SIRA Views

October 28, 2015  /  8:30 AM
The Problem with Low Inflation

Low InfIt is an accepted orthodoxy in economics that inflation is A Bad Thing. This is because the price system is an extremely clever invention which provides information to market participants on how to reallocate consumption and production, and it does this without any central control or guidance. The different prices within the overall economy are derived from the interaction of consumers and producers, from the workings of the system itself.

October 9, 2015  /  4:06 AM
An Australian Recession?

Recession1Will Australia enter a recession soon?

The answer in part depends on how you define a recession. The traditional (U.S.) definition has been two consecutive quarters of negative growth in real GDP (Gross Domestic Product). Real GDP is the volume of output in the economy, in other words, the level of goods and service produced after inflation is removed. For example, if inflation is 5% and nominal (unadjusted) GDP rises by 2%, real GDP has actually fallen—by 3%.

September 4, 2015  /  6:41 AM
Long Term vs Short Term

When the share market is volatile in the short term, many people forget the long-term benefits of share investment. The chart below shows the All Ordinaries Index from January 1990 to now, plotted on a log scale. A logarithmic scale is designed to make similar percentage moves in the market occupy the same “space” on the chart

August 21, 2015  /  5:51 AM
The Market Correction

Bear & Bull MarketOver the last few months, the Australian share market, as measured by the All Ordinaries index is down 12%, so we are now officially in a correction.

August 14, 2015  /  6:20 AM
When Will the US Raise Interest Rates?

interest-rate-riseSince the end of 2008, the average fed funds rate has been just 0.13%. This extraordinarily low bank rate has been necessary to undo the damages caused by the GFC. But, obviously, it was never meant to be permanent. And as the US economy has recovered, so have we moved closer to the point where interest rates will have to rise.

August 7, 2015  /  6:00 AM
Unemployment Jumps! Or Does It?

AU UnemploymentAmong the most closely watched economic statistics in Australia are the employment data from the Australian Bureau of Statistics (the ABS): the unemployment rate, the level of total employment, and the split between full-time and part-time employment

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