You don’t get [to \#3 in the world](https://www.foodandwine.com/global-tastemakers-best-cities-coffee-2024-8620205) by accident. That’s the Big Cuppa lobby at work.
It's just a list thrown out to gain clicks, probably AI generated.
A lot of Australians think their country is the centre of the world. Most people don't believe Australia exists
I wouldn't put Australia or the UK on any list for good coffee.
Copenhagen is definitely not number one, Sydney or Melbourne should beat it. Also i would rate Melbourne over Sydney.
I was in Copenhagen last week, there are a lot of cafes serving decent coffee but only a few serving exceptional coffee.
I bought a coffee machine and a thermal cup. Ill be making my coffees and bringing into office to do my part for return to office mandate. I also make sure I bring lunch and not spend more than an extra cent in the CBD. :)
Im doing this out of principal for those lobbists pulling strings to get us back in.
You don't change your spending based off what you think will shift the economy, your spending will change as the different things impact you change. For instance if higher interest rates means that you miss a pay rise or even worse lose your job because your employer no longer has access to cheap debt then you straight up just will have less money to spend. If you're over leveraged and higher interest rates squeezes out your discretionary spending then that is what it is as well.
The government and the RBA are separate entities with slightly different goals and very different mechanisms to impact the economy but at the end of the day a bit of a recession is a pretty good inflation cure. Also remember that different people are affected in different ways by inflation and by recessions, particularly on the inflation side people or organisations with very large debts can benefit quite a lot from inflation shrinking their debt in real terms.
As correct as your comment is from an economic-concept perspective, it would be awesome if the gov would finally show some guts and try to affect some of the different inflation drivers, such as price gouging. otherwise, the lower socio-economic group will get hit harder despite them not causing any of that shit...
Totally agree, they like to just point fingers at the RBA as a scapegoat but they absolutely have a role to play. Trouble is it’s really hard and nuanced economic policy is a lot easier to attack than it is to sell.
That inflation point is not true for every individual or for every organisation, it is super true though on the individual level if your salary keeps up and it's also super true for organisations if they can pass on the increases born of inflation onto customers.
Rate rises only hurt the everyday working class, but the upper class are unaffected and keep spending. Try instead to tax the rich and the large corporations, and any government will find themselves being pushed out of office pretty quick...
You're right to be confused.
I went to 2 bars last night - an open mic bar, usually teaming with young people. Damn near empty last night. Then a folk club, usually full of a healthy mix of young and old. Full of boomers last night.
I was talking with my parents (both 5 or so years from retirement) on the phone the other day and something they said shocked me. I live overseas and was telling them how cost of living, while went up here, wasn't as anywhere near as bad as what was going on back home. I specifically said my friends were struggling with things like rent, insurance and groceries big time.
They sorta said, "yeah this cost of living stuff is overplayed. It's always been expensive, no idea what everyone is complaining about. Also people are just bad with money."
We didn't grow up rich at all, and they definitely aren't rich at all. It was middle of the middle class, we went on a QLD holiday every 4 years and I got the new PlayStation like 2 or 3 years after everyone else. Rarely had food out except for like Mother's Day. Best descriptor I can think of.
Then I found out later in the conversation they had paid off the last of their mortgage, so I mean there ya go, there's the issue in a nutshell right there.
People have a vast change in lifestyle immediately after the last mortgage payment is made because they typically still keep spending pretty much like as if they were still paying it. It's very hard to suddenly start spending more money all of a sudden so I'm guessing the bulk of the extra income starts going into other savings and investments.
I am not good at finances nor economics (I chiefly just lurk here), but I genuinely do not understand (well, I do, but it sounds tinfoil) how this conclusion isn't more well-known:
CommBank and others literally have data showing most inflation is now due to services inflation, as folks without mortgages (eg unaffected by rate rises, and in fact earn more due to them thanks to interest on savings) are burning through the Covid stimulus and able to keep up with rising costs and such, while everyone else is being ground down... *but the people driving inflation don't care*.
Why is this not reported/as well-known? Well, because you can't piss of the second largest voting bloc (so the govt ain't gonna do shit), and everyone wants their cash, so the media (the big media groups literally own the real estate platforms and such) ain't gonna blame them either.
Breaking News: inflation has increased from some dude spending $76 at a bar
meanwhile Boomer buys new landcruiser sahara and decked out caravan to travel for 6 months up to Cape york whilst accidently buying a few investment properties on the way
Yeah, my boomer mum just dropped $110k on a new volvo. Straight out cash purchase. The high interest rates suit them fine as all their investments are growing faster than they can spend it.
Meanwhile, I’m hoarding all my cash and even feel guilty for wanting to go see a movie.
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They own outright, are both retired. My dad gets his Australian super plus a US pension as he worked there for 7+ years in a high up position. The US pension is paid in USD.
My boomer parents sold at the wrong time and moved to a city to follow us so rented. Now prices in my home town have gone up x3 and the superannuation they've always paid extra into would pay for the median house with nothing leftover. It's just shit timing and the luck of the draw, they worked, owned and renovated for 20+ years and prices didn't keep up.
They helped us out 12 years ago when we upgraded to a house. They also gave me a small interest free loan when I was buying my first house back in 2003 to cover the stamp duty and legal fees, which I paid back in 6 months.
This was before they retired too.
That's brings to mind the time an [MP bought a $795k investment property](https://www.pedestrian.tv/news/federal-mp-buys-800k-gold-coast-flat-on-taxpayer-funded-visit-just-cos/) while on a taxpayer-funded work trip...
Networth of 3M but the family home isn't included. So the younger generation is subsidising living cost for someone who owns a 2M property. And some of that younger generation are looking at homelessness due to accommodation affordability
Yet boomers who manipulate the system to come in one dollar under the threshold at retirement age will sit there in their 1.5M Kellyville house and cheer on Andrew Bolt slandering the "dole bludgers" who are draining all our tax money.
Replace "upper class" with retirees. The big winners are not corporations, its retirees with fat savings accounts and paid off mortgages. The rest of your comment still applies though haha.
Also to OP, welcome to the wonderful world of stagflation.
That said I don't think inflation will continue to be much of an issue, but "stagflation" is the term you're looking for.
My parents are retired public school teachers. Massive paid off house, massive superannuation funds and a big fat savings account to boot. Three kids, massive house and at least one overseas holiday a year.
You look me in the eye and tell me that two public school teachers can afford that now.
I was two years old 30 years ago. They were fine paying a mortgage and feeding five people on one public school teachers wage. That's not possible now.
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Yup. Now they couldn't afford to rent with their combined incomes let alone having kids! My mum no study no career outside of basic office admin owns a $650k house single income 2 kids "we did it bloody tough" pffft righto boomer U just were born at the right time.
I do wonder what people 55-75 are going to do at retirement age when no one fills the underpaid healthcare worker vacancies and the 80s and 90s kids get into politics and happily write off that whole generation with zero remorse
I mean the changes to the stage 3 tax cuts to be less of a reduction infuriated r/aushenry. You had posters raging about having to now buy 3 houses and negative gear them to get out of the tax bracket.
Rate rises hurt the rich as well. Businesses are impacted a lot more by interest rate hikes which hurts the rich a lot more, it’s just most people here don’t own or run businesses so they don’t realise this. Not to mention, rich people, for the most part, don’t buy the same things poor people do. So any spending driven inflation done by the rich won’t have as much of an impact on the poor.
They said the upper class was unaffected which is untrue. Also, while the rich are still earning a lot, they’re not earning as much as they otherwise would be, which will hurt them. People earning less just don’t notice that because they see those people are still making a lot each year whereas those people see how much less they’re making each year. Say someone who used to earn $25m a year was now earning $5m, those making less just look at that $5m and thing they’re making a huge amount. Those people making that much money are seeing themselves lose $20m a year, or seeing their income drop 80%.
