“Australia saw deflation for the first time in seven years in the first quarter, as falling petrol, food, and clothing prices drove down the cost of a basket of goods and services.” (Mulligan, 2016) The Reserve Bank of Australia having prolonged deflation through low interest rates to the point of almost zero, market participants are demanding through market … Continue reading Deflation Down Under, RBA Kanagroos Kick For Lower Rates!
A housing bubble can be described as a game of musical chairs. In which, the increase in credit expansion is confused for real loanable funds. Here, people purchase investment property with lower interest rates. This increases asset prices and so the boom inflates the housing bubble, during which a house worth $500k at the first … Continue reading Housing Bubbles & Musical Chairs