The RBA's self-destructive policies

That is not entirely true against all currencies. There have been fluctuations especially against the US dollar. That has been because the US Government and the Fed have adopted much the same fundamental policies as the Australian Government and the Reserve Bank of Australia. Sometimes, the US dollar has collapsed even more dramatically than the Australian dollar - as it has done in the last couple of years when the $A rose from around 50 US cents to around 80 US cents. But that has not been characteristic. More generally, the $A has lost value against the US dollar and likewise against major European and Asian currencies.

Against European currencies in the last 20 years, it has lost between two-thirds and three-quarters of its value. I repeat, it has lost between two-thirds and three-quarters of its value. So what may we expect of the value of the $A if the RBA persists with its interest rate hikes? The Australian economy will stop growing, more imports will be needed from overseas to meet constant domestic demand (though the components will change) or domestic demand that has not fallen as much as domestic supply, and we'll experience once more a decline, perhaps a further dramatic decline in the value of the $A vis a vis leading European and Asian currencies.

If this is so, why is the RBA doing again what has proved to be so disastrous in the past?

The only explanation must be that they are so much in thrall to false economic and financial ideas and theories that they can't see what is clearly written in huge letters before their eyes. Is this possible for such a distinguished, professional institution in such a highly developed and well-administered country as Australia? One thing that we must say is that Australian policies are much the same as the American. So if the Australians are blind to their policies of self-destruction, so too must the Americans be.

The other consideration is historical and highly relevant. In 1929 and afterwards, as we sank into the greatest worldwide depression of all time - up to now - governments, central banks and economic gurus almost everywhere, advocated and applied policies and measures that, almost without exception until at least 1933, made things worse. They applied policies and measures that hit investment, productivity and production. They applied policies and measures that lost jobs, that increased unemployment, that lengthened the soup-kitchen lines, not only in the United States but right around the world.

Hitler came to power in early 1933. So did Franklin Delano Roosevelt but even the "New Deal" was too little and too late to turn the economic tide around - or the drift into world war. Unfortunately, we are doing the same thing now. We are persisting with policies that can only be self-destructive. That applies not only to Australia but especially to the United States - and indeed to many other countries.

We cannot foresee what will be the precise economic outcome - or the precise political and strategic outcomes. But, in general terms, they are sufficiently terrifying for us - and the central banks and the economic gurus - to apply their minds urgently to problems and misconceptions that could cause immense distress to peoples worldwide.