DEAR News Of The Area,

WE constantly hear in the nightly news that the Reserve Bank manages inflation by increasing home mortgage interest rates, to reduce money available for consumption spending.

This is now affecting middle income earners as well as low income earners with many examples of people paying up to half their net income on mortgage repayments, leaving even less money for increased cost of living rises, with home repayments under sustainability risk.

This beggars the value of the work ethic… ie work and buy your own home and ‘get ahead’.

It seems that this no longer applies.

Unsustainable variable housing rate increases, that necessitate struggling families to sell up, can lead to homelessness and create further need for increased government social housing which requires further spending, adding to increasing inflationary expenditure.

This seems like a self defeating circular monetary model/practice therefore and raises the question: What other monetary mechanisms could the RBA initiate to reduce consumption that would be benign to home buyers instead of threatening, for example financially rewarding people to pay out their loans over a shorter time frame… thereby reducing money circulating by increased savings reward?

Increasing taxation on serious luxury spending?

Currently the Reserve Bank system seems to only manage inflation by increasing its own wealth with profit return from a guaranteed source of dependant home buyers.

It seems that governments are consequently at their behest and face an almost impossible task of having to compensate struggling folk with counter ‘cost of living reparations’ somehow.

It seems that we need to rethink this model.

Regards,
Karen MATTHEWS,
Nambucca Heads.