RBA to drop another $100bn?!? Why?

Adam Keily: [00:00:52] Hello and welcome to another episode of Comedian versus Economist, we demystify the world of money and help you get a handle on the bigger picture. My name's Adam and I'm joined, as always by my little older brother and real life economist, Thomas. Welcome, Thomas. [00:01:08][15.3]

Thomas Keily: [00:01:08] Yeah, laugh it up. Laugh it up. [00:01:10][1.4]

Adam Keily: [00:01:12] I feel a little older brother, even the playing field somewhat. You've always been older, but now you're little. Yeah. [00:01:18][5.7]

Thomas Keily: [00:01:18] Where little is a relative term relative to me. [00:01:24][5.8]

Adam Keily: [00:01:25] We were relatives. Yes. More. Yeah, that's true. [00:01:28][2.6]

Adam Keily: [00:01:29] Uh, hey, um, exciting news, Thomas. And a couple of things I just wanted to cover off. Maybe before we get started with the meat of the show is thanks to everyone who's tuned in to comedian versus economist. Thanks to everyone out there who's listening to the show. Hopefully they're listening and enjoying the show and they're not just tuning in and then tuning out again. But we did have a sneak peek at the Apple podcast charts earlier today. And we are now. Can you believe this? We are now ranked number two in investing podcast behind our goodmates Equity mates Investing podcast at number one in the investing section. So number two and number four in business podcasts across the whole of Australia. So why don't you. Yeah, and well done. Well done to all the listeners out there for for tuning in and staying with us. We hope you're enjoying the show. Probably also worth noting, not in the top 100 of comedy podcasts. It's so I guess you're holding up your side of the bargain pretty well. [00:02:35][66.3]

Adam Keily: [00:02:38] I might be letting the team down. Uh, it's, uh, it's a tougher league comedy. Yeah, it is. But I thought, you know, comedian versus economist, I thought we had a fairly even pitch across the to the two demographics. And we've we've polled well in in not one, but two categories of kind of a serious finance bent. And we haven't even featured in the top hundred. And you need to you need to get some sort of special access to see the bottom, the bottom one, one to three hundred in comedy. So needless to say, I didn't sign up. I didn't think we'd waste our budget on that. But yeah, generate genuinely do do think everyone out there for tuning in, listening. Um, speaking of people listening and tuning in, we have been getting a ton of email coming through to us, which is super exciting as well. You can of course e-mail us at cve@equitymates.com or head over to the website and use the contact form at equitymates.com/cve. A few emails that caught my interest actually Tom this week. One was from Dylan. Now Dylan has asked a couple of questions and I want to and I want to shout out to Dylan and tell him that I appreciate him asking me a question as well, which was a big thrill, because most of the email that we get is, it's fair to say, is directed at you. But Dylan, in the interests of balance, has gone. I'm going to ask him a question and he starts the email. Adam, how do you take your eggs? And I'll be honest, Dylan, I had to get an urban dictionary just to check that as a 40 something year old male, I wasn't missing a trick. Two things. Don't go to Urban Dictionary and look up. How do you take your eggs? Secondly, poached. Let's not muck around. The only way to have eggs is poached. Thomas, how do you take your eggs out of interest? [00:04:29][110.5]

Thomas Keily: [00:04:29] I'm a scrambled kind of guy. [00:04:31][1.1]

Adam Keily: [00:04:32] I say this is what separates us. I can't believe we're even from the same mother. There's an old saying that says you can't make an omelet without breaking a few eggs. I say you can't make an omelet because that's not how you make poached eggs. [00:04:43][11.8]

Adam Keily: [00:04:49] shots were coming from the top 200. Here we go now. There you go. There, guys. I hope that clears it up for you. Dylan did also ask Thomas called you out on your bold prediction, I think from perhaps from your TV appearance on the equity might show on Osbey. Or maybe it was the megatrends episode. I'm not sure. But you've been talking smack about Bitcoin ever since it started going up. you're not a believer at all. And he was wondering, I think, as we record today with regards to Bitcoin, after the Tesla Elon Musk activity, of course, which was that Tesla bought one point five billion dollars worth of Bitcoin. Have you changed your tune now on Bitcoin? [00:05:39][49.9]

