Aussie cash rates down from 6.0% to 1.0% in the decade since the GFC
In this week’s video insight David reviews the low growth and low inflation environment we currently find ourselves in. This is attributable to four major factors which are structural in nature and are causing disruption across the Western world workforce. Together with casualisation and little growth in real wages, many people are logically feeling less secure. Are there any winners?
To read more on the structural reasons driving the change of low interest rates, you can download Montaka Global Investments’ whitepaper here.
Chief Executive Officer of Montgomery Investment Management, David Buckland has over 30 years of industry experience. David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.
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John
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John
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From Whitepaper – In Part I of this two-part whitepaper series, we considered the likely drivers of low interest rates that are currently being observed, particularly around demographics, indebtedness, technology, globalisation and the structure of the international monetary and financial system.
David I think your arguement is that the basic current problem is deflation – governments need to keep dropping interest rates in this type of deflationary scenario.
Yet, governments seem to be relying on a flawed logic here. The housing market which in many ways is the major part of the economy is not, and has not been for decades, in a state of deflation. Maybe the real problem is based on ideological stupidity – governments should be spending more on productive activities as means of stimulating the ‘right’ sectors of the economy rather than using a sledge hammer (interest rates) to fix a what is a intricate problem.
David Buckland
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Thanks John. Ultimately, growth in productivity is what gets slower growing, highly indebted economies out of holes. And you are right about the “right”sectors”.