Australia: Cost of Living

It has just been the recent years that the Cost of Living in Australia has skyrocketed... Fuel Prices have hit ridiculous prices, food prices are going up, the cost of houses has gone up, everything is just going up and up and up.

I personally just can't see the reason, is it the economy? import/export? trade agreements?

Fuel prices are to hit 1.45 a litre shortly.... its just crazy :O

".41 in Palmo :(

http://www.nt.gov.au/justice/graphpages/cba/ntfuel/nt_fuel_watch.shtml

All I can say is be thankful we dont live in the UK.. your paying about 90p there.. or about $2+/L, 24 million cars on the road (about 1 for every second person) on an island 34 times smaller then Australia in land mass with about twice the population. For an avg house over there your paying what you would here but only in pounds for something probably half the size and connected to the dude next to you where you have a 10pm/7am? curfew to keep the hell shutup :S

I think it's pretty damn nice :) But I do agree it sucks its getting higher!! :(

Alot of recent price rises is due to weather events (ie America's hurricane) and general oil shortages. If anyone watched Oil Storm (tv show that was on the other night), it showed quite well how the price of oil reflects on almost every other aspect of life, including the cost of living in general.

Australias been pretty moderate when it comes to the cost of living. Moderate compared to the liberties and luxuries we enjoy.

That said, i still wish they'd tax my income less :P

Also, the English smell. Ergo, they have to pay their fuel truck drivers 'Danger money' to enter the country and deliver the fuel.

Hmmm, cost of living rising? Inflation has been steady in the 2-3% mark for a while... But yes, things are about to get a bit shitty with the current oil shennanigans. A good ole' fashioned supply-shock.

Apparently some group released a study saying the cost of housing in Australia was hugely expensive (as a proportion of median income or some crap). Can't remember if i saw a link to it on this forum or it was another forum. People ask why housing is so expensive in Australia? Supply and demand baby! Demand for urban and suburban land skyrocketed with low-ass interest rates, supply is constant, prices go up.

http://www.news.com.au/story/0,10117,16586719-2,00.html

There were no problems when the price was lower, its getting to that greedy stage imo.

Quote from IvoMan:
It has just been the recent years that the Cost of Living in Australia has skyrocketed... Fuel Prices have hit ridiculous prices, food prices are going up, the cost of houses has gone up, everything is just going up and up and up.

I personally just can't see the reason, is it the economy? import/export? trade agreements?

It's a few things. The common cause for all the items you listed is the continuously increasing supply of money, but there are various factors affecting each item:

* Fuel is in high demand and supply is limited;
* Agriculture and transport have a large fuel price component in their underlying cost structure;
* Houses have gone up due to cheap loans and negative gearing - the supply of land matters but not as much as the other factors.

So true

er, is "First Born" made up of seperate letters, or is it one entire plastic sheet? :S

Does it matter :|
Its prolly just photoshoped in.

lol thats funny

Quote from El Presidente:
... you listed is the continuously increasing supply of money...

increasing the supply of money actually makes things cheaper. Well thats what they have taught me at Uni...

there are many many many reasons as to the prices of things increasing, increased world demand for oil, in the past 10 years China has more that doubled its demand. supply shortages of oil, there is a cartel that controls something like 80% of the world oil supplies so they have a pretty good ability at controlling price. As for housing, that was because of the increase in demand due to lower interest rates, increased real wages, combined with a slow increase in supply. but there is good out of the house market, people may have increased levels of debt, but they have greater values of assets.
as for prices in general increasing, it can basically be taken back to people wanting to get pay rises for the same amount of work. each time you get a pay rise, your company will usually increase the cost of your product to cover that and then every one else raises their prices to cover the increase to them. So if everyone would stop asking for pay rises without increases in productivity, prices would be less likely to rise (need to factor in shocks etc)

anyways, i better finish this now, or i'll end up ranting on for another 30 pages. Being drunk does that to you.

Quote from Dragon Fury:
increasing the supply of money actually makes things cheaper. Well thats what they have taught me at Uni...

Pre-WW2 Germany proved that increasing the supply of money does NOT make things cheaper.
Imagine having to pay "00 or even "000 for a loaf of bread.
People in Depression-Era Germany often carried sacks of notes (Deutschmarks) to pay for common goods because the government of the day tried to increase the supply of money to combat the economic depression.
Surely if you increase the amount of money in circulation and the amount of goods in the marketplace don't rise accordingly then that's a bad thing?

