We ran our live show, complete with updated data and scenarios, plus answering questions real time via YouTube chat. How much will mortgage stress be up? What is the trajectory of potential defaults? Which post codes are most in the front line? All are answered
– I don’t fully agree that lending drives prices. To get (more) lending rising prices are also required to rise. Then companies are willing to invest in (more) production capacity.
– See what happened with iron ore. Iron ore prices rose between 2000 and say 2008 and that spurred new investment in new mines. And that investment was done with borrowed money (= credit inflation = extra demand).
– In that regard Australia didn’t have a “mining boom” between say 2000 and say 2013 but Australia had a “Mining INVESTMENT boom”.
– Interest rates are set by a force called “Mr. Market” and NOT central banks. – Inflation does NOT drive interest rates. My favorite example is what happened in the US after the year 2000. Between 2000 and mid 2008 the price of oil went up sevenfold (in USD), the CRB index (also in USD) tripled. And what happened to US interest rates ? Did rates rise along with the rising price inflation like in the 1970s ? Did rates rise along with the credit/debt inflation (from ~ USD 24 trillion in 2000 to ~ USD 56 trillion in mmid 2008 ? No, the US 10 year yield didn’t rise, it FELL from ~ 6.25% in the year 2000 to ~ 4.5% in mod 2008.
– Rising interest rates are NOT Inflationary, they are Extremely Deflationary !!!! Mr. Market knows perfectly well when it must raise interest rates.
Its the delta on credit which is the key – rate of change…