Or, to take a more middle class example, someone accustomed to earning $200k per year would be hurting if that dropped to $150k per year, whereas someone on $80k per year year would see that as a lot of money. It’s just a matter of perspective, to you they’re doing fine, to them they’re hurting. Since it’s their life, I think it’s reasonable to take their perspective and say they’re hurting.
Regardless, that’s going down a rabbit hole. We can debate whether or not their hurting since people can correctly point out that they’re still on $5m a year. Both arguments are valid and as a result it’d just become a circular argument until someone gives up, so I don’t really want to waste time on that. However, getting back on track with the main argument, you’d be moving the goalposts to make this about who’s hurting and who isn’t. The original comment was saying that the rich’s spending was causing inflation and that the solutions were only affecting the poor. The rich aren’t causing inflation by spending too much and even if they were, it would only hurt them. Plus, the solutions are affecting them as well.
>Say someone who used to earn $25m a year was now earning $5m
I'll defend the word unaffected here. Because anyone earning $5m a year isn't affected by a loss of $20m. Not in a meaningful way. They're not going to be homeless, and it's not stopping them from spending a shitload of money either. Their investments might suffer, but not their spending habits.
Your middle-class example is entirely situationally dependent. If they're older and don't have expenses, then a $50k drop still won't really affect them. If they have a huge mortgage then yeah it would. I wouldn't classify someone on $200k with a huge mortgage as rich though.
>However, getting back on track with the main argument
I've no interest in the main argument, nothing apart from interest rates is done about inflation anyway. So debating who's causing it is pointless. I just wanted to point out that for all intents and purposes rich people aren't really being affected in any meaningful way.
You’re still just arguing whether or not they’re being hurt. You can change definitions all you like, but at the end of the day, in this example they’re making $20m less per year. They’re being hit financially in a huge way.
Also, all you’ve done is prove my point about perspective. You can’t fathom the difference in lifestyle that a $25m salary can afford you vs a $5m one, so you don’t think they’d be affected. The difference between these 2 lifestyles is massive. At $25m, you can buy a $100m house, you can then use that finance a yacht, private jets, massive holiday houses etc. A $5m salary can’t even come close to affording that unless you already have that degree of wealth. I can assure you as well, prior to COVID, stupidly wealthy people weren’t shy on how much debt they had either. A $5m salary can still afford a great lifestyle, but it’s not even close to being the same lifestyle. You just can’t fathom the difference because both are so otherworldly to you that they’re the same. But ask anyone on in that pay bracket and they’ll quickly tell you the difference. That was literally my point in my initial comment, there’s a huge difference, you just can’t see it.
Regardless, I’m done with this argument. As I said, discussing whether these people are being hurt is up to perspective, and both views have a valid argument. It’s just going to lead into a circular argument as a result as you won’t change your opinion. I’m respecting that you don’t want to continue the main argument since you realise the comment I initially replied to was stupid, so I expect the same courtesy from you to not move the goal pole posts and try force this unproductive argument into happening. I’ve already pointed out it will go nowhere so I can’t be bothered having, and now you’re trying to argue in bad faith to try to force it. If you want to whinge about how much money the rich make and how much better their lifestyles are, then that’s fine but go do that to someone else.
Maybe try rereading that last paragraph. I’m giving you the courtesy to not continue the original discussion since you realise it was an idiotic point. Allow me the courtesy of not having to deal with this circular argument that won’t go anywhere but let you whinge about the rich being rich.
As I’ve said, you can keep changing definitions and moving goal posts, “affected in any meaningful way” is the same as “hurting” to you. When I said affected initially, I was referring to whether they were financially impacted. Changing the definitions doesn’t make my point invalid. If anything you’re proving what I originally said.
Also, you’re just proving my point that the wealthy spending money doesn’t have a large impact on inflation for the poor. Lots of people buying yachts causes yacht prices to go up and increases inflation for the rich, but it doesn’t affect the poor because they’re not buying those things. The rich spending a lot of money on things causes inflation in that bracket to go up, but that doesn’t affect most people because they’re not buying those things.
>Lots of people buying yachts causes yacht prices to go up and increases inflation for the rich, but it doesn’t affect the poor because they’re not buying those things.
Except they're not just buying Yachts. They are also spending huge on all sorts of other discretionary items that everyone else would also like to buy every now and then, but not at ridiculous prices. And this is the type of spending that they will continue to do no matter how many Yachts they lose.
Hey, look who decided to finally come back on topic and stop moving the goal posts so they can whinge!
What *discretionary* products do the rich buy that everyone else does? Sure, they have water and energy but those aren’t discretionary items. Sure, there’s small luxuries like iPhones where normal people can afford the top of the line products, but if they started to buy enough of them Apple would just produce an even more premium model that only the rich can afford. Same with hobbies, in fact you see it even more in hobbies. Some hobbies have cheap entry points (say $400), and then top of the line is expensive but not unobtainable for normal people (say $10k). Then the hobby becomes mainstream, rich people start enjoying it, and suddenly the top of the line is in reachable (say $100k). But, in the meantime the products that were $10k often become $5k and the new $10k products are miles better anyway. You see that all the time.
But please tell me, what discretionary spending do the rich that has a huge impact on everyone else. Sure, there’s probably things I’m missing that they do, but it’ll probably be minor things that won’t massively affect everyone. Happy to be proven wrong with respect to that.
Yeah, this is a massive factor.
While I can absolutely shop more frugally, wear my clothes longer, and go out less - I can’t really reduce most of my bills (not in any meaningful way), and rents continue to climb.
I think OP might be referring to things you see in media sometimes, to effect of: “(millennials/gen Z/poor people) are killing (department stores/cafes/tourist industries)” that seem to scream “WHY YOU NO SPEND??!!!” While you also simultaneously see pieces of media to the effect of “If you don’t stop spending, Daddy RBA is going to smack you (with another rate rise)”.
Obviously businesses don’t want to go under; and the media profits on stoking outrage, regardless of whether it’s contradicting the opinion piece they posted yesterday.
Spending on imports definitely is. Australia is largely trading a fixed amount of primary production for a fixed amount of imports - with a war on and on the tail of supply chain issues there's just less stuff to go around, so you get less stuff.
Ditto housing - there's not enough houses to go around.
Pure services and labour value add are probably the one thing that spending money on is ok - citizens might as well be busy doing something instead of sitting around because everyone feels too poor to pay for workers.
Housing inflation is services inflation, it goes directly to the cost of rent.
Cost of importing isn’t even going to be remotely touched by rate decisions, unless you think that Iran and the Houthis fear the RBA.
It's a special case, which is why I pointed it out. People are outbidding each other for a limited amount of housing.
Most services like house cleaning or handjobs aren't driving inflation. There's no shortage of people with a firm grip and the time and willingness to rub something. If you spend your Capitalist Reward^tm on those, then you won't really be contributing to inflation.
If that's the case, how come we have a "cost of living crisis", not a "cost of luxury crisis"? It's the essentials like rent, electricity, insurance, groceries etc. that are going up.
If we spend too much money, we are blamed for inflation. If we don’t spend enough money, we are blamed for the recession. Either way, it’s definitely our fault and in no way driven by corporate greed.
You're not supposed to be spending is the answer. The rba will push the country into recession rather than have economic growth to keep inflation under control.
There will be a bit of inevitable overlap, as the only way *in theory* to drop inflation is to get people to a point of pain where they can’t keep spending.
