I never realized how strong the Australian dollar used to be. With the dollar so high I could purchase a good GPU for $450 instead of $1,200, a 4k TV for $200, a mountain bike for $100. We consumers have lost so much purchasing power over the last 50 years. The only time the dollar recently exceed parity with the US was ~2011. Now 1 AUD is equal to 0.653 USD. Our money is almost worthless, and the government is always trying to devalue the currency even further; the government hates the poor.
In 1974, 1 AUD was equal to 1.48 USD. What happened?
RefusdClassification on 30/05/2023 - 07:12
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Hahaha. So true. Empty vessel makes the most sound.
The true crime is the education level!So what happened when the Australian dollar was parity with the U.S dollar around 10 odd years ago now..
Biggest thing for most was the destruction of the local car industry, but I am sure there were plenty of other casualties.
It was that high because coal, iron ore, gas and many farm products were all highly priced at the same time.I dont know about the local car industry issue, it was when the government decided to stop subsidising the industry like how most governments around the world do as its important to have that infrastructure in place.
@lonewolf: Nobody would love to blame it on the gov more than me, and I'm sure it had an impact, but the high dollar made imported cars much cheaper relatively, and killed what little exports there were.
Would the industry still be here if the gov had carried subsidies for a few years? Possibly, I guess. A local Holden or Ford would look more cost effective with the dollar at 66c.
@mskeggs: I thought the imported cars dropped in price when the government started to remove all the luxury tax type stuff for cars as part of also wanting to remove local car manufacturing subsidies etc? I mean if its just the currency, then even though AUD is much lower now than before, There are far more expensive european cars on the streets these days than there were back then? I thought the main factor was all the taxes that were imposed on imported cars etc?
A lot of other countries still maintain their local car manufacturing, some with quite extreme measures like malaysia. And the idea seems to be the factories that are used for car manufacturing are crucial to have incase of desperate circumstances especially i believe war…At least thats what i had always been told.
@mskeggs: Probably wouldn't have such long wait times for new cars in general since there would be more supply in the Australian market locally.
10 years ago was the back end of the GFC. It took an economic collapse in the US for us to reach parity.
We also suffered wage stagflation that has never left us since. Every company claimed they couldn't afford to give a raise as they weren't generating income on exports. We haven't seen much in the way of an improvement since.
And now they claim no one wants their jobs so get people in on visas for well under what the job is actually worth on the open market.
Partly it was a weak USD more than a strong AUD because of the GFC, partly it was a broad based China-led commodity boom (unlike now when the boom is, as far as Oz is concerned, mostly just iron ore and gas), and partly it was simply forex markets overreacting through herd behaviour (as they are prone to do from time to time, in both directions).
Dont forget that less than a decade earlier the AUD was trading at 49 cents against the USD.
And you are right - commodities booms notoriously worsen income inequality because the extra money overwhelmingly goes to large and rich investors (in Australia's case, typically foreign ones) rather than to ordinary wage earners. It's called the "resources curse".
@derrida derider: Coal is still a huge export from the east coast - and will be for a few more decades too. Lithium is booming - Australia is currently the World's biggest exporter, although that will change when South American brine-based Lithium comes on stream.
What happened? I imported lots of car parts because I was younger, childless and full of hope. It was a great time!!
Now, less so.
What happened in Vegas, stays in Vegas
I was in the states at that time for a holiday… everything was so cheap in comparison.
In the end the only thing that really matter for wealth of the country is productivity - the more productive each person is the wealthier the country will be. Government policy should be aimed more at increasing productivity, while still having a good safety net.
Fair enough up to a point - as Paul Krugman said "For living standards labor productivity isn't everything. But in the long run it is almost everything". The trouble is that no-one knows how to create sustained growth in productivity, except indirectly and with a long delay through better education and health.
As a professional economist I've been sick to the back teeth of people who keep talking about "microeconomic reform" (ie "flexible" labour markets and dismantling the welfare state) as though that is the key to productivity. Neither theory nor experience support that. Anyway "reform" has to be one of the most prostituted words in a world where much of the language has become a brothel.
Watching Krugman's old masterclass in 2023 plays like a standup routine considering (like how he often is) he was so wrong about money printing and inflation.
"Come on now, I'm sure they hate most levels of the public equally :)"
Nah … they have their protégées… listen to their Voice … listen carefully :)
I feel old, :+(
I suggest OP you do economics !