Thomas Keily: [00:05:40] Oh, damn it, Dylan, I want to answer this. Yeah, no, I have been throwing a lot of FUD out there about Bitcoin. I do. I feel a public duty to to provide some counterweight to all the crypto rubbish that is out there and there's a lot of rubbish out there. Um, yeah. And so I did make a bold prediction of Krypto of Bitcoin going to 5000. Some people are talking about going to one hundred thousand for the record. [00:06:12][32.1]

Adam Keily: [00:06:12] What's that now? [00:06:13][0.3]

Thomas Keily: [00:06:14] Forty two, I think, right. [00:06:16][1.9]

Adam Keily: [00:06:16] Yeah. Forty two thousand. Yeah. [00:06:18][1.4]

Thomas Keily: [00:06:18] So it's halfway towards being totally wrong for me. Um, for the record, yes. I want to put that counterweight out there because like in the world that I live in and the research that I do and the economists that I read, there isn't really anyone who's like Bitcoin is awesome. You know, like most people think like. Yes, like it's got some nice features, but dominant global currencies. It's no one really sees a pathway forward. I haven't seen anyone explain the pathway to global financial system dominance at er everything. I'm everything. I am over. [00:06:55][37.4]

Adam Keily: [00:06:56] You are. You're overthinking it. You and your smart mates are sitting around thinking this is this, there's nothing behind this. Bitcoin is not going anywhere. It doesn't deserve to be anywhere. Meanwhile, the rest of us we're making we're making a ride off to the moon. [00:07:10][14.4]

Adam Keily: [00:07:16] That's what's really the problem is, is that people like me are making money out of Bitcoin and people like you are sitting around going to shouldn't happen. It's not right. No, there's no use goes for people. There's no thesis anywhere like your little universe. [00:07:35][19.5]

Thomas Keily: [00:07:39] Do you know what I did? I sold my dogecoin. [00:07:41][1.8]

Thomas Keily: [00:07:42] You're out. [00:07:43][0.4]

Thomas Keily: [00:07:44] I'm out because I figured I'm all I'm all in bitcoin now from those we just know we're not talking big bucks, obviously, because it's not how I roll. But Elon Musk is not taking Dogecoin seriously. That's a joke. Surely his secretary is saying hot the rainforests. He's just like he is. He's he's gone off script and you can't be. His company's bought one point five dollars billion worth of a different coin. [00:08:13][29.1]

Thomas Keily: [00:08:15] Yeah. Yeah. One point five billion. And Tesla has repositioned it sort of like charter to say that it is is allowed to just invest the cash that it's sitting on and is sitting on a crap ton of cash because it's been selling stock at these like super crazy levels that it's at. Which, you know, I'm not saying the Tesla is in a bubble, but they've been taking advantage of the huge stock price run that they've seen. So they're selling heaps of stock that they've got a ton of cash and they've said that yet we're allowed to invest this, you know, for the for the purpose of making a profit. So what are they doing with Bitcoin? Is it like it's just there. It's just a reserve and there's just there because they want the liquidity or they just see it as a safe asset? Or are they taking a punt going like this? Is this is on its way to the moon. The interesting thing, I think for now, now that now that Tesla holds it, does that put any constraint on Elon Musk to start tweeting about Bitcoin? Because if he tweets Bitcoin every time he tweets anything like, you know, he bought a hat for his dog at Etsy, tweeted about it, its shares jumped eight percent. [00:09:17][62.0]

Adam Keily: [00:09:18] He bought a hat for his donations as [00:09:22][4.0]

Thomas Keily: [00:09:23] well as anything he tweets, gets a rocket under it. So, yeah. So if he tweets, Bitcoin is awesome. I love it. And it booms like, is that market manipulation? [00:09:35][11.5]

Adam Keily: [00:09:37] is he right? Or. Probably is. But the SEC there, the place in the market space. Right. They're not in control of crypto. Isn't that the whole point of crypto? It's like decentralized and, you know, regulated currency can even get a rocket under him or for for for pumping a crypto coin. That's not in the SEC's domain, is it? [00:09:57][19.7]

Thomas Keily: [00:09:57] But it's like if you start a rumor, like, you know, you're in trouble because he said some Saudi prince was offering for twenty firm for Tesla. [00:10:06][8.8]