A big issue we have is that most people under 50 are going alright we wanna tap out, we’re really struggling, but many over 50 have enough wealth that they’re single-handedly keeping inflation so sticky, so we all have to suffer the higher rates until even they are forced to stop spending.
Best case scenario, inflation isn’t sticky so you don’t have to send the country into a full blown recession, just a small dip
Worst case scenario, inflation is very sticky and you have to cause a recession in the process of bringing it down. A short term recession is far less damaging to the economy than runaway inflation
“but many over 50 have enough wealth that they’re single-handedly keeping inflation so sticky,”
Is that really what’s happening? Biggest contributors to inflation last print were rent increases and education cost rises. Spending on those isn’t dominated by over 50s.
And who owns most of the investment properties and sends kids to private schools?
Let me rephrase slightly then. “The wealthy in this country are keeping inflation sticky. This more often than not is people over the age of 50 who have had time to build wealth in a system that didn’t have such a high cost of living”
>Is that really what’s happening?
Well yeah that is exactly what’s happening:
https://www.bloomberg.com/news/articles/2024-05-23/gen-z-australians-slash-spending-while-baby-boomers-splurge
Who do you think are the ones benefiting from the rent increases? It’s the over 50’s with no or minimal mortgages jumping on the bandwagon and increasing rent on their properties because they can try and justify it as being due to rate increases
Higher interest rates means more income from savings which in turn means they have more to spend. Many over 50's aren't "invested" so to speak in diverse assets but keep a lot in cash or short term instruments. Higher interest rates = better for them.
Its the rest of us that suffer because usually the debt to savings ratio of anyone under 50 is the polar opposite of retirees.
Not because there is a material difference in costs on their end though. It’s just because they know people will be able to pay back less money until things improve
Part of this is that people don't want to have less things, and a huge amount of those things come from overseas. What comes in from overseas is loosely tied to our exports - which is basically fixed primary production - so essentially there is less imports to go around and people *will consume less*. If they try to keep up the same consumption it will just drive prices up.
In theory, spending more on things that are actually generally produced here doesn't have the same inflationary pressure - particularly if it can cause growth in the local economy - and the potential is there for that.
Though I'd point out the housing market is in a similar state to imports - not enough to go around.
Essentially: If you buy local produce or services, then that's unlikely to drive inflation. If you try to buy the same amount of housing or imports as you are used to - there's less to go around - it will cost you.
You don’t need to cause a recession to reduce inflation. What a ridiculous statement.
The whole point of raising rates incrementally is to control/reduce inflation without recession.
I never said they had to. I said that because of the conflicting nature of reducing inflation and preventing a recession, to reduce inflation will inevitably have *some* effect on GDP. The level of stickiness of inflation will ultimately determine how much of an effect.
If you’re gonna have a go, make sure it’s actually reflective of what I’ve said
Given the latest data on consumer sentiment being the lowest in what, 40 years?
And that spending per capita is almost as bad….
Doesn’t matter what we are “supposed to be doing”, we’re not spending compared to historical figures.
I’d say just keep doing whatever you’re doing as best you can.
It is interesting that the Govt is also trying to incentivise retirees to spend and not die with large super balances. Having super in pension mode, where you have to withdraw, at zero tax on earnings is one example of this.
If you believe the media many retirees are very wary of spending as they are scared of running out before they die.
Retirees will tend to spend on services, so travel and eating out, not stuff as they typically have all the stuff they need.
https://www.smh.com.au/money/super-and-retirement/why-retirees-should-be-spending-more-in-retirement-20231006-p5eaa9.html
> to spend and not die with large super balances.
How is this possible to achieve in reality because any old person could just drop dead at the drop of a hat due to stroke or heart attack. The only solution is to get rid of your financial assets and purchase a lifetime annuity which people aren't keen on doing.
From the SMH article
"The required annual minimum drawdown increases with age. It is 4 per cent of the account balance up to age 65, with the percentage progressively increasing for older age cohorts. “We know if they continue to do that, draw down their super at the minimum rate, they likely bequest 30 to 50 per cent of their super savings,” Ellis says."
Again that "30 to 50 per cent" is a function of not knowing when people are going to die.
You are right that it's hard to judge exactly and there will always on average be a balance if you, say, plan on a 95% age at death.
Lifetime annuities are indeed not popular at current interest rates.
Another recent "Fairfax" article, can't find it right now, mentioned that based on super fund data many die with more than they started with.
Yeah, I sort of am a bit confused too. I'm sort of not buying stuff at the moment that I would otherwise buy on the grounds that that's going to add to inflation for everyone... but then, by not spending, that might cost someone's job somewhere along the retail chain.
Exactly, and then that person that loses their job cuts back on spending because they’ve got no income, and then wherever they were going to spend gets less revenue and may have to lay people off, etc. until inflation is forced down. It sounds brutal but it really is for the greater good- if inflation goes nuts for too long then none of our jobs are worth a thing as none of us will be able to afford anything
I have lost a job because a company went out of business, it does suck and I’m not denying that. It doesn’t change the brutal truth that it’s what’s best for the nation as a whole
>but continue spending on essentials.
If you want to collectively lower inflation, downgrade your essentials. Learn to cook if you don't already or buy pies from the supermarket.
Essentials like food, rent & energy, Got it...except the biggest contributors to inflation are from Essentials like food, housing, insurance and education. Clothing, furnishing & recreation have risen less than a percentage in the latest figures.
The only discretionary spend that has increased significantly is alcohol & tobacco, partly due to increased taxes.
Stagflation is real and has been a fiscal and monetary issue since at least the 70s. https://en.m.wikipedia.org/wiki/Stagflation
Be concerned to the extent that government and central bank policy affects you and also what policy solution you think is most helpful (and how to advocate for it) - but you’re not a treasury blockhead presumably so no need to get lost in the big picture too much I would suggest.
Not spending.
I've seen news implying a decline in retail spending is a bad thing too, but if you want to collectively lower the inflation rate you must find alternatives
>but at the same time we are trying to avoid a recession
Watch more Alan Kohler
A mild recession is more like a rest than a drop, growth slows a little only to pick up later especially when interest rates are high.
Right now we're crushed by financial inflation marked by the greatest increases in prices being in insurance, health care and real estate. As these are monopolised items it goes to follow the only real consumer response is to boycott as much as possible.
This means if you typically get food delivered then buying microwave dinners and pies. If you already do that, consider some "but cheaper" style recipes. If you already do that... Grow beans and tomatoes and you're almost winning.
This has a deflationary effect on food prices in a similar way to how undocumented street food deflates food prices in the developing world (which I think is neat but we have food standards).
Deflating food prices is about the only response to what's mostly just inflated financials (in Australia).
>Grow beans and tomatoes
Yes I will spend 3 months and the same amount of money I would on simply buying tomatoes from woolies to grow 3 tomatos on the balcony of my Sydney apartment.
While I'm at it I'll make sure to die while sharing my apartment with 3 other families rather than going to a doctor so I don't contribute to rising health care costs or the inflated realestate market.
Growing food is do-able if you're a boomer living in a detached house on a quarter acre block, the new estates where houses are laid out like sardines in a can then not so much.
They’re trying to cut capex, billions of dollars corporations spend on new infrastructure or investment to grow their businesses, not an individual like you spending their 100$ a week. Why does no one seem to understand this
Depends I'd you listen to newscorpse. ADHD RWNJ journalism. Grifters of fear. Satanic purveyors of Late stage capitalism. Immoral hedonists.
Spend as much as you can't afford.