And people were payed in Wheelbarrows... Money was like toilet paper.

thats because the money became worthless.
After the war, the US, Briton etc told Germany that it had to pay back the cost of the war. Though, those countries were idiots when they said that Germany could pay it back in German dollars (cant remember the name). They had to pay back something like 2 billion dollars. So they just printed heaps more money. There was so much money around it became worthless, thats why they were paying "000 for a loaf of bread.

Quote from Dragon Fury:
thats because the money became worthless.
After the war, the US, Briton etc told Germany that it had to pay back the cost of the war. Though, those countries were idiots when they said that Germany could pay it back in German dollars (cant remember the name). They had to pay back something like 2 billion dollars. So they just printed heaps more money. There was so much money around it became worthless, thats why they were paying "000 for a loaf of bread.

"Reparations repayments led to the German economy becoming devalued. Having to pay such large sums to the Allies resulted in the German economy having a rapidly reduced capacity to purchase goods, as they were compelled to give much of their accumulated wealth and produce to the Allies in part payment towards the Reparations bill.
This had several consequences. First, it resulted in the value of the German currency falling. Second, it resulted in the cost of items within Germany rising as the relative cost of importation rose as the value of the currency declined. This is inflationary in nature and has several consequences. In situations such as this people make use of their savings, as they cannot afford to make purchases using only their weekly or monthly income. In Germany billions of dollars worth of hoarded and saved marks re-entered the economy in the period after the war. Again, this results in inflation rising and the value of the currency falling when compared to other currencies. Combined, these factors lead to a cycle of devaluation and inflation that can, and did, become hyperinflation.

It is not however the case that the economy within Germany continued to decline throughout the whole of the period 1919 – 1923. In 1920 the currency stabilised for a period of some 6 months. The price index remained almost constant and the value of the German mark remained at approximately 1US$ to 69 German marks. The Weimar Government, it has been argued, could have introduced a stable currency at this point. Instead they continued to increase the amount of money in circulation – which is inflationary. The result was hyperinflation in 1923. This had massive consequences for the economy and society in general."
excerpt taken from "The Seeds of Evil - The Rise of Hitler"

that's massive amounts of money being introduced... if i could be bothered i would type out what my text books say...

believe me, having been to Europe...the cost of living in Australia is extremely good. especially the fuel.

Edit: Apart for Power...we get jipped for that.

Dragon can I just ask what you are studying and at which university?

Increasing the money supply causes inflation. Full stop. Increasing the money supply does not make things cheaper in nominal or real terms. It does not necessarily make things more expensive in real terms, but it DOES cause inflation.

Inflation = change (read: increase) in the general level of prices of goods and services. You are saying this is caused by supply shocks such as oil at the moment etc. That is true, over the short term. You say it is caused by wage increases? Perhaps, but many would argue that is a symptom not a cause. However, it does not explain long term trend inflation, from the generally accepted neo-classical economic viewpoint.

Long term inflation is explained by increased in the money supply. This is through a theory called the Quantity Theory.

MV = PY ... where M = money supply, V = velocity, P = price level, Y = real GDP

Now theres a fair amount of theory (and data) behind this but heres a quick run down of it. If V and Y are stable, M explains P. V is generally accepted as stable as payments and transaction processes are slow to change over time. Y is accepted as stable because GDP growth always converges to the trend growth rate over time. Therefore, according the the theory, long term inflation is explained by changes in the money supply.

Google is your friend, for some more fun times go have a look at monetarism and why Milton Friedman is the coolest kid on the block.

Quote:
increasing the supply of money actually makes things cheaper. Well thats what they have taught me at Uni...

Quote:
So they just printed heaps more money. There was so much money around it became worthless, thats why they were paying "000 for a loaf of bread.

got contradiction?

Quote from Dragon Fury:
lower interest rates

This is a way in which the Reserve Bank expands the money supply: by lowering the interest rate. They can also lower reserve ratios and simply print and loan money to major commercial banks.

Quote:
... combined with a slow increase in supply

The increase in availabilty of housing and the increase in population have remained at a fairly stationary ratio for the last 30 years or so. However in that time the proportion of homeowners has fallen and the real price of houses has risen dramatically. What varied even nearly as much as house prices? The money supply.