Adam Keily: [00:10:07] It turns out that's a joke about 420 cannabis culture. I didn't think it was that funny, actually. And he had to step down as CEO of Tesla. [00:10:17][10.6]

Thomas Keily: [00:10:20] So he got in trouble for that. But, you know, like if you start a rumor about something awesome happening in your company, in the share price goes up, that's not OK. That's X, not X, not cool with that. So if you if he starts tweeting stuff about Bitcoin and Bitcoin price booms as a result and then Tesla's, you know, makes profit off that, is that it? I mean, it's shady, but is it like criminal? I don't know. It's I don't know. It's an interesting [00:10:46][26.7]

Adam Keily: [00:10:47] one. Well, we'll leave that to the SEC. Yeah. [00:10:50][2.8]

Thomas Keily: [00:10:50] So I don't know. So. For the record, I think, you know, hundred thousand is as likely as 5000. I still don't see the case for Bitcoin in particular, but it but money, gold, all of it. It works on a social construct. The social construct is just socially determined. Humans are weird. Weird stuff happens. Maybe Bitcoin goes to 100000. [00:11:14][23.7]

Adam Keily: [00:11:17] I love watching you say. All right, nice one. So thanks, Dylan, for your e-mail. Really appreciate it. Taking the time to write in. Someone else who wrote in was Hugh, and he was interested to know more about interest rates and what the low interest rates that we've got at the moment mean for things like property property prices, for things like cash lending, current mortgage holders, people who are looking to enter the property market, maybe what that what their low interest rates we've got at the moment. I mean, I could take a stab at it, obviously have a pretty pretty good go now that I'm feeling quite educated in this space. After the introductory series we did, if you haven't tuned in to actually go back and listen to that. But I figured we're covering a lot of that off today, aren't we? [00:12:01][44.4]

Thomas Keily: [00:12:02] Think that's the plan. Yeah. Yeah. Let's take a look at that. I mean, the big news, the big news last week we're recording this, the first the RBA is meeting in in early February, they announce they're going to check in on another hundred billion dollars into the economy. [00:12:16][13.9]

Adam Keily: [00:12:17] 100 billion. [00:12:18][0.5]

Thomas Keily: [00:12:18] Yes, that's billion with a B [00:12:20][1.3]

Adam Keily: [00:12:21] with a beeton. Jeez, I thought. Stop me if I'm wrong, I'm not an economist, right, but I thought the economy was doing well. I thought we were bouncing back pretty good. I thought money printing came into it when things weren't going so great. [00:12:38][17.8]

Thomas Keily: [00:12:39] Hmm. Yeah, I think this is interesting. So it's definitely the case. I think that we're looking at a V shaped recovery. So we were wondering what kind of recovery we were going to get. It's now pretty clear that we're on track for a V shaped recovery. GDP's bouncing back very quickly. Employment's bouncing back very quickly and things are looking pretty good. And they're definitely looking a lot better than they were in September, which is when the RBA announced the first program of 100 billion that they were going to print. Um, and at that time, the RBA was thinking the unemployment rate was going to go down towards 10 percent. It was going to they were expecting that to peak at around 10 percent. Now, looks like it's already peaked at just seven and a half percent and is on its way down downward. So the economic picture is a lot better than it was six months ago when the first round of quantitative easing was announced. So it is a bit of a surprise. And it is interesting because like normally the RBA telegraphs its moves in advance. It doesn't like to shock the market. So if it's going to cut interest rates and no one in the market is is expecting it, they'll go and talk to a few journalists and say, you know, we think people are underestimating the chance of a rate cut. This is why we think it's on the cards. And then a couple of people in the papers will stop publishing articles saying, you know, rate cuts could be coming. And then slowly the idea starts to build and take root. And so that when rate cuts come and no one knows for certain, but when the rate cut comes, it's never as a total surprise, right? Yes. So they like to sort of like telegraphed their moves a bit in advance. What's interesting, I think about this last this last round is that I think the commentary that I was following, everyone saying, like, yeah, the economy's doing a lot better. Maybe the RBA is going to start winding things back a bit. Maybe they've they're thinking the economy's overheating a bit. They've overplayed their hand. Maybe they're going to start winding some of their measures back. Um, that was that was sort of the flavor of the conversation that I was that I was hearing. But in the end, they went the other way. They went like, get we're doubling down on money printing. We've got to print another hundred billion, throw it at the market, see what happens. Yeah. So it was a surprise. It was. It was an unusual move in that sense. [00:14:56][137.1]