Uh
You are suppose to do what is right for you
Consumer spending isn’t going to help
The country needs industrious “risk takers” doing something other than houses and holes
Raising rates has accelerated inflation as everyone is just shuffling their rates increases onto everyone else and corporate’s are increasing prices because they can.
It’s complete BS
You'd have to be a special kind of stupid to follow instructions from the idiots runnings this country in regards to your own personal choices on spending.
Oh god no, I meant the question as a whole. As in, are the government trying to push us to spend less or spend more?
I'm not really in a position to change my current spending habits but I'm trying to understand where the economy is supposed to be heading.
10:00am on a Tuesday at Westfield's or Stocklands 45 minutes drive from the CBD and it's packed full of shoppers.
Sometimes I think to myself how are we meant to drop inflation under these conditions 😂
Retirees and people who don't work 9-5 doing their essential shopping.
Packed shopping centres are a non sign in Australia because all the supermarkets and cheap department stores are in the shopping centre.
In bad weather they are also a free indoor playground for the preschool set.
No, you understand correctly. You're meant to be confused. That's entirely the point to get you to spend into the economy.
You should save because things aren't going to stay this way indefinitely. This is the way the market tries to manipulate you at the end of the cycle, and confusion and especially FOMO are great motivators to get you to do so.
Spending all my money on shit to DIY my own work direct imported from overseas.
Sorry were we meant to be spending it in the Australian economy while prices are out of control? I can’t afford the quadrupling of the invoice vs just doing it all myself.
You can spend on necessities to keep you alive but nothing else. Unless you're a boomer who only cares about themselves. Data have shown that boomer are the only group that are increasing spending more than inflation
Well, they probably have the income to do so and even if there is a deficit then they have the investment capital which they can partially cash in to keep going as before.
Exactly my point they just think about themselves rather than reduce their spending. I'm a millennial and I'm basically just buying necessities to help reduce inflation.
Well see there's a big problem here because retirees are being told that they aren't spending enough of their super. So, if you read this link here https://www.ifa.com.au/news/33070-use-it-or-lose-it-call-for-legislation-to-make-retirees-spend-more then it says
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Currently, under the Superannuation Industry Supervision Act, retirees under 65 must draw at least 4 per cent of their account balance each year, while those aged between 65 to 74 years must take 5 per cent. From the age of 95, retirees have to withdraw 14 per cent of their income.
A Treasury survey found that most retirees draw only the minimum amount.
“The SIS minimum is exactly there as a minimum, but a lot of retirees actually believe that because that’s the amount that the regulators tell them to take, that’s obviously the right amount and therefore you shouldn’t take any more than that,” Mr Lapedus said.
Another speaker, Fidelity head of client solutions and retirement Richard Dinham, said the government minimums anchor people’s spending patterns.
“The government really needs to think about what those minimums should be, and the 4 per cent is probably too low,” he said.
“The statistics and the system back up the fact that they (retirees) are underspending and leaving too much at the point of death.
“It could be that future governments remove some of the tax benefits if there is too much being passed on to the next generation which is an unintended purpose of super.”
---------------------------------------------------------------------
And there are plenty of other articles on the net pretty much saying the same thing, also something like a quarter of superannuants have more money left in their super fund when they die compared to when they started.
So, I'm left wondering what are they meant to do in this situation?
(1) Spend only the legislated minimum to ease inflation? or
(2) Ignore the first option and spend how much you like, when you like, without a care in the world?
The government is trialling a new economic model of Schrödinger’s spending. We are required to both spend money to save the economy as well as stop spending to reduce inflation.
Your spending needs to be in a state of superposition at all times.
Government aren’t going to stop the inflation, they need us to spend to pay for the upcoming war with China. New subs and an expanded military doesn’t pay for itself.
Rates went to zero to encourage spending because we knew that spending would drop (fear plus less oppertunity to spend), Interest rates are man made and we choose them to affect the economy throughconsumer behaviour. We are in a totally different economic climate now and if we dropped Interest rates too low we would have even more problems.
Everyone seems quick to be shirty at the retired person enjoying life after 40+ years of being a taxpayer. If you find yourself feeling like this, just ask yourself.. what would you do in their shoes? Give everything you’ve worked for away and go back to work to die? Feel guilty for setting your kids and grandkids up for success and an easy life? Nah… you’d hoard every cent, live life to fullest and die happy knowing your kids are set up. As you should
It isn't so much the printing of money as the spending it without the productive capacity in relevant sectors of the economy to absorb the increased expenditure. Taxation used to be a good way to do this until the electorate was convinced to stop supporting it.
Our money printing does not impact inflation because of this one simple trick. We tell our citizens that it doesn’t impact inflation and they believe us. It’s not a lie if everyone believes it.
Spending on transport and cafes while you are in the CBD on your mandated office days = OK. Anything that brings you enjoyment = not OK
We must protect CBD cafes at all costs. They are the backbone of our economy...
You don’t get [to \#3 in the world](https://www.foodandwine.com/global-tastemakers-best-cities-coffee-2024-8620205) by accident. That’s the Big Cuppa lobby at work.
They lost all credibility at this point “Yes, Sydney is a laid-back beach town“ Did they mix up Sydney with Summer Bay?
Tbf Sydney is very laid back compared to New York, Tokyo, London etc
It's just a list thrown out to gain clicks, probably AI generated. A lot of Australians think their country is the centre of the world. Most people don't believe Australia exists I wouldn't put Australia or the UK on any list for good coffee.
aus is better than most places. but not " the best"
Australian coffee is excellent, wtf are you on about? 😂
Oof, Melbourne one ahead of Rwanda
Big is $2 extra sorry boss
I don't trust any list that rates Tokyo that high.
Big coffee!
Copenhagen is definitely not number one, Sydney or Melbourne should beat it. Also i would rate Melbourne over Sydney. I was in Copenhagen last week, there are a lot of cafes serving decent coffee but only a few serving exceptional coffee.
Won’t someone think of the Arts-Degree-dropout baristas
There are at least 7 cafes between my office building and the nearest main road. Yay Brookfield Place! Enabling caffeine addicts to power the CBD.
simpsons memes are the backbone of our economy
Don't forget the 'independent grocers' charging $8 for a mid-sized bottle of water
Stay at home and save on transport costs and the cafe coffee
“Mandated”. If only we could…
Melbourne CBD is packed right now.. tourists and students and people working in the city. Except Fridays, no one works in the city on Fridays
I bought a coffee machine and a thermal cup. Ill be making my coffees and bringing into office to do my part for return to office mandate. I also make sure I bring lunch and not spend more than an extra cent in the CBD. :) Im doing this out of principal for those lobbists pulling strings to get us back in.
Doing exactly the same. This is what you get for forcing us back to cbd!
You don't change your spending based off what you think will shift the economy, your spending will change as the different things impact you change. For instance if higher interest rates means that you miss a pay rise or even worse lose your job because your employer no longer has access to cheap debt then you straight up just will have less money to spend. If you're over leveraged and higher interest rates squeezes out your discretionary spending then that is what it is as well. The government and the RBA are separate entities with slightly different goals and very different mechanisms to impact the economy but at the end of the day a bit of a recession is a pretty good inflation cure. Also remember that different people are affected in different ways by inflation and by recessions, particularly on the inflation side people or organisations with very large debts can benefit quite a lot from inflation shrinking their debt in real terms.
As correct as your comment is from an economic-concept perspective, it would be awesome if the gov would finally show some guts and try to affect some of the different inflation drivers, such as price gouging. otherwise, the lower socio-economic group will get hit harder despite them not causing any of that shit...
