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Over the course of the last year, Glenn Stevens at the Reserve Bank of Australia has thrown down the gauntlet against Greenspan Groupthink. Rather than choosing to live in fear of his government’s conflicted politics, he has proactively raised interest rates alongside a real-time market recovery.

Many US centric equity market investors live in fear of rate hikes, primarily because there is a cowardice that comes from the top. The Australian citizenry is seeing the rewards born out of confident leadership to put a real rate of return into their hard earned savings accounts.

Rather than wait for a lagging economic indicator like the unemployment rate to rollover (Bernanke), a confident Stevens has raised interest rates 3 times, taking benchmark rate in Australia to 3.75%. In the face of those rate hikes, we saw the January unemployment rate in Australia ROLL OVER!

This morning’s payroll adds in Australia were 3-times higher than consensus expected, and the unemployment rate dropped from 5.5% to 5.3% on a month-over-month basis.

 

Washington/Greenspan Groupthink is being taught a lesson from China and Australia. I humbly suggest America starts learning. Evolution of thought processes is a critical aspect to long term success, particularly when working within the spheres of a social science like economics.

Well done Sir Stevens. Well done.

KM

Keith R. McCullough
Chief Executive Officer

Debasing Greenspan Groupthink  - aussiu