Seriously the quality of some forum posts is embarrassing. eg if you think your price of products is going to be like that if the AUD was stronger lol :)omg did u know in 1956 the price of bread was 13 cent omg what happened, that loose change on the ground could have fed a family of 10
we have lost so much buying power, i blame Thaal Sinestro
While I agree with your sentiment, you're comparing fixed value vs relative value. Very different discussion.
Why are you comparing something from nearly 50 years ago.
Because everyone on Oz bargain does it. Look at any grocery deal and someone is guaranteed to say “Scam! This was normal price back in my day”
I remember being offended when the price of rump steak hit $1/kg - OUTRAGEOUS ! Ima stop buying it !!! (we were paying $10pw rent back then)
meanwhile - 50 years later I see Coles has rump steak on special for $25/kg (and I regularly buy filet steak for $46/kg) - https://www.coles.com.au/browse/meat-seafood/beef-veal/beef-…
so - if 25x price in 50 years - using formula Growth YRootOfX Years = Rate
suggests inflation of 6.6%pa - OMG ! OUTRAGEOUS !! Ima Stop Buying !!!
the rich wanted to become richer !
InB4 someone says but a weaker AUD$ facilitates trade esp with our resource sector, my response to that is TRICKLE DOWN ECONOMICS
Mod: Removed inflammatory word
The value of the AUD is not something the government or anyone else controls and a weak AUD does not benefit the rich.
Resources are traded on a global market based on spot price, it doesn't make a difference what the AUD is, they make the same profit. However the resources industry does increase demand for AUD increasing its value.
The high AUD makes our local manufacturing and services industries less competitive because it inflates fixed costs such as labour and lease costs.
AUD is low in value compared to the USD at the moment for several reasons
- Lack of demand for our biggest exports - raw materials, particularly now that China's construction boom has ended.
- Flight to safety - in a depression/recession the safety of the USD is preferred over volatile currencies such as the AUD.
- Low RBA cash rate - our government bonds are not attractive globally. The value of corporate bonds is also linked to the value of government bonds.Actually the government COULD control the exchange rate for the AUD if it chose - historically most governments operated with fixed exchange rates, and some still do. It's just that it would then be unable to control either capital flows or interest rates or both. It's called the Mundell-Fleming Trilemma. See https://en.wikipedia.org/wiki/Impossible_trinity
You can control how much money is flowing in or out of the country (ie foreign debt and foreign investment), inflation, or the exhange rate - pick any two. Most modern governments have found it least harmful to give up control of the exchange rate.
Very interesting, however I would summarise control of monetary policy as control of interest rates rather than control of inflation. particularly in Australia where we import so many consumer goods inflation is influenced directly by changes in the exchange rate.
Sending thoughts and prayers to the poor people who can't get a 4090, truly one of the basic living requirements.
Seriously Unicef needs to step up and start helping the people who really need it - gamers.
Why need to go back to 1974, we had a chance to catch up in 2012, what happened OP? lol
In summary, the floating exchange rate regime that has been in place since 1983 is widely accepted as having been beneficial for Australia.
The value of the dollar has little to do with the Quality of Life one receives in that city and economic condition. With that said, it is practically impossible to keep up with the USD. That is a nation which invades other nations, holds the worlds most powerful military, insists that international trade is used with their currency, and lends out international loans backed by its economy.
Australia had been doing marvellous, just based on that our market is growing smaller and smaller. We aren't becoming the world's expertise in technology (ie Taiwan). We aren't building more and more things (ie China). Our contribution on the international scale seems to be about; stability, raw materials, tourism. Some would lump education there, but that one is a slippery slope.
If you want your dollar to go up in value, you need to do something about it actively not passively. That might mean pegging your currency back on the Gold Standard. Increasing export of goods. Producing a technological advantage, as a service. Or basically just building the worlds strongest superpower and taking resources from those unable/unwilling to defend themselves.
wtf? Is this place full of Chinese bots or what…
There's not a single sentence that I agree with.
The value of the dollar has little to do with the Quality of Life one receives in that city and economic condition.
You're basically saying the economy has no bearing on quality of life.
With that said, it is practically impossible to keep up with the USD.
See: Europe.
Australia had been doing marvellous, just based on that our market is growing smaller and smaller.
Huh? Prove it. Utter BS.
We aren't becoming the world's expertise in technology (ie Taiwan). We aren't building more and more things (ie China). Our contribution on the international scale seems to be about; stability, raw materials, tourism. Some would lump education there, but that one is a slippery slope.
You're right, we're not China or Taiwan. That's all I agree with.