Totally agree, they like to just point fingers at the RBA as a scapegoat but they absolutely have a role to play. Trouble is it’s really hard and nuanced economic policy is a lot easier to attack than it is to sell.
trouble is my very small salary is also shrinking in real terms
That inflation point is not true for every individual or for every organisation, it is super true though on the individual level if your salary keeps up and it's also super true for organisations if they can pass on the increases born of inflation onto customers.
When you are spending? Feel guilty for doing it. When you aren't spending? Feel guilty for not doing it!
Economy is down the shitter so tighten your belts. But also we need you to consume, so buy new belts and tighten them!
I just ate. Not up to tightening that belt currently
Sounds like someone’s been eating too much. GET HIM/HER!
Food? Ok big spender
I only have a rope which comes loose, and all these bourgeois belt types wonder why they haven't paid their mortgage off
Dude he's ragging on your cord. https://www.reddit.com/r/TheSimpsons/comments/17xq25/dude_hes_ragging_on_your_cord/
You should spend and live the high life to keep the CBD cafes in business. But other people should stay at home and scrimp it all under the mattress.
Sadly ... I live several hundred miles from a CBD. But i can keep "giving" to online shops👍
The RBA and treasurer thanks you.
Rate rises only hurt the everyday working class, but the upper class are unaffected and keep spending. Try instead to tax the rich and the large corporations, and any government will find themselves being pushed out of office pretty quick... You're right to be confused.
I went to 2 bars last night - an open mic bar, usually teaming with young people. Damn near empty last night. Then a folk club, usually full of a healthy mix of young and old. Full of boomers last night.
I was talking with my parents (both 5 or so years from retirement) on the phone the other day and something they said shocked me. I live overseas and was telling them how cost of living, while went up here, wasn't as anywhere near as bad as what was going on back home. I specifically said my friends were struggling with things like rent, insurance and groceries big time. They sorta said, "yeah this cost of living stuff is overplayed. It's always been expensive, no idea what everyone is complaining about. Also people are just bad with money." We didn't grow up rich at all, and they definitely aren't rich at all. It was middle of the middle class, we went on a QLD holiday every 4 years and I got the new PlayStation like 2 or 3 years after everyone else. Rarely had food out except for like Mother's Day. Best descriptor I can think of. Then I found out later in the conversation they had paid off the last of their mortgage, so I mean there ya go, there's the issue in a nutshell right there.
\~$7k a month on our mortgage. That would be a lot of disposable income.
Well a mortgage is a huge drain on your finances. I'm hoping I can pay off my mortgage in the next 5 years or less, and have a surplus of cash.
People have a vast change in lifestyle immediately after the last mortgage payment is made because they typically still keep spending pretty much like as if they were still paying it. It's very hard to suddenly start spending more money all of a sudden so I'm guessing the bulk of the extra income starts going into other savings and investments.
I am not good at finances nor economics (I chiefly just lurk here), but I genuinely do not understand (well, I do, but it sounds tinfoil) how this conclusion isn't more well-known: CommBank and others literally have data showing most inflation is now due to services inflation, as folks without mortgages (eg unaffected by rate rises, and in fact earn more due to them thanks to interest on savings) are burning through the Covid stimulus and able to keep up with rising costs and such, while everyone else is being ground down... *but the people driving inflation don't care*. Why is this not reported/as well-known? Well, because you can't piss of the second largest voting bloc (so the govt ain't gonna do shit), and everyone wants their cash, so the media (the big media groups literally own the real estate platforms and such) ain't gonna blame them either.
Breaking News: inflation has increased from some dude spending $76 at a bar meanwhile Boomer buys new landcruiser sahara and decked out caravan to travel for 6 months up to Cape york whilst accidently buying a few investment properties on the way
Yeah, my boomer mum just dropped $110k on a new volvo. Straight out cash purchase. The high interest rates suit them fine as all their investments are growing faster than they can spend it. Meanwhile, I’m hoarding all my cash and even feel guilty for wanting to go see a movie.
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Exactly the same scenario. My parents accountant keeps telling them they need to spend more money
Term deposits are making them heaps, and property prices….
They own outright, are both retired. My dad gets his Australian super plus a US pension as he worked there for 7+ years in a high up position. The US pension is paid in USD.
My boomer parents sold at the wrong time and moved to a city to follow us so rented. Now prices in my home town have gone up x3 and the superannuation they've always paid extra into would pay for the median house with nothing leftover. It's just shit timing and the luck of the draw, they worked, owned and renovated for 20+ years and prices didn't keep up.
Yeah everyone focuses on people with more than they have.
Your mum didn't want to loan some money to you so you can get a headstart on a deposit in property market?
They helped us out 12 years ago when we upgraded to a house. They also gave me a small interest free loan when I was buying my first house back in 2003 to cover the stamp duty and legal fees, which I paid back in 6 months. This was before they retired too.
I hate it when that happens, falling over onto a signature line and accidentally making another million due to house price rises.
That's brings to mind the time an [MP bought a $795k investment property](https://www.pedestrian.tv/news/federal-mp-buys-800k-gold-coast-flat-on-taxpayer-funded-visit-just-cos/) while on a taxpayer-funded work trip...
Need to get that net wealth below 1.2M otherwise I won't be entitled to the pension I don't need.
Networth of 3M but the family home isn't included. So the younger generation is subsidising living cost for someone who owns a 2M property. And some of that younger generation are looking at homelessness due to accommodation affordability
Yet boomers who manipulate the system to come in one dollar under the threshold at retirement age will sit there in their 1.5M Kellyville house and cheer on Andrew Bolt slandering the "dole bludgers" who are draining all our tax money.
The scariest part about this breaking news it not far from the truth.
It’s not their fault the for sale sign got stuck in their bullbars and they called the agent to get it out.
Spacelama performs at open mic bar, which suddenly becomes empty on subsequent open mic nights. I think we see what's happening here.
Empty bar on a Monday!?! What is this country coming to
Pssst, take a look at the calendar.
System designed by boomers. Working for boomers. They need to shuffle off this plane of existence already
Replace "upper class" with retirees. The big winners are not corporations, its retirees with fat savings accounts and paid off mortgages. The rest of your comment still applies though haha. Also to OP, welcome to the wonderful world of stagflation. That said I don't think inflation will continue to be much of an issue, but "stagflation" is the term you're looking for.
My parents are retired public school teachers. Massive paid off house, massive superannuation funds and a big fat savings account to boot. Three kids, massive house and at least one overseas holiday a year. You look me in the eye and tell me that two public school teachers can afford that now.
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I was two years old 30 years ago. They were fine paying a mortgage and feeding five people on one public school teachers wage. That's not possible now.
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Yup. Now they couldn't afford to rent with their combined incomes let alone having kids! My mum no study no career outside of basic office admin owns a $650k house single income 2 kids "we did it bloody tough" pffft righto boomer U just were born at the right time.
I do wonder what people 55-75 are going to do at retirement age when no one fills the underpaid healthcare worker vacancies and the 80s and 90s kids get into politics and happily write off that whole generation with zero remorse
Same thing they’re doing now: immigration.
Rate rises hurt business. This is where the economic slowdown happens. When business slows down.
Nah, the rich don’t spend most of their money. They hoard it and put it against mortgages and savings etc.
They make a point of not spending a dollar unless they get $3 back.
I am 1 month away from my stage 3 tax cut. how bout we don't tax income buddy.
I mean the changes to the stage 3 tax cuts to be less of a reduction infuriated r/aushenry. You had posters raging about having to now buy 3 houses and negative gear them to get out of the tax bracket.
Rate rises hurt the rich as well. Businesses are impacted a lot more by interest rate hikes which hurts the rich a lot more, it’s just most people here don’t own or run businesses so they don’t realise this. Not to mention, rich people, for the most part, don’t buy the same things poor people do. So any spending driven inflation done by the rich won’t have as much of an impact on the poor.
