During COVID, the Australian government faced a simple problem: it needed to spend enormous amounts of money, fast. JobKeeper alone cost $89 billion. The solution was elegant, quiet, and costly, at least for ordinary Australians.
The Reserve Bank created new money and used it to purchase government bonds, keeping borrowing costs artificially low and enabling deficit spending on a scale Australia had never seen. More dollars entered circulation. The supply of goods did not keep pace. Prices rose. Savings eroded. Purchasing power quietly evaporated.
Nobody called it a tax. Nobody put it to a vote. But that is functionally what it was.
The mechanism was deliberately structured to avoid scrutiny. Direct monetary financing, the Reserve Bank handing money straight to Treasury, is illegal under Australian law. So instead, the government issued bonds through normal channels, and the Reserve Bank purchased them on the secondary market shortly afterward. The economic outcome was identical. The legal and political exposure was not. By inserting one extra step into the process, they achieved the same result while maintaining plausible deniability. It was not money printing. It was bond purchasing. The distinction exists on paper. It does not exist in your grocery bill.
The timing was not accidental either. Crisis conditions suppress scrutiny. When unemployment is rising and businesses are collapsing, questioning the mechanism of government spending is politically toxic. Nobody asks hard questions during an emergency. That is precisely when the answers matter most, and precisely when governments move fastest.
Then came the inflation. And with it, a second layer of cynicism. The same institution that helped engineer the conditions for rising prices, the Reserve Bank, was also tasked to fix it. Its solution was to raise interest rates aggressively, transferring the cost of correction onto mortgage holders, renters, and small business owners. The people least responsible for the problem absorbed the most pain.
The bill arrived in stages. First came inflation, which hit 4.09% in the first quarter of 2026, its highest level in over two years. Then came the medicine: the Reserve Bank has raised interest rates three times in 2026 alone, lifting the cash rate to 4.35%. Australians are now absorbing both simultaneously, higher prices at the checkout, higher repayments on the mortgage. The cause and the cure, arriving together.
This is not an argument that COVID spending was wrong. Emergency conditions demanded emergency responses. The argument is narrower: the cost of that response was distributed across the population without transparency, without consent, and without the public having the tools to recognise it was happening.
"By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily."— John Maynard Keynes
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