Adam Keily: [00:14:58] Were you used to work at the RBA? I did, yeah. Yeah, yeah. Why didn't you know what. You got no mates there anymore. You got no hookups. Yeah. [00:15:06][8.0]

Thomas Keily: [00:15:06] No, I mean the funny I was never high enough up the chain was moved like this or the interest rates or the is a tightly guarded secret. So we as an economist we used to gather around the Reuters machine, which is what it was back then and [00:15:21][14.8]

Thomas Keily: [00:15:24] yeah. Wait for the announcement to come up. And we actually used to run a pool on it like everyone used to put it in a bit. [00:15:31][6.4]

Adam Keily: [00:15:31] What's, what's the RBA going to do this month. And if it was [00:15:34][3.2]

Thomas Keily: [00:15:35] cut by twenty-five or whatever and [00:15:37][1.5]

Adam Keily: [00:15:38] yeah, someone said every other, every other company in the world is running a Melbourne Cups away. You got to stay in your hand. A Reuters cheering it on. Yeah. And we used to do that with employment data. Everyone would take a punt that would come in. [00:15:52][14.5]

Adam Keily: [00:15:56] Really. Okay, so the RBA has announced another hundred billion. The economy is doing reasonably well now. So what are the RBA now saying, like what's the reason that they've done it? What are the RBA saying why they've done it? Or they're just like, yeah, here's another hundred billion. [00:16:14][18.9]

Thomas Keily: [00:16:15] Yeah, kind of the latter. They're like the statement that came out with they released a statement every after every board meeting when they make this kind of decision. It was a positive thing. It was saying, you know, employment's better than we expected. GDP's better than expected. Retail sales are better than expected, like a long list of everything is better than expected then they say. But there are some risks, particularly if covid gets out of hand. And here's another hundred billion kinds of more or less. And that seem to be so there was that they didn't go out of their way to make a strong case for, you know, they said they felt it was still needed, but they didn't wasn't wasn't a super strong case for it. This makes me think and I think that's shifted on the RBI's website. Now they're talking about their target rates. And like the key indicators there, there are interest rates and the government bond rate. And but they're now also talking about the exchange rate and that sort of coming into focus. And sort of one of the things that's interesting, like if the RBA stopped printing money, they become almost the first nation in the world to do that, to stop printing money. And while every other country in the world is printing more and more money, and particularly the US printing more and more money to what that means is that Aussie dollars would become scarce relative to other currencies because other currencies are getting more and more. They're more and more of them being printed. So they become more and more abundant and it all becomes relatively more scarce. Scarce things go up in price. And so the Aussie dollar would start to appreciate. And we're talking about a trajectory here because we have this announcement, this 100 billion, it doesn't come all at once. They're talking about five billion a week. That's what they're going to do. It's just a steady stream, five billion every week buying. [00:17:58][103.1]

Adam Keily: [00:17:58] That's Ronaldo money. As an economist, I don't know who that is. Yes, Cristiano Ronaldo, the famous economist. Right. Five billion a week. [00:18:11][12.8]

Thomas Keily: [00:18:12] That's crazy. Yeah. Yeah. So OK, so the net is a steady trajectory. And so they know what their trajectory is. They know what the other global is, what their trajectory is. And so you can start to model what the discrepancy is going to be. And then that starts to put pressure on the exchange rate. The exchange rate is already higher than the RBA would like, and in that scenario just starts going up and up and up and we breach one US dollar pretty quickly and start heading to I don't know who knows where we end up. Um, you know, and that becomes. [00:18:43][31.4]

Adam Keily: [00:18:44] And why is that? Why is that a problem? I mean, for exports, that's people stop buying from us because they can't afford it. So exports shut down. On the flip side, we get like cheap Nike and stuff, obviously, which is good for us. For everyone. [00:18:59][15.7]

Thomas Keily: [00:19:01] Yeah. No, that that that sums it up. It's yeah. It's, it's a real challenge for exporters. Um, and that's the drag on economic growth and it's a bit of a problem. [00:19:11][9.3]

Adam Keily: [00:19:12] All right. Let's pause there for a second because I do want to know more about the exchange rate thing. I'm also curious to know what it is that we're going to spend this 100 billion dollar on. How are we going to what is there is something in particular that they're going to inject it into the economy somehow. But let's pause there for a sec, grab a quick word from our sponsors and we'll be back right after this. [00:19:35][22.9]

Thomas Keily: [00:19:36] Banking with virgin money has never been more rewarding. Earn rewards on your everyday spending and pay zero monthly fees with the Virgin Money Go transaction account and with points, perks, and epic experiences tailored to you, you can manage your money easily on the go smash the savings goals, get money for it, and be rewarded for it. Back to your own beat. Virgin money, terms and conditions, and monthly criteria apply. Now let's get into the show. [00:20:02][25.9]

Adam Keily: [00:20:04] Welcome back here on comedian versus economist, and we're talking about the RBA decision to print another hundred billion dollars. And Tom, we're talking before the break there. One of the key drivers potentially is that they're doing it to try and manage the exchange rate. But presumably, they can't just print 100 billion dollars and keep it in cash. They've got to spend it on something. So what are they going to spend it on? [00:20:28][24.4]

Thomas Keily: [00:20:29] Yeah, so they're buying government bonds. So federal or state government bonds, basically. So the government issues debt, the RBA buys it up. So the way this works is the RBA prints money. They just make the numbers go up, they press the button buying, they've got money and then they buy government bonds with that. Now, what's there's a really interesting thing here that during so we saw this is what this is this story is called quantitative easing, easing the quantity of money in the economy. And we saw this in America during the GFC as part of their response. And so they buy it. They bought up government bonds. And that pushes down the government bond rate, which affects interest rates throughout the economy and lowers interest rates throughout the economy, and sort of makes money cheaper throughout the economy. And that's sort of the idea. And at the time in the first in the GFC, the government sort of issued the bonds are on the market. The Fed bought them up. And that that was sort of the end of the story. This time around, the governments are issuing the bonds. They're then taking the money from the RBA and then spending it on the economy. So the quantitative easing is going hand in hand with a massive fiscal program. And so state and federal governments are now looking at a combined deficit of 15 percent of GDP in the financial year 2021. So that's what you think about that is like five years of GDP growth, just bang all at once, pumping that into the economy. And so that then that changes the story because now you're increasing the money supply in the economy. There's more money sloshing around in the economy because it comes through the government spending programs, whatever the government spending its money on comes slushing around. And that starts to then. Yes, I mean, that's an interesting question. This gets to do are we looking to look at inflation now because there's no more money sloshing around? Where is inflation going to show up? Is it going to show up in asset prices? Probably. Is it going to show up in consumer prices? Maybe. Maybe not. We're not sure yet. So this is why it is a quite interesting and quite interesting time for the Aussie economy and particularly interesting because we're already running hot like we're already in recovery. We're already doing pretty well. But we're like letting us a slush kind of money flow into the economy. And I think the consequences of that are going to be quite interesting. And, you know, it's I know it's like potentially the best business conditions in a generation. I think we're potentially looking at [00:23:11][161.2]

Adam Keily: [00:23:11] because you mentioned inflation. So that's a reality that's a risk, isn't it? I mean, if you're, as you say, stick a 100 billion into the economy, that doesn't really need it. There's all this money flying around it, knowing what I do now, which isn't a lot but about inflation that has a risk of pushing inflation up because you've got all this extra cash floating about. [00:23:36][25.2]

Thomas Keily: [00:23:37] Yeah, I mean, that's definitely the standard wisdom that, like, that's the Orthodox view, the MMT view. Add some nuance to that, saying, yep, we probably get inflation, but it depends on where we have capacity-constrained sectors that are going to determine where inflation shows up. We're definitely going to see it in asset markets because asset markets are capacity constrained. The RBA got hit with the Freedom of Information request earlier this month. They wanted to know what happens. What does the RBA think it's going to happen to asset prices? Their answer was we think property prices are going to go up 30 per cent over the next three years. Really, that's what their internal analysis shows. That's good news for me. Is it? [00:24:17][40.0]

Adam Keily: [00:24:17] Why I've got a house. [00:24:18][1.4]

Thomas Keily: [00:24:19] Yeah. Are you going to sell it and live in a tent? [00:24:22][2.8]