Affecting them more and them hurting are completely different. Rich people remain unhurt and are still spending freely.
They said the upper class was unaffected which is untrue. Also, while the rich are still earning a lot, they’re not earning as much as they otherwise would be, which will hurt them. People earning less just don’t notice that because they see those people are still making a lot each year whereas those people see how much less they’re making each year. Say someone who used to earn $25m a year was now earning $5m, those making less just look at that $5m and thing they’re making a huge amount. Those people making that much money are seeing themselves lose $20m a year, or seeing their income drop 80%. Or, to take a more middle class example, someone accustomed to earning $200k per year would be hurting if that dropped to $150k per year, whereas someone on $80k per year year would see that as a lot of money. It’s just a matter of perspective, to you they’re doing fine, to them they’re hurting. Since it’s their life, I think it’s reasonable to take their perspective and say they’re hurting. Regardless, that’s going down a rabbit hole. We can debate whether or not their hurting since people can correctly point out that they’re still on $5m a year. Both arguments are valid and as a result it’d just become a circular argument until someone gives up, so I don’t really want to waste time on that. However, getting back on track with the main argument, you’d be moving the goalposts to make this about who’s hurting and who isn’t. The original comment was saying that the rich’s spending was causing inflation and that the solutions were only affecting the poor. The rich aren’t causing inflation by spending too much and even if they were, it would only hurt them. Plus, the solutions are affecting them as well.
>Say someone who used to earn $25m a year was now earning $5m I'll defend the word unaffected here. Because anyone earning $5m a year isn't affected by a loss of $20m. Not in a meaningful way. They're not going to be homeless, and it's not stopping them from spending a shitload of money either. Their investments might suffer, but not their spending habits. Your middle-class example is entirely situationally dependent. If they're older and don't have expenses, then a $50k drop still won't really affect them. If they have a huge mortgage then yeah it would. I wouldn't classify someone on $200k with a huge mortgage as rich though. >However, getting back on track with the main argument I've no interest in the main argument, nothing apart from interest rates is done about inflation anyway. So debating who's causing it is pointless. I just wanted to point out that for all intents and purposes rich people aren't really being affected in any meaningful way.
You’re still just arguing whether or not they’re being hurt. You can change definitions all you like, but at the end of the day, in this example they’re making $20m less per year. They’re being hit financially in a huge way. Also, all you’ve done is prove my point about perspective. You can’t fathom the difference in lifestyle that a $25m salary can afford you vs a $5m one, so you don’t think they’d be affected. The difference between these 2 lifestyles is massive. At $25m, you can buy a $100m house, you can then use that finance a yacht, private jets, massive holiday houses etc. A $5m salary can’t even come close to affording that unless you already have that degree of wealth. I can assure you as well, prior to COVID, stupidly wealthy people weren’t shy on how much debt they had either. A $5m salary can still afford a great lifestyle, but it’s not even close to being the same lifestyle. You just can’t fathom the difference because both are so otherworldly to you that they’re the same. But ask anyone on in that pay bracket and they’ll quickly tell you the difference. That was literally my point in my initial comment, there’s a huge difference, you just can’t see it. Regardless, I’m done with this argument. As I said, discussing whether these people are being hurt is up to perspective, and both views have a valid argument. It’s just going to lead into a circular argument as a result as you won’t change your opinion. I’m respecting that you don’t want to continue the main argument since you realise the comment I initially replied to was stupid, so I expect the same courtesy from you to not move the goal pole posts and try force this unproductive argument into happening. I’ve already pointed out it will go nowhere so I can’t be bothered having, and now you’re trying to argue in bad faith to try to force it. If you want to whinge about how much money the rich make and how much better their lifestyles are, then that’s fine but go do that to someone else.
I said affected in a meaningful way. They are not hurting and can still spend plenty of money. Also fewer yacht purchases isn't impacting inflation.
Maybe try rereading that last paragraph. I’m giving you the courtesy to not continue the original discussion since you realise it was an idiotic point. Allow me the courtesy of not having to deal with this circular argument that won’t go anywhere but let you whinge about the rich being rich. As I’ve said, you can keep changing definitions and moving goal posts, “affected in any meaningful way” is the same as “hurting” to you. When I said affected initially, I was referring to whether they were financially impacted. Changing the definitions doesn’t make my point invalid. If anything you’re proving what I originally said. Also, you’re just proving my point that the wealthy spending money doesn’t have a large impact on inflation for the poor. Lots of people buying yachts causes yacht prices to go up and increases inflation for the rich, but it doesn’t affect the poor because they’re not buying those things. The rich spending a lot of money on things causes inflation in that bracket to go up, but that doesn’t affect most people because they’re not buying those things.
>Lots of people buying yachts causes yacht prices to go up and increases inflation for the rich, but it doesn’t affect the poor because they’re not buying those things. Except they're not just buying Yachts. They are also spending huge on all sorts of other discretionary items that everyone else would also like to buy every now and then, but not at ridiculous prices. And this is the type of spending that they will continue to do no matter how many Yachts they lose.
Hey, look who decided to finally come back on topic and stop moving the goal posts so they can whinge! What *discretionary* products do the rich buy that everyone else does? Sure, they have water and energy but those aren’t discretionary items. Sure, there’s small luxuries like iPhones where normal people can afford the top of the line products, but if they started to buy enough of them Apple would just produce an even more premium model that only the rich can afford. Same with hobbies, in fact you see it even more in hobbies. Some hobbies have cheap entry points (say $400), and then top of the line is expensive but not unobtainable for normal people (say $10k). Then the hobby becomes mainstream, rich people start enjoying it, and suddenly the top of the line is in reachable (say $100k). But, in the meantime the products that were $10k often become $5k and the new $10k products are miles better anyway. You see that all the time. But please tell me, what discretionary spending do the rich that has a huge impact on everyone else. Sure, there’s probably things I’m missing that they do, but it’ll probably be minor things that won’t massively affect everyone. Happy to be proven wrong with respect to that.
And the middle class.
Evil rich people are an easy target for angry basement dwelling Redditors.
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Spending is not driving inflation, services are. You can’t not pay rent, electricity or insurance
Yeah, this is a massive factor. While I can absolutely shop more frugally, wear my clothes longer, and go out less - I can’t really reduce most of my bills (not in any meaningful way), and rents continue to climb. I think OP might be referring to things you see in media sometimes, to effect of: “(millennials/gen Z/poor people) are killing (department stores/cafes/tourist industries)” that seem to scream “WHY YOU NO SPEND??!!!” While you also simultaneously see pieces of media to the effect of “If you don’t stop spending, Daddy RBA is going to smack you (with another rate rise)”. Obviously businesses don’t want to go under; and the media profits on stoking outrage, regardless of whether it’s contradicting the opinion piece they posted yesterday.
Spending on imports definitely is. Australia is largely trading a fixed amount of primary production for a fixed amount of imports - with a war on and on the tail of supply chain issues there's just less stuff to go around, so you get less stuff. Ditto housing - there's not enough houses to go around. Pure services and labour value add are probably the one thing that spending money on is ok - citizens might as well be busy doing something instead of sitting around because everyone feels too poor to pay for workers.
Housing inflation is services inflation, it goes directly to the cost of rent. Cost of importing isn’t even going to be remotely touched by rate decisions, unless you think that Iran and the Houthis fear the RBA.
It's a special case, which is why I pointed it out. People are outbidding each other for a limited amount of housing. Most services like house cleaning or handjobs aren't driving inflation. There's no shortage of people with a firm grip and the time and willingness to rub something. If you spend your Capitalist Reward^tm on those, then you won't really be contributing to inflation.
