Don't buy RBA's ever-cheaper-money-makes-us-better-off bullshit

Christopher Joye

Coolabah Capital

Don't buy into the Reserve Bank of Australia's ever-cheaper-money-makes-us-better-off bullshit. Taking on more record debt at the puniest interest rates in human history to artificially boost economic activity to some theoretically acceptable growth rate – and the existence of zombie businesses that would never survive with a normal cost of capital – is plainly stupid. The same logic applies to mindlessly chasing absolute yields and buying horrifically overvalued investments just because the RBA wants to ignite "animal spirits". The risk-averse would be better served making peace with meagre returns and avoiding catastrophic capital losses when fundamentals wrest control of asset prices back from policymakers who think they know better...The news for prudent savers and retirees, who are being punished in the name of encouraging spendthrift borrowers to extend their debt-buying binge, is devastating. The interest rate on Macquarie Bank's popular cash management account has plummeted to just 1.65 per cent. Betashares' similarly successful exchange-traded fund (ETF), which invests in cash deposits, is now returning only 2.28 per cent net of fees (but before brokerage). Free in AFR (VIEW LINK)


Christopher Joye
Portfolio Manager & Chief Investment Officer
Coolabah Capital

Chris co-founded Coolabah in 2011, which today runs $7 billion with a team of 33 executives focussed on generating credit alpha from mispricings across fixed-income markets. In 2019, Chris was selected as one of FE fundinfo’s Top 10 “Alpha...

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