PVO: Albo and Jim hope we are too stupid to notice their fraudulent spin. It’s beyond insulting

It is remarkable how both the Finance Minister and the Prime Minister insist that black is white when it comes to the inflationary impact of their budgetary decision-making.

They even deny that our central bank holds them accountable.

Whether Albo and Jim like it or not, they now rule Australia’s high inflation rates and the long window in which interest rates are likely to finally fall again.

Australians are suffering from this and will continue to do so for some time to come as they have failed to curb spending, benefits and tax cuts, which only fuels inflation.

The Reserve Bank of Australia (RBA) is beginning to expose Labor’s counterproductive spending with a bluntness not often seen from central bankers.

Not that you would know that if you listened only to the Prime Minister and the Chancellor of the Exchequer. When asked directly about the RBA blaming state and federal government spending for worsening inflation, Anthony Albanese replied: ‘That’s not what they said.’

Really? Let’s spell out what the RBA said then, shall we. Then we can re-evaluate the veracity of the Prime Minister’s denial.

The RBA explained why inflation had not fallen and interest rates remained high by citing a “stronger outlook for domestic demand, led by public demand”.

Note that the RBA identifies domestic demand as the problem.

Jim Chalmers has been arguing for some time that inflation is a global problem, but in reality inflation is falling elsewhere in the world but rising in Australia, the latest data shows.

So what is ‘public demand’, and what makes it stronger? First of all, being stronger is not good.

Increased public demand puts upward pressure on inflation and interest rates.

According to the RBA, ‘the stronger outlook for public demand reflects continued spending and recent announcements by the federal, state and territory governments’.

The central bank couldn’t be clearer than that. It’s blatantly obvious that overspending by state and federal governments is the problem.

Albanese and Chalmers hope the general public is too stupid to notice their fraudulent spin. Frankly, it’s starting to get insulting.

The Governor of the Reserve Bank of Australia (RBA) also made it clear at her press conference after the last board meeting that government decision-making is putting pressure on inflation.

“Make no mistake: inflation is still too high and the administration is still concerned about the level of excess demand in the economy,” said Michele Bullock.

Excess demand is created by government policies: tax cuts, benefits, overspending. Even support for inflation, which fuels wage increases in many professions, is part of Labor’s mantra.

Bullock said that raising rates was seriously considered at the board meeting earlier this month, and he noted that rates will not decrease for at least six months.

That is no one’s fault except the Prime Minister and the Minister of Finance.

Yet Chalmers and Albanese, like Monty Python’s Black Knight, continue to fight and deny the obvious. They claim that the high inflation figures – which have been revised upwards and are higher than comparable countries abroad – have nothing to do with their decision-making.

It’s starting to get embarrassing to watch.

Although the RBA Governor has explicitly stated that domestic factors are the cause of excessive inflation, the denials continue.

Facts are irrelevant when Albo and Chalmers try to avoid the consequences of their policies.

The Prime Minister even used a media appearance to claim that his government is ‘arm in arm’ with the RBA. That couldn’t be further from the truth. His claim is utterly ridiculous and everyone should be able to see that by now.

And we all thought Scott Morrison didn’t take the truth seriously.

When the government and the RBA steer fiscal and monetary policy in different directions, they certainly do not do so ‘hand in hand’ as Albo would have us believe.

It’s like an orchestra playing out of sync. It sounds awful.

Or a driver who brakes and accelerates at the same time. That just doesn’t work.

It is hard to overstate how bad it is for the economy and for confidence in our political and policy-making institutions when the RBA and the government cannot agree on what is inflationary and what is not. When their approaches contradict each other. When the government ignores the central bank’s warnings.

Simply put, if the wasteful spending of state governments and the federal government continues, the RBA may be forced to raise rates when it would rather not, knowing that this could crash the economy and force a recession.

The ECB may be forced to do so because the alternative (letting inflation spiral out of control even further) is even worse.

The current Labor governments at state and federal level do not seem to understand the position they are putting the RBA in with their overspending.

The spending, which is partly the result of overspending as a result of the pandemic, is intended to help Australians struggling with high living costs.

So Albo and Chalmers undoubtedly think they are virtuous. But that is simply a product of their lack of economic insight, as a conga line of economists now complains.

Attempts to spend money to support people when inflation is out of control are misguided. Like it or not, governments cannot buy their way out of times of high inflation.

When they try to do that, as the state governments and the federal government are doing now, they only make a bad situation worse and prolong the pain.

I am cynical enough to believe that the Labour governments that are up for re-election simply don’t care.

They know that the inflation that occurs in the short term will disappear into people’s pockets before they vote (hopefully buying their support), while the consequences will only be felt later.

The consequences are dire and dangerous: they will cause high inflation for all of us, potentially pushing up mortgage rates for mortgage holders and causing a recession and, with it, job losses.

But what does it matter, these selfish politicians probably think…because there is nothing they care about more than retaining power.