If that's the case, how come we have a "cost of living crisis", not a "cost of luxury crisis"? It's the essentials like rent, electricity, insurance, groceries etc. that are going up.
I’m not sure what point you’re trying to argue? Rent electricity and insurance are services inflation, not discretionary spending.
Do whatever you want, you individually have no to little impact on the economic situation of even your suburb.
If we spend too much money, we are blamed for inflation. If we don’t spend enough money, we are blamed for the recession. Either way, it’s definitely our fault and in no way driven by corporate greed.
You're not supposed to be spending is the answer. The rba will push the country into recession rather than have economic growth to keep inflation under control.
There will be a bit of inevitable overlap, as the only way *in theory* to drop inflation is to get people to a point of pain where they can’t keep spending. A big issue we have is that most people under 50 are going alright we wanna tap out, we’re really struggling, but many over 50 have enough wealth that they’re single-handedly keeping inflation so sticky, so we all have to suffer the higher rates until even they are forced to stop spending. Best case scenario, inflation isn’t sticky so you don’t have to send the country into a full blown recession, just a small dip Worst case scenario, inflation is very sticky and you have to cause a recession in the process of bringing it down. A short term recession is far less damaging to the economy than runaway inflation
As a 50 something I'm tapping hard. Looking hard at the boomers.....
Like I said, many over 50’s- I know there’s over 50’s struggling just as hard, just as there are 30 year olds with 4 properties
>30 year olds with 4 properties Average AusFinance enjoyer
“but many over 50 have enough wealth that they’re single-handedly keeping inflation so sticky,” Is that really what’s happening? Biggest contributors to inflation last print were rent increases and education cost rises. Spending on those isn’t dominated by over 50s.
And who owns most of the investment properties and sends kids to private schools? Let me rephrase slightly then. “The wealthy in this country are keeping inflation sticky. This more often than not is people over the age of 50 who have had time to build wealth in a system that didn’t have such a high cost of living”
>Is that really what’s happening? Well yeah that is exactly what’s happening: https://www.bloomberg.com/news/articles/2024-05-23/gen-z-australians-slash-spending-while-baby-boomers-splurge
Who do you think are the ones benefiting from the rent increases? It’s the over 50’s with no or minimal mortgages jumping on the bandwagon and increasing rent on their properties because they can try and justify it as being due to rate increases
Higher interest rates means more income from savings which in turn means they have more to spend. Many over 50's aren't "invested" so to speak in diverse assets but keep a lot in cash or short term instruments. Higher interest rates = better for them. Its the rest of us that suffer because usually the debt to savings ratio of anyone under 50 is the polar opposite of retirees.
It also means the banks loan less money.
Not because there is a material difference in costs on their end though. It’s just because they know people will be able to pay back less money until things improve
The banks get charged interest by the RBA.
Which is passed on in full to mortgage holders
Part of this is that people don't want to have less things, and a huge amount of those things come from overseas. What comes in from overseas is loosely tied to our exports - which is basically fixed primary production - so essentially there is less imports to go around and people *will consume less*. If they try to keep up the same consumption it will just drive prices up. In theory, spending more on things that are actually generally produced here doesn't have the same inflationary pressure - particularly if it can cause growth in the local economy - and the potential is there for that. Though I'd point out the housing market is in a similar state to imports - not enough to go around. Essentially: If you buy local produce or services, then that's unlikely to drive inflation. If you try to buy the same amount of housing or imports as you are used to - there's less to go around - it will cost you.
You don’t need to cause a recession to reduce inflation. What a ridiculous statement. The whole point of raising rates incrementally is to control/reduce inflation without recession.
I never said they had to. I said that because of the conflicting nature of reducing inflation and preventing a recession, to reduce inflation will inevitably have *some* effect on GDP. The level of stickiness of inflation will ultimately determine how much of an effect. If you’re gonna have a go, make sure it’s actually reflective of what I’ve said
Given the latest data on consumer sentiment being the lowest in what, 40 years? And that spending per capita is almost as bad…. Doesn’t matter what we are “supposed to be doing”, we’re not spending compared to historical figures. I’d say just keep doing whatever you’re doing as best you can.
Yes you and many are confused. To curb inflation the government needs to stop spending. Not many votes in that though.
Indeed look at Vic. Budget cuts or defers spending: outcry of broken promises.
Vic is broke. Hold on to your wallets more taxes coming.
It is interesting that the Govt is also trying to incentivise retirees to spend and not die with large super balances. Having super in pension mode, where you have to withdraw, at zero tax on earnings is one example of this. If you believe the media many retirees are very wary of spending as they are scared of running out before they die. Retirees will tend to spend on services, so travel and eating out, not stuff as they typically have all the stuff they need. https://www.smh.com.au/money/super-and-retirement/why-retirees-should-be-spending-more-in-retirement-20231006-p5eaa9.html
> to spend and not die with large super balances. How is this possible to achieve in reality because any old person could just drop dead at the drop of a hat due to stroke or heart attack. The only solution is to get rid of your financial assets and purchase a lifetime annuity which people aren't keen on doing. From the SMH article "The required annual minimum drawdown increases with age. It is 4 per cent of the account balance up to age 65, with the percentage progressively increasing for older age cohorts. “We know if they continue to do that, draw down their super at the minimum rate, they likely bequest 30 to 50 per cent of their super savings,” Ellis says." Again that "30 to 50 per cent" is a function of not knowing when people are going to die.
You are right that it's hard to judge exactly and there will always on average be a balance if you, say, plan on a 95% age at death. Lifetime annuities are indeed not popular at current interest rates. Another recent "Fairfax" article, can't find it right now, mentioned that based on super fund data many die with more than they started with.
Yeah, I sort of am a bit confused too. I'm sort of not buying stuff at the moment that I would otherwise buy on the grounds that that's going to add to inflation for everyone... but then, by not spending, that might cost someone's job somewhere along the retail chain.
Exactly, and then that person that loses their job cuts back on spending because they’ve got no income, and then wherever they were going to spend gets less revenue and may have to lay people off, etc. until inflation is forced down. It sounds brutal but it really is for the greater good- if inflation goes nuts for too long then none of our jobs are worth a thing as none of us will be able to afford anything
Real easy to say when you're not the one who has been made redundant.
True, but that doesn't detract from the accuracy of the statement.
I have lost a job because a company went out of business, it does suck and I’m not denying that. It doesn’t change the brutal truth that it’s what’s best for the nation as a whole
Beatings will continue
Until morale improves
Same here, the way I understood it is.. cut down on luxuries and discretionary spending, but continue spending on essentials.
>but continue spending on essentials. If you want to collectively lower inflation, downgrade your essentials. Learn to cook if you don't already or buy pies from the supermarket.
Essentials like food, rent & energy, Got it...except the biggest contributors to inflation are from Essentials like food, housing, insurance and education. Clothing, furnishing & recreation have risen less than a percentage in the latest figures. The only discretionary spend that has increased significantly is alcohol & tobacco, partly due to increased taxes.
I don't know man, all I know is I couldn't spend even if I wanted to.
Stagflation is real and has been a fiscal and monetary issue since at least the 70s. https://en.m.wikipedia.org/wiki/Stagflation Be concerned to the extent that government and central bank policy affects you and also what policy solution you think is most helpful (and how to advocate for it) - but you’re not a treasury blockhead presumably so no need to get lost in the big picture too much I would suggest.