If you want your dollar to go up in value, you need to do something about it actively not passively.
Why would we want that?
Fvck.
I wrote a very detailed comment addressing your concerns and explaining your misunderstandings. I put in links for references as well. Then my phone lost memory when I switched App and it's all flugging gone. FmlI'm not going to type it up again. Not unless you ask me to because I'm so fvking jizzed off right now.
Because GPUs are too expensive. That's why we want more valuable aud
Blame Paul Keating
Each time the Australian dollar falls, it makes the products we produce cheaper for overseas buyers, and it makes them cheaper for us compared to overseas products.As a result we are the world's fifth most traded currency.
Interesting read. I'm curious now why, as the fifth most-traded currency and a net exporter, the Australian Dollar isn't valued higher.
As foreign buyers tried to get hold of the Australian dollars they needed to pay for our minerals, the dollar climbed.
Do our multi-nationals not trade in AUD when buying/selling Australian resources/products?
No most commodities are traded in US dollars
Being a highly traded currency is more to do with it being a very popular carry trade due to the consistent discount rate premium on USD and relative stability compared with other high rate economies like Turkey.
the government hates the poor.
You mean the poor that want to get cheaper GPUs? Or the actual poor?
upper class poor
.These people have no idea how to live without money. They're what's called "new poor".
With the price of food so high now the poor have resorted to eating GPUs.
Silicon chips are still chips
It's all about the salt and oil really.
I could only get a 7900xt, missed out on a while x! Please support my GoFundMe so I can get the help I need and add an x.
^ sarcasm, just for the oblivious.
Who forgot to do their homework last night…
In 2001, 1 AUD was equal to 0.4775 USD. What happened?
I mean really? What a silly post.
On another note, water is NOT wet: https://www.youtube.com/watch?v=ugyqOSUlR2A
Agree!
I was in the US when our dollar was 0.50 USD. That Big Mac large mcvalue meal was $16 AUD at the time.
Cheers, jv, now I know who to thank.
You're thanking jv?
No, just toasting ;)
More like Malcolm Fraser/John Howard's "financial mastery" by nature of being Liberal /s
that Hawke/Keating inherited…John Howard and Peter Costello's popular belief legacy that Liberals are inherently "good financial managers" falls apart pretty quickly when you notice that they were in power during the biggest global economic growth period certainly since the Depression (ie anyone could have grown the economy substantially).
And when you notice that Treasurer Johnny Howard (albeit allegedly at Fraser's insistence) left Australia in a terrible financial state in the early 80's.
Interest Rates peaking above 20% and Double Digit Unemployment (back when the workforce was heavily skewed toward Men only).I'm not saying it was the 70/80's Liberal's "fault" necessarily, just highlighting that the slant of the Political in party in power at the time has no real world basis to support the argument that one is financially better than the other. Global trends hit far harder than anything any political party can swing.
Didn't Costello flog off our gold reserves or some other national asset Bonds?
In 1974, 1 AUD was equal to 1.48 USD. What happened?
Now do Wages over that time.
Now do buying power over that time.
Yeah, "let's just ignore 95% of the situation so it suits our narative" seems to be OPs approach.
Yeh, that’s what we need, in a country with more exports than imports, is for our dollar to be 1.5x higher than the American dollar… just so OP can get a cheap TV… because that’s totally how economics works.
Surely this is just a wind up thread.
I sure hope so. I worry about the education system otherwise. We need to raise taxes to pay for better schools for OP!
They didn't have GPUs and 4k colour televisions in 1974.
Australia didn't even have colour TV in 1974.
All the VFL football games were played in Black & White too…
Actually the test patterns were on some stations. Then it was launched on March 1st 1975. Who remembers Aunty Jack's Launch?
Our dollar is almost worthless? Ah, okay. You do realize the AUD has been below 50 US cents two decades ago, right?
Above parity dollar makes imports cheaper, but it also increases the cost of exports for our customers. The Australian car industry was already circling the drain in 2011 with falling sales, but the above parity dollar killed it off. We were exporting Commodores to the USA, and GM rightly canned the product due to escalating costs.
The AUD floated in 1983. Prior to that it was manipulated and artificially controlled. You can only do that for so long until something breaks. Read up about what happens when currency pegs become too expensive to maintain. The currency can become near worthless overnight when the central bank runs out of USD.
On the plus side, a lower dollar is great for our export industry and not so great for importing. So produce local and make $$$. The mining industry knows this…
He was the worst Treasurer this country ever had
How so?
He destroyed Australian manufacturing
In what way? He increased our exports.
Before Keating we were getting richer. After Keating overall wealth stalled
causality?
@jv: He made us a banana republic, dependent on a couple of exports to one country that it made itself rich by doing the value add to not us.
Sorry mate, but you have no idea. In the 1980s our manufacturing was in serious decline as Japan industrialised and produced high quality products for far lower cost than Australia. We lived in a highly protected economy, and paid for it. The new car market was almost entirely driven by business purchases as households simply couldn't afford new cars. Hawke/Keating drove a restructure that pulled us out of that decline, and gave us decades of growth. In contrast, the USA continues it's slow decline, characterised by the "rust belt".
We had IC / chip manufacturers here in Adelaide and they were good.
But on the Keating issue, 13 years of consecutive growth and still got done in a landslide.
What a silly post
I wonder if the OP knows that not everything was rosy in the 70s and 80s. Australia actually had a car import tariff of 45% in the 1980s to protect the local car industry. Not only did that make our industry lazy and complacent, but it also artificially increased the cost of every single imported car and made the consumer pay for the privilege.
Then Hawke/Keating/Button came along and slashed the tariffs. Boo hiss, what a terrible thing to do, making consumer goods cheaper for Australians by abolishing an enormous tax. How many people know the tax on a television used to be a whopping 30% in the 1990s?
Yep, tariffs were terrible for the Australian economy for the reasons you mention above but they also created domestic barriers. Most of the manufacturing was done in NSW and Victoria (some in SA) and not the other states. So the manufacturing states benefited from all the jobs while the non-manufacturing states suffered with higher cost goods with no manufacturing jobs and had, largely, agrarian economies until mining took off. That had gone on for decades and was one of the reasons that WA used to try secede from the Commonwealth in the 1930s.
I'll take a 30% TV tax if the GST (profanity) off.
Would you be better off? Excise applied to all luxury goods not only TVs.
Personally I would be better off, yeah
The two biggest crocks of you know what that Australians were sold that have made us poorer were Keating's "globalisation". Every country should do what it does best, and what Australia does best is dig stuff out of the ground and sell it off cheap to someone else to turn into valuable stuff. And Howard's "increasing house prices will make you rich". It made us seem rich to have million dollar houses, but our children will hate us for it.
"increasing house prices will make you rich"
Also known as a Ponzi scheme.
its all to encourage you to invest and keep the money moving and not store it away, those that store it away will be punished, the dollar will not get them as far.
Since the 1990's the US made a series of abusive raise of the debt ceiling and insisted the world buy up US reserves otherwise they would not be able to transact in commodities like fuel. In other words they exported inflation on to the world and crystallised fake wealth into real for their benefit.
If that's too complicated, it's like we are the barefooted pregnant house wife and the they are the wife beating gambler husband who finds every attempt to abuse and gas light the reality.
RBA and Philip Lowe happened
Philip Lowe wasnt employed till 2016, average USD/AUD exchange since then doesnt align with OP's complaints
2013 ish AUD was doing quite well, ever since then from 2014 its been crap. Guess who has been leading for most since then
What are the yearly averages for AUD/USD since 2016 that would indicate this summary of performance for the last 7 years?
Mid 60s to mid 70s the entire time, with more years higher at 2016 end lower at 2023 end, but even 2021 average was 0.75.
We looking at different trend lines?Can you elaborate on the fiscal policy by the RBA which you think has impacted the exchange rate since 2016 and what resulting change occurred to the rate post such policy changes?
I note that in depth analysis is not your thing
He might be thinking of Bernie Fraser….
Economics of the world changes over time. Simples.
In something like 1988, my family bought an IBM 486 with 20mb of HDD space and 640kb memory for like $4,400.
Wow!
I know we were still selling XT;s with 512kb in 1991, alongside 286's, 386's, 486's Mac Classics and LCII's.I think the Amstrad XT was either $799 or $999 (No HD? Twin floppies) with a CGA screen. There was a Toshiba XT Notebook that was $1999
I was at the release conference when Commodore introduced the C64.
The speaker praised its 64kB ram as being at a pinnacle. He bragged that nobody ever wants more!!!!
Words can do a lot of harm!
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It's like you sat through the opening lesson of economics 101, but only absorbed 2 sentences from the lecture.
Please let us know what economic policy changes you'd suggest to make the AUD at parity to usd?
How would this impact exports vs imports (noting we currently export more than we import)?
Come on now, I'm sure they hate most levels of the public equally :)