultimately more profitable, ones.

I wish I could say it is likely the government will pick up even one of these ideas, but it isn't.

Just a few days ago Treasurer Jim Chalmers boasted, "We've seen the highest quarterly wages growth in 26 years under an Australian Labor government. Real wages started falling under the Coalition due to a decade of deliberate wage stagnation and high inflation. We're turning it around."

Except they're not turning it around at all.

He's quoting nominal wages against real wages, and ignoring the fact that labour productivity has just suffered a record fall.

Those wage hikes aren't good for the economy, they are inflation in action.

If you can't see it when you stub your toe on it, in the end, you're unlikely to be able to do anything about it.