In the careful phrasing that characterises the Reserve Bank, Stevens today went further than his deputy. Reduce the three concluding paragraphs of his speech to bullet points , this is what you get:

That’s the extra $8.8 billion the government is having to borrow and pay interest on while blowing out “Labor’s” 2013-14 budget deficit by the same amount.

“The high exchange rate has also had a significant impact on the Reserve Bank's own balance sheet. It led to a decline in the value of the Bank's foreign assets and hence a diminution in the Bank's capital, to a level well below that judged by the Reserve Bank Board to be prudent. This has been a topic of some interest of late. Our annual reports have made quite clear over several years now that, while this rundown in capital in the face of a very large valuation loss was exactly what such reserves were designed for, we considered it prudent to rebuild the capital at the earliest opportunity. It has been clear that the Bank saw a strong case not to pay a dividend to the Commonwealth during this period, preferring instead to retain earnings, so far as possible, to increase the Bank's capital. That rebuilding could in fact have taken quite a few years, given the low level of earnings.

“That is the background to the recent decision by the Treasurer to act to strengthen the Bank's balance sheet, in accordance with a commitment he made prior to the election. The effect of this is that instead of it taking many years to rebuild the capital, it will occur in the current year. This results in a stronger balance sheet on average, and makes it likely that a regular flow of dividends to the Commonwealth can be resumed at a much earlier date than would otherwise have been the case.”

So “Labor’s” deficit blows out to about $40 billion this year, but Hockey’s heroic efforts to reduce the debt in the years ahead will be enhanced by a rich stream of dividends from the RBA. The last time the Aussie had a sharp fall, the RBA paid the government a dividend of more than $5 billion. Trader Joe is playing the forex market with borrowed money.

Last week the RBA deputy governor, Philip Lowe, said the level of the bank’s capital reserves had not been keeping him awake at night. The board had wanted to rebuild the capital level over time but the government wanted to do it immediately.

The official line from the Treasurer is that he found the world to be a dangerous place on his trip to Washington. Today Glenn Stevens said: