So The QE exercise cost $5 billion ……..Orr took a punt, and the punt hasn’t paid off,
Easy come easy go
https://www.interest.co.nz/bonds/114...serve-banks-qe
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So The QE exercise cost $5 billion ……..Orr took a punt, and the punt hasn’t paid off,
Easy come easy go
https://www.interest.co.nz/bonds/114...serve-banks-qe
Tried to quit ST but no one else cares about monetary policy and the RBNZ.
Especially not labour MPs according to winners article.
Labour MPs on Parliament’s Finance and Expenditure Committee have blocked numerous requests by Green MP Chlöe Swarbrick for a review to be done of the government and RBNZ's economic response to Covid-19.
Swarbrick's concerns largely relate to the distributional impacts of low interest rates - IE the way they've benefited asset owners.
Meanwhile National MP Andrew Bayly has raised concerns in committee meetings about losses related to the LSAP programme.
No votes to be gained finding out it was a massive over reaction that helped the wealthy and exacerbated a housing crisis and is now resulting in CPI inflation as well as the asset price inflation.
It was mostly for the older wealthier boomer voters anyway. They have the houses and they have the most to fear from covid yet it is the next generation picking up the tab.
The $5bill loss over a population of 5mill is only $1,000 for every man woman and child in the country. Hardly worth worrying about, certainly no need to question the intelligence and competency of the NZRB or sack Adrian. I bet he is hoping for a recession and a cessation of CPI inflation so he can drive interest rates down again and reduce the loss some time before 2027.
https://www.msn.com/en-nz/news/natio...?ocid=msedgntp
The war in Ukraine adding to inflation. Supply chain issues. No mention pf out of control central banks, I guess because this highlights out of control money printing and govt spending.
The article highlights one of the big reasons for the inflation.
the Government has already taken on more than $120 billion in debt to pay for the pandemic, according to the latest Treasury figures. A large chunk of it, about $20 billion, paid for the wage subsidy scheme.
Net debt went from 19 percent of GDP prior to the pandemic to 30.1 percent of GDP at the end of 2021. It's expected to peak at 40.1 percent of GDP in 2023. Net debt reached its peak of 54.8 percent of GDP in 1992.
The tax take is up but I imagine tax on $20billion in wages subsidies is playing a part. Does that include the Resurgence Support Payments from IRD?
$20billion or $4,000 for every man woman and child.
At a 3% death rate 150,000 dead ( team of 5mill * 3%) that is $800,000 ($120bill/150,000). I was going to say for every life saved but we are getting deaths now despite the pandemic response so I guess you could deduct these.
It is easy to forget the fear at the time so I still think it was the right thing to do at the time but in hindsight it seems like we may have over reacted.
Inflation heading towards 6% DOUBLE the top of the RBNZs range.
Further labour shortages, mechanics this time.
https://www.nzherald.co.nz/business/...RQHEMMBS5ULWE/
I am not an economist but are interest rates currently at a level that are stimulative or contractionary?
Does Adrian know? How is the inflation target set? What studies were done to prove constantly rising prices are a good thing?
I was going to ask does it matter if inflation doesn't remain within its target range but that is self explanatory, a runaway housing market, levels of debt the IMF has expressed concern about and an inflation tax hitting everyone but especially the poorest hardest as they haven't enjoyed the asset price inflation. Of course it matters. How can people keep their job if they are not doing what was asked of them.
https://www.nbr.co.nz/node/233867
I thought the over inflated housing market was mainly due to a shortage of houses? Adrian can you help me here???
"...places such as Invercargill and Kawerau have seen prices rise by 36% and 37% respectively from March 2020 to the November 2021 peak, despite minimal population growth over the past 25 years. Kawerau, for example, has seen its population fall by 5.5% since the mid-90s. "
Oh wait never mind:
"Global factors
Clearly there are other global factors at play influencing house prices rather than any localised shortfalls in house building....These factors include:
- monetary stimulus by the RBNZ and other central banks cutting interest rates to near zero, sending mortgage rates to historic lows;
- relaxation of loan-to-value ratios (LVRs) increasing the availability of credit;
- an accumulation in savings as fiscal support and limited ability to spend on travel and services saw household savings increase; and
- inflows of capital into housing as returns from bank deposits fell to near zero."
https://www.interest.co.nz/business/...eaching-record
Another .25% rate hike in April I wonder. More strong leadership from Adrian no doubt.
Who knows...
Baby boomers need to protect their house prices, Adrian although independent of govt will be aware of that, as apparently the RBNZ policies only play a "Bit Part" when prices rise but according to the article below may play a bigger role than Adrian is letting on.
Only an opinion piece no useful information but probably good advice for young kiwis in the conclusion. Boomers can always replace them with Pommy, Chinese and Indian immigrants.
Predicting 30,000 a year coming in once our young people have stopped leaving.
https://www.stuff.co.nz/business/opi...ealands-future
To this foreigner, it has been illuminating to watch NZ’s housing problem deteriorate over the past few years. The attempts to subdue property speculation met with hysterical, misplaced cries of communism or socialism. The vested interests fighting tooth and nail to stop houses being built, despite clear evidence of a shortage. And the commentators and politicians transparently attempting to preserve the status quo for older voters.
Perhaps one day, the penny will drop, and the generations holding New Zealand’s wealth will recognise the gravity of the situation. Not only does this housing market pose a risk to financial stability, it poses a threat to NZ’s future prosperity. If you were a young, ambitious person, would you want to stick around?
I wonder if Adrian thinks stimulative interest rates could be responsible for labour shortages. Maybe not and that is why the OCR is still at 1%.
https://www.msn.com/en-nz/news/natio...1ffa1c8d61cdd4
Labours answer to out of control monetary policy and inflation... increase benefits and minimum wage.
I personally think they should treat the cause, not the symptom. Rising prices are the symptom and low interest rates and easy money are the cause, so I guess they are not even doing that. They are just adding fuel to the inflation fire.
Opening up immigration to address the labour shortage might stop labour/wages inflation while maintaining house price growth, so only a matter of time before the immigration spigot is opened again, I guess.
Is it possible that benefit payments rising faster than wages could be an incentive to remain a bludging piece of s*it (or bottom feeder as Chris describes them) rather than working or studying to gain some useful skill?
https://www.stuff.co.nz/business/mon...-other-incomes
The premium for working is being eroded.
Easy money and abandoning the price stability mandate means less thought required for capital allocation and spending.
Interesting quote in the last article.
It is vitally important that the Reserve Bank returns to its mandate and ensure that inflation expectations do not become unhinged.
Returns to its mandate?
(1)The Bank’s main objectives are—
Economic objectives
(a)the economic objectives of—
(i)achieving and maintaining stability in the general level of prices over the medium term; and
(ii)supporting maximum sustainable employment; and
Financial stability objective
(b)the financial stability objective of protecting and promoting the stability of New Zealand’s financial system
I don’t see pumping up properties prices as a stated objective, yet cannot but help think this plays a big part in their thinking. The IMF suggested they were so successful at pumping property prices it has become a threat to financial stability. Does Adrian know what his objectives are? I am not sure he does if people are suggesting he return to them.
