Dr Sam Wylie

When you want some folding money for the weekend, then you go to the ATM.

I know you don't use cash anymore, but when people want cash, and I don't either, right?

But people do go to ATM and get cash out.

There's a lot of cash in circulation.

When you want cash, you go to the ATM.

When Westpac wants cash, they send an armored car around to the RBA, right?

when you you know you want 800 bucks for the weekend they want 40 million stacked in the back of the RBA back of the armored car so you know the RBA is the bank's bank but the the RBA the reserve bank of Australia is charged by the federal government with controlling inflation not letting inflation get too high or get too low and too low has been the concern over the last 10 years

But too high is the concern now.

You know, in COVID-19, a lot of money got pumped into the economy, JobKeeper and JobSeeker and all the kinds of incentives for companies, a lot of government spending and a lot of creation of new money in a thing called quantitative easing.

Let's talk about that another time.

But all of that stimulus has really sped up the economy.

There's a lot of demand and it's pushing prices up.

And the RBA is worried about it.

And the tool that they have to slow the economy down and to stop prices rising too quickly is to put interest rates up.

And if they do that, variable mortgage rates will go up.

Remember that the banks add about 2.4% on top of the interest rate that the RBA sets.

Now, you know how I said, I know my answers are very long-winded, so I'll be brief with this, but you know how I said that the RBA is worried about inflation prices going up?

Well, it has been very worried about deflation, prices starting to go down or inflation getting very low.

And that's why it cut interest rates all the way down to zero in COVID-19.

We really do live in extraordinary times.