The Reserve Bank of Australia won't admit it publicly, but it deliberately tries to keep a certain percentage of Australians out of work to control inflation. And the mechanics of why are more troubling than most people realize.

According to the ABC, at 4.1 percent, Australia's unemployment rate is historically low. That's kept most households afloat despite 13 successive interest rate rises. But economists and central bankers view that low unemployment with suspicion, not celebration.

Mate, here's the uncomfortable truth: the RBA's entire inflation-fighting strategy depends on making sure enough people can't find jobs.

The economic logic

The theory goes like this: when unemployment is too low, workers have bargaining power. They can demand higher wages because employers are desperate for staff. Those wage increases feed into business costs, which get passed on to consumers as higher prices. Inflation rises.

So to control inflation, central banks raise interest rates. That slows the economy, reduces hiring, and increases unemployment. Workers lose bargaining power, wage growth moderates, and inflation comes down.

In economist-speak, there's a "natural rate of unemployment" - the lowest unemployment rate consistent with stable inflation. Go below it, and you get accelerating price rises. Stay above it, and inflation comes down.

The RBA won't tell you exactly what it thinks this rate is for Australia, but its actions suggest it's higher than 4.1 percent.

Why this matters

Here's the problem: this entire framework treats unemployment as a policy tool rather than a human tragedy. Every percentage point of unemployment represents tens of thousands of Australians who can't find work, can't pay their bills, and face the psychological toll of joblessness.

When the RBA talks about "cooling the labor market," it means making it harder for people to find jobs. When it worries about "wage pressure," it means workers might actually get pay rises that keep pace with living costs.

The strategy worked during the recent inflation surge - unemployment stayed low enough to avoid recession and a banking crisis, but high enough to prevent runaway wage-price spirals. Most people kept their jobs and could service their mortgages, even if living standards fell.

But that was luck as much as management. The RBA was threading a needle, trying to slow the economy without crashing it.

The alternatives nobody's discussing

The dirty secret is that using unemployment to fight inflation is a choice, not an inevitability. Other policy tools exist: direct price controls, competition policy to prevent price gouging, fiscal policy to reduce demand without destroying jobs.

But those require political courage and coordination between the central bank and government. It's easier to let the RBA do its thing, raise interest rates, and blame unemployment on "the economy" rather than policy choices.

Mate, I'm not suggesting there are easy answers here. Inflation is corrosive, especially for people on fixed incomes. And controlling it matters.

But we should be honest about the trade-offs. The current system fights inflation by making sure enough people can't find work. That's a choice, not an economic law of nature. And it's worth asking whether it's the right choice, or just the convenient one.