hardpole said..
Noone ever mentions that by not taxing the capital gain on profit from sale of your primary residence we encourage people to maximise the investment in that property. It makes sense to purchase the most expensive property you can, and maximise the capital gain at 0 tax rate.

Maybe we should tax the gain on properties in the top 10% of prices nation wide. That wouldn't be popular !

I don't see that as a big issue affecting housing. It only applies to the house you are living in and really only encourages people to put thier own time and effort into renovating said house. ie it encourages people to buy a run down house and do it up, thus realising a gain. It has a positive effect of increasing productivity and typically is done for a lower cost due to home owners doing a lot themselves.

There is plenty of stock of run down houses that need renovating. It does not apply to rental / investment properties and you have to live in it for a year. Maybe the only change could be extending it to 2 years, but I don't see the point.

Housing stock is the issue. More land needs to be opened up and we need to relax the restrictions around high density developments in the inner city and around transport hubs. Too much of NIMBY objections and anti development brigade going on.

I used to be terrified by images of the tar-baby and the thorny thickets when I was little.

It was this one in a book I had that used to give me nightmares.

japie said..
Nice try!
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Yeah, I admit it, I was trying to wind you up. Such an outdated term. With the language you used it sounds like you went to a boarding school. Which clearly didn't teach critical thinking.


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The moot point remains. You started a thread about interest rates and have prevaricated, in your usual fashion, when it comes to discussing what many consider to be valid arguments that the financial system we are manacled to is corrupt and weighted in favour of the people who own it.

If it were only you it would be inconsequential. Unfortunately the majority appear to be in the thrall of some kind of Stockholm Syndrome when it comes to the financial system.

Sad because we are at a point in the evolution of technology where all of the systemic flaws in the money system could be eliminated.

Along with the corruption.

Minus the need for interest rates and the associated hikes.

Even a basic understanding of economics will tell you why there are interest rates and how it all works. Corrupt? As much as anything else is, but also a free market to a large extent.

We know that certain groups outlaw charging interest, but we also know that they use other ways to get around it. So what, it is still used. People pay others to use their money.

If there is more risk, you charge more money. If there is less risk, you can charge less money knowing that you get your original capital back.

Falling back to thinking it is run by some group to rip us all off is just stupid and ignorant.

'Stockholm Syndrome', yeah right. Maybe people out there actually went to school and understood what they were taught in economics. If people like you had your way you would give out free money to people and wonder why they weren't giving it back to you and why you are suddenly broke.

'Interest rate rises'. Just consider what would happen to the supply of money if interest rates were zero? No one would lend anything to you as you may never pay it back. Want to start a rice farm in the back of Toowoomba which is in a drought declared area? No one would lend anything to you unless the interest rate was sky high and even then they would require some security.

Interest rate rises by the banks are not dictated to them. The RBA is just telling others what rates it would offer on bonds. If they wanted the banks could offer much lower or much higher rates. But the reality is that the bond rates set the base rate for a guaranteed return on the money market, so all other rates are based from that.

It is a useful tool to dampen the economy when it is overheating and to stimulate the economy when it is slowing down. The unfortunate thing is that housing lending is significant in Australia and higher interest rates also dampen investment in productive enterprises, not just housing.

I may have to Google 'prevaricate' but at least I understand basic economics and seemingly critical thinking.

Mr Milk said..
FN, as well as looking for the definition of prevaricate, you might want to find out what the RBA's official interest rate is. It's not the bond rate.
The cash rate is a figure set by the Reserve Bank of Australia (RBA), representing the interest that banks and lenders have to pay on the money they borrow. The RBA itself describes the cash rate as the "overnight money market interest rate". The reason for this is that banks frequently lend money to each other and process these transfers overnight, and the cash rate is the amount of interest that banks have to pay to borrow money in these transactions.

I stand corrected.

Prevaricate? I can't even spell it.

I guess it has been a while since my economics classes