The RBA should be wary of economic 'shrinkage'

So interest rates have fallen again.

Hmmm, my first reaction is to start quoting the “shrinkage” part from “The Hamptons” episode from Seinfeld.

For those who aren’t Seinfeld fans – yes it is hard to believe but they do exist – below is the relevant segment of the script.  I have also included a synopsis of the complete episode for the unenlightened among you.

George: Well I just got back from swimming in the pool.  And the water was cold…

Jerry: Oh… You mean… shrinkage.

George: Yes.  Significant shrinkage!

Jerry: So you feel you were short-changed.

George: Yes! I mean, if she thinks that’s me she’s under a complete misapprehension.  That was not me, Jerry.  That was not me.

Jerry: Well, so what’s the difference?

George: What if she discusses it with Jane?

Jerry: Oh, she’s not gonna tell Jane.

George: How do you know?

Jerry: Women aren’t like us.

George: They’re worse!  They’re much worse than us, they talk about everything!  Couldn’t you at least tell her about the shrinkage factor?

Jerry: No, I’m not gonna tell her about your shrinkage.  Besides, I think women know about shrinkage.

George: How do women know about shrinkage?  (They see Elaine walking down the hall) Elaine! (She enters)  Do women know about shrinkage?

Elaine: What do you mean, like laundry?

George: No.

Jerry: Like when a man goes swimming… afterwards…

Elaine: It shrinks?

Jerry: Like a frightened turtle!

Elaine: Why does it shrink?

George: It just does.

Elaine: I don’t know how you guys walk around with those things.

“The Hamptons” (Episode 85/Season 5):  Jerry and the gang go to the Hamptons for the weekend to see their friend’s baby.  George gets upset when he realizes that his date went topless on the beach.  In exchange for Jerry having seen her breasts, George wants to see Jerry’s date naked.  Instead, Rachel walks in on George undressing after a swim, and she witnesses his post-swim “shrinkage”.  Jerry and Elaine are shocked to discover how ugly the baby is, and Elaine becomes especially confused when the handsome Dr. Pfeiffer describes both her and the baby as “breathtaking.”  Kramer finds a filled lobster trap.

So I guess I have three things to say.

Firstly, beware of what you are doing, RBA, you just might frighten us into economic “‘shrinkage”.  You know, the “paradox of thrift” and all that jazz.

Secondly, despite what some economists think, confidence will not be restored by a few interest rate tweaks.  We need to go to an election (and two in Queensland) before we get our pep back.

And finally, at least this interest rate commentary is half interesting!

Michael Matusik is the director of independent property advisory Matusik Property Insights. Matusik has helped over 500 new residential developments come to fruition and writes the weekly  Matusik's Missive.