Around the world, Central Banks are attempting to rescue weak governments.
Fiscal Policy changes belong to the government, but in restrictive times those policies are generally unpopular (think “Austerity” in the UK, or any attempt to raise taxes or cut spending in the USA). As such, governments prefer to ignore things until it’s too late.
Central Banks know that Monetary Policy is a blunt instrument – mostly using interest rates as a lever to stimulate or restrict business investment. Whether it’s the Fed Reserve, Bank of England, RBA, or your local institution – they know that higher interest rates won’t change the flow of oil through the Strait of Hormuz, but they have to do something.
Importantly, they know that 6% unemployment is more desirable than 5% inflation. Rates were increased again in Australia this week (where inflation is at 4.6% and unemployment is at 4.3%) … but maybe down under we have a government with the courage to enact some tax reform?
The Australian Federal Budget is released next Tuesday. I won’t add to speculation, and I certainly won’t be watching it live. As an investor, business owner, and business advisor I keep myself attuned to changes in tax law and what that means for your family’s wealth – but we can all do that by reading the summaries in the weeks to follow.
Whether dramatic changes, or weaksauce, my advice is the same as all economic changes:
- Remember your Circles of Control and Influence;
- Respond, don’t React;
- The Master Prefers Whatever Occurs.
Next Steps
Want to learn more about how this can apply to your business? It costs nothing to chat:
- Email me jacob@jacobaldridge.com (I read them all)
- Call, Text, or WhatsApp me +61 427 151 181
- Or just Subscribe to stay in touch