Not spending. I've seen news implying a decline in retail spending is a bad thing too, but if you want to collectively lower the inflation rate you must find alternatives >but at the same time we are trying to avoid a recession Watch more Alan Kohler A mild recession is more like a rest than a drop, growth slows a little only to pick up later especially when interest rates are high. Right now we're crushed by financial inflation marked by the greatest increases in prices being in insurance, health care and real estate. As these are monopolised items it goes to follow the only real consumer response is to boycott as much as possible. This means if you typically get food delivered then buying microwave dinners and pies. If you already do that, consider some "but cheaper" style recipes. If you already do that... Grow beans and tomatoes and you're almost winning. This has a deflationary effect on food prices in a similar way to how undocumented street food deflates food prices in the developing world (which I think is neat but we have food standards). Deflating food prices is about the only response to what's mostly just inflated financials (in Australia).
>Grow beans and tomatoes Yes I will spend 3 months and the same amount of money I would on simply buying tomatoes from woolies to grow 3 tomatos on the balcony of my Sydney apartment. While I'm at it I'll make sure to die while sharing my apartment with 3 other families rather than going to a doctor so I don't contribute to rising health care costs or the inflated realestate market.
Growing food is do-able if you're a boomer living in a detached house on a quarter acre block, the new estates where houses are laid out like sardines in a can then not so much.
Haha this is me this morning after hearing the news at 6am - confused!
They’re trying to cut capex, billions of dollars corporations spend on new infrastructure or investment to grow their businesses, not an individual like you spending their 100$ a week. Why does no one seem to understand this
The rich will get their comeuppance as we all don't keep our wealth when we die
What worries me is that gdp is low. Inflation still not controlled and unemployment rising. So what can they do now to fix the problem?
We are not supposed to be spending. Someone tell the boomers.
Depends I'd you listen to newscorpse. ADHD RWNJ journalism. Grifters of fear. Satanic purveyors of Late stage capitalism. Immoral hedonists. Spend as much as you can't afford.
You can’t win so don’t think about it too much.
It's a free country, though some might have forgotten that in the last few years. Do whatever you want mate.
Uh You are suppose to do what is right for you Consumer spending isn’t going to help The country needs industrious “risk takers” doing something other than houses and holes
When in doubt just remember everything is your fault as a consumer and not our borderline redneck incompetent politicians.
Raising rates has accelerated inflation as everyone is just shuffling their rates increases onto everyone else and corporate’s are increasing prices because they can. It’s complete BS
You'd have to be a special kind of stupid to follow instructions from the idiots runnings this country in regards to your own personal choices on spending.
Oh god no, I meant the question as a whole. As in, are the government trying to push us to spend less or spend more? I'm not really in a position to change my current spending habits but I'm trying to understand where the economy is supposed to be heading.
10:00am on a Tuesday at Westfield's or Stocklands 45 minutes drive from the CBD and it's packed full of shoppers. Sometimes I think to myself how are we meant to drop inflation under these conditions 😂
Retirees and people who don't work 9-5 doing their essential shopping. Packed shopping centres are a non sign in Australia because all the supermarkets and cheap department stores are in the shopping centre. In bad weather they are also a free indoor playground for the preschool set.
Not to mention all the time retirees and people on disability spend just walking the shopping centres for something free to do and a social activity.
No, you understand correctly. You're meant to be confused. That's entirely the point to get you to spend into the economy. You should save because things aren't going to stay this way indefinitely. This is the way the market tries to manipulate you at the end of the cycle, and confusion and especially FOMO are great motivators to get you to do so.
I'm pretty sure I will spend as I wish . Business as usual in this household.
Isn’t housing one of the main factors driving inflation? If that is the case, wouldn’t it be almost impossible to reduce?
Spending all my money on shit to DIY my own work direct imported from overseas. Sorry were we meant to be spending it in the Australian economy while prices are out of control? I can’t afford the quadrupling of the invoice vs just doing it all myself.
They don't call it a soft landing for nothing. They're trying to bring the plane down to the ground but not too quickly.
Monetary Economics is just the reserve bank gaslighting citizens to do stuff before they take any action. I’m not even joking
You can spend on necessities to keep you alive but nothing else. Unless you're a boomer who only cares about themselves. Data have shown that boomer are the only group that are increasing spending more than inflation
Well, they probably have the income to do so and even if there is a deficit then they have the investment capital which they can partially cash in to keep going as before.
Exactly my point they just think about themselves rather than reduce their spending. I'm a millennial and I'm basically just buying necessities to help reduce inflation.
Well see there's a big problem here because retirees are being told that they aren't spending enough of their super. So, if you read this link here https://www.ifa.com.au/news/33070-use-it-or-lose-it-call-for-legislation-to-make-retirees-spend-more then it says ----------------------------------------------------------------------- Currently, under the Superannuation Industry Supervision Act, retirees under 65 must draw at least 4 per cent of their account balance each year, while those aged between 65 to 74 years must take 5 per cent. From the age of 95, retirees have to withdraw 14 per cent of their income. A Treasury survey found that most retirees draw only the minimum amount. “The SIS minimum is exactly there as a minimum, but a lot of retirees actually believe that because that’s the amount that the regulators tell them to take, that’s obviously the right amount and therefore you shouldn’t take any more than that,” Mr Lapedus said. Another speaker, Fidelity head of client solutions and retirement Richard Dinham, said the government minimums anchor people’s spending patterns. “The government really needs to think about what those minimums should be, and the 4 per cent is probably too low,” he said. “The statistics and the system back up the fact that they (retirees) are underspending and leaving too much at the point of death. “It could be that future governments remove some of the tax benefits if there is too much being passed on to the next generation which is an unintended purpose of super.” --------------------------------------------------------------------- And there are plenty of other articles on the net pretty much saying the same thing, also something like a quarter of superannuants have more money left in their super fund when they die compared to when they started. So, I'm left wondering what are they meant to do in this situation? (1) Spend only the legislated minimum to ease inflation? or (2) Ignore the first option and spend how much you like, when you like, without a care in the world?
The government is trialling a new economic model of Schrödinger’s spending. We are required to both spend money to save the economy as well as stop spending to reduce inflation. Your spending needs to be in a state of superposition at all times.
Government aren’t going to stop the inflation, they need us to spend to pay for the upcoming war with China. New subs and an expanded military doesn’t pay for itself.
Only spend if you can't afford it.
Remember when covid started we shut everything down and rates went to zero. We just need to do that again.
Rates went to zero to encourage spending because we knew that spending would drop (fear plus less oppertunity to spend), Interest rates are man made and we choose them to affect the economy throughconsumer behaviour. We are in a totally different economic climate now and if we dropped Interest rates too low we would have even more problems.
FTW I’m buying a new shed, redoing my driveway and putting a new tray on my Ute.
Everyone seems quick to be shirty at the retired person enjoying life after 40+ years of being a taxpayer. If you find yourself feeling like this, just ask yourself.. what would you do in their shoes? Give everything you’ve worked for away and go back to work to die? Feel guilty for setting your kids and grandkids up for success and an easy life? Nah… you’d hoard every cent, live life to fullest and die happy knowing your kids are set up. As you should
Oh sweet child of summer. The government prints the money which causes inflation. You spending has nothing to do with it.
It isn't so much the printing of money as the spending it without the productive capacity in relevant sectors of the economy to absorb the increased expenditure. Taxation used to be a good way to do this until the electorate was convinced to stop supporting it.
But the government said their money printing didn't have an impact on inflation.
Our money printing does not impact inflation because of this one simple trick. We tell our citizens that it doesn’t impact inflation and they believe us. It’s not a lie if everyone believes it.
Government is really taking a page out of George Costanzas playbook
Yeh just like they reckon inflation is 3.6 percent
More like 3.6 percent per week
Which government said that?