Adam Keily: [00:24:25] Well, I don't know. Is that the recommended approach? I hadn't thought past that. Yeah. [00:24:32][7.6]

Thomas Keily: [00:24:33] I mean, this is the thing. People think rising house prices are great, but it's like I mean, there is a wealth effect. It gives you cheap access to credit through your home loan. You can draw on the increased value in your home, but you've still got if you sell your house, you've still got to buy another house in a market that's inflated. So it's great news if you own multiple properties, it's awesome because you can cash out. But if you only own one, you it's not it doesn't really do all that much for you. [00:24:59][25.7]

Adam Keily: [00:24:59] So. Well, talking off of house prices then, and this is getting back to in a fairly long, roundabout way, we've got back to his initial question. Who was who sent us an email and, you know, another CV at Equity Mates dot com if you want to get in touch or equity mates, dotcom forward slash CV on the web. So he was asking about what all this means, really, these super low-interest rates now that we've got, what does that all mean for property prices? We talked about briefly just now, you know, the property is going up. What does it mean for lending? What does it mean for people who may be looking to get into the market? Why are we not even talking about interest rates anymore at all about money printing? So, yeah, what does it mean for interest rates? [00:25:43][43.6]

Thomas Keily: [00:25:44] The thing to remember is that the RBA lowered interest rates to zero point twenty-five and then down to zero point one percent. And then once they hit that level, they then branched out in two directions. They added two more levers to their toolkit. The first lever we've been talking about is quantitative easing. It's the money printing, buying government bonds. That program, the second lever is the term funding facility. So the term funding facility is where they've been offering banks credit, laughing banks money at the rate the rate of zero point one percent. And so they're offering that to banks on the condition that the banks go and lend that out to consumers. And that's why. And it's that program. That's why we've seen fixed-rate mortgages fall as far as they have since covid started, because the government, the banks are borrowing at three years at zero points one percent from the RBA, and then lending that on to consumers at fixed rates at a substantially lower rate than the standard variable rate. And that's why we've got low fixed rate. So so that term funding facility is another lever that's in the mix. And this is another relatively new monetary policy tool. And the RBA sets that rate. The RBA just makes that number up at the moment at zero point one percent. But it could be anything. They could lift it. Some people thought we might have seen it, seen the RBA lifted this month, but it could be zero points one percent. It could be zero. It could be negative. [00:27:14][89.9]

Adam Keily: [00:27:15] Is it just me or is does it seem like the RBA is? Are they getting the sort of fast and loose these days compared to where they were 10 years ago, like they're springing surprises, they're just making up new rules for a new mechanism for lending money that they've printed like it seems like these unnamed sources are concerned about their mental health? It seems like there's a growing trend that I haven't been following the RBA at all for any stretch of time. But just going off what you what the way you've described it is they never used to spring surprises that always does that always telegraph what they were going to do. There are all these new tools just suddenly at their disposal. Are they. Do they even know how they work yet? Do they have are they just kind of throwing things out there to see what happens? [00:28:11][55.8]

Thomas Keily: [00:28:13] I look to a large extent, we are in uncharted waters. We don't know where this road ends. Typically, though, the world's central banks work closely with each other and are watching what's happening in different places. So this term funding facility, there's been something like that happening in Europe for since about 2014, I think. And it got introduced in 2014. And then in 2016, it went negative. So from that point on, the ECB, the European Central Bank, was paying banks to take money from them and then lend it to consumers. Did I did [00:28:52][38.7]

Adam Keily: [00:28:52] I see Denmark or someone? Was it Denmark had zero interest rates like you could just borrow money from a Danish bank and not have to. We had to pay it back, obviously. But but, you [00:29:05][13.1]

Thomas Keily: [00:29:06] know, zero zero percent interest fixed for 20 years. [00:29:09][3.3]

Adam Keily: [00:29:10] Fixed for 20 years. [00:29:11][1.2]

Thomas Keily: [00:29:12] Yeah, yeah. Just lock it in. [00:29:14][2.0]

Adam Keily: [00:29:14] Is that because that the banks were borrowing from was it the ECB borrowing from the ECB at a negative rate so they could say, that's right, we're already making money. We don't need your consumer money. That's incredible. I can't even wrap my head around how that works. [00:29:28][13.3]

Thomas Keily: [00:29:28] Yeah, I mean, in that scenario, the banks just want anyone with a pulse, right. Who can take money from them because they're getting paid to borrow the money and lend it out so that, yeah, as long as the differentials there, they're making money. [00:29:40][12.5]

Adam Keily: [00:29:41] Yeah, right. So this all sounds like pretty good news then for someone who was like maybe trying to buy a house. [00:29:46][4.4]

Thomas Keily: [00:29:49] If you're going to buy a house this week, it's probably good news for you. I think if you're going to be trying to buy a house in a couple of years, you know, maybe by the end of the year when they're up 30 percent, then it's not great news. I mean, the interesting thing to think about with when you're buying a home is there's two hurdles you've got to get over. The first is the serviceability hurdles or whether you can service the mortgage. And that really swings on interest rates and where interest rates are. And when interest rates go down, you're able to service more. And that's good news for lower rates. Good for you there. But the other hurdle is the deposit hurdle. So you've got to be able to come up with 10, 20 percent of the purchase price. And as house prices are escalating, it's really that deposit hurdle that that deposit hurdle goes up. And that's what's really holding first home buyers back because interest rates are falling. So that's going in first time buyers a favor. But as prices go up, the deposit hurdle gets higher and higher and gets harder and harder and it's waiting more. First time buyers lean on the bank of mum and dad to get that deposit. Because in terms of just purely in terms of serviceability, houses are about as affordable as they have been for the last 20 years. That doesn't shift so much. It's the deposit that really makes housing expensive for from the first home buyers perspective. [00:31:06][77.2]

Adam Keily: [00:31:07] Yeah, that ain't one of those, you know, first-time buyers and any one of those money printing machines. The RBA has got a deposit note. Do you have a deposit and one minute. Uh, yeah. Right. Well, there you go. So, yeah. OK, so is there any way, just as a final note, um, so RBA is printing one hundred dollars billion and they're sticking it into the economy. Can I get some is there any more, is there any more stimulus packages on the way. [00:31:38][31.0]

Thomas Keily: [00:31:40] I don't think we're going to see direct stimulus packages. I doubt we're not going to see. I think we'll see job keep a wound wound up. Um, yeah. I don't think we're going to see cash payments. I don't even know if we'll see, you know, the home builder grant that might we wound up pretty soon to it's hard to sort of pinpoint areas of the economy that need a cash injection. So I would expect we're going to see more longer term plays, more infrastructure spending, more roads, bridges, um, you know, maybe a high speed rail, stuff like that, that, um, you know, can that can sort of justify maybe the NBN will get an upgrade that might be nice. [00:32:19][38.9]

Adam Keily: [00:32:20] And Monaro. [00:32:21][1.1]

Adam Keily: [00:32:23] Yeah, it's got [00:32:26][3.6]

Adam Keily: [00:32:27] more of it. It will monorails around. Is the Sydney monorail still going in there for a while yet? And I say that someone someone someone send us an email. If you if you send us a picture of you on a monorail. First person said they didn't get to receive CV. Disclaimer we don't have any CV. Well, I've got a text that I signed a sign saying no [00:32:57][29.3]

Adam Keily: [00:32:57] less, less. [00:32:58][1.4]

Adam Keily: [00:33:01] Very good. One of us, we can't afford the postage. [00:33:03][2.3]

Adam Keily: [00:33:05] We thought, [00:33:09][3.5]

Adam Keily: [00:33:10] let's be honest, I'm the only one who's writing any of the show, so I'll get you to DocuSign. It, uh, very good. All I reckon that wraps it up for this week. Thanks again, Thomas, for your insights and input. Thanks again. Also to everyone out there who's tuning in, especially those that have sent through some emails, we do try and reply to them as they come in. We will try and incorporate them into the shows as we go through. So keep them coming. Really, really love hearing from hearing all the questions coming in over the email one more time. It is cve@equitymates.com or head over to the website equitymates.com/cve. once again, a big thanks to Alec and Bryce over at equity mates for all their support. Uh, yeah, that wraps is up for another week. Anything you wanted to finish off with me? Anything. Any final thoughts? [00:34:01][50.8]

Thomas Keily: [00:34:02] Bitcoin to the ground. [00:34:02][0.7]

Adam Keily: [00:34:06] We'll see you next time. [00:34:06][0.0]

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