There's a war going on in Canberra.
It's being fought between the Reserve Bank of Australia on one side and the Treasury allied with the government on the other.
This blogger has no special leak to offer, nor insight from the generals that are directing the battle, but the war is now out in the open in respective policy formulations.
The Reserve Bank is using aggressive interest rates and moral suasion to shift Australians from their debt-addled addiction to house prices and over-consumption. As was made clear by Glenn Stevens last Friday
As of today, the government is using the Budget to boost mortgage credit and house prices to fire up the addiction.
The RBA is engaged in an historic undertaking. And one that is without prior success, to this blogger's knowledge. It is attempting to backfill an enormous bubble, to grow beyond it, instead of suffering the calamitous deleveraging that is afflicting the rest of the Western world.
It has been granted the opportunity by a moment of historic serendipity; that China just happens to need an awful lot of Australian exports right now.
This gives the economy the external demand it needs to shift its drivers of growth from unproductive mortgage-led investment to productive business investment in mining and associated industries.
Regular readers will know that this blogger has issues with the RBA's faith in mining. It believes greater effort should be put into other export sectors. After all, mining will flourish anyway.
However, it is full of admiration for the manner in which the RBA is disregarding the pleas of housing and cons
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