If you still believe it's not driven by investors flush with cheap, plentiful cash, then why do house prices spike every time the share market bottoms out?

i cant be bothered arguing with people who google everything. i will just admit defeat

as for house prices rising everytime the share market bottems out is that house prices very rarely go backwards (unless over valued market) and houses are an asset that isn't easily lost. unlike shares.

Google everything? Mate, I'm an economics student at the University of Queensland. Excuse me for knowing a a little about my studies and my future profession. Don't have a cry just because you were completely wrong.

Dragon you're fighting a loosing battle here :P .. Uber is right.

What do you need to be able to study economics at uni?

Quote from IvoMan:
What do you need to be able to study economics at uni?

Eh? What do you need? Erm, not much, some books, a pen or two and a functioning brain.

Or do you mean that you think I think I know it all because I'm an economics student and he isn't, and I'm using that to say I'm smarter than him or something?

It's an economic question. He tried to give an answer. I pointed out why his answer doesn't hold up. I gave my answer.

The only reason I pointed out that I study economics is that he tried to put down my knowledge as google. Which is wrong, and a cheap way out of a lost argument.

Quote from uber tard:
Eh? What do you need? Erm, not much, some books, a pen or two and a functioning brain.

Or do you mean that you think I think I know it all because I'm an economics student and he isn't, and I'm using that to say I'm smarter than him or something?

It's an economic question. He tried to give an answer. I pointed out why his answer doesn't hold up. I gave my answer.

The only reason I pointed out that I study economics is that he tried to put down my knowledge as google. Which is wrong, and a cheap way out of a lost argument.

Sorry I wrongly worded my question, I was totally off topic, the question was meant to be... what are the prerequisites to be able to study economics at uni?... like as in I am interested in that as a career pathway.

Quote from Dragon Fury:
increasing the supply of money actually makes things cheaper. Well thats what they have taught me at Uni...

What the sprak?

I wanna hear the theory behind this one.

Quote from IvoMan:
Sorry I wrongly worded my question, I was totally off topic, the question was meant to be... what are the prerequisites to be able to study economics at uni?... like as in I am interested in that as a career pathway.

Oh ok :) Um, in QLD you have to apply through QTAC, the tertiary education place thingy, for mature age students I think all you have to do is take a standardised exam or something and it's fairly easy to get results that allow you entry so I hear. It's pretty much the same in other states just apply through their tertiary education thingy. OP score required in QLD for University of Queensland was a 6 last year, compared to a 4 for commerce and a 2 for law. But this is all just supply and demand, all the commerce subjects I've done have been much easier than economics, and a shitload more boring. (Don't ever do marketing, the subject is seriously who can pull the most buzzwords out of thier ass in 60mins.)

Basically commerce is like taking a financial trade, it's fairly worthless unless you specialise in say accounting, marketing, management or some other boring ass subject like that.

Most people would say economics is he study of the theory behind the economy, but thats not entirely right. Economics is the study of choice. It's a way of thinking, that allows you not only to give answers to ecnomic problems, but answers heaps of questions that you wouldn't expect an economist like marriage, social cost, suicide, crime, law etc. All of these can be examined from an economic viewpoint. It's really interesting, or at least I think it is :)

hay guyz lol 2 go2 uni in qLD u hav 2 go 2 skool

Quote from Aravi:
What the sprak?

I wanna hear the theory behind this one.

So do I. I only did year 12 economics and even that explained enough to contradict what Dragon has put forth.

Quote from reload!:
hay guyz lol 2 go2 uni in qLD u hav 2 go 2 skool

I'm not sure if this is parody or tragedy.

Currently the best alternative to Petrol is AVGas (spelling?).

Costs around 16c (or thereabouts) a litre, and is available from the airport. Apparently better on the car and more efficient then petrol. Costs around $2000 to get your car converted to allow for AVgas.

You're wrong there Ivo :)..

You may be able to get your car converted to run on it, but as far as im aware its very illegal to run a normal car on it - racing i belive its ok as you can get a license, but due to the lead content of the fuel its not allowed as for some other factors i think... 16c a litre hahahaha i wish it was that, its hovering around the 3-4 dollar mark a litre.

I stand corrected. (I need to get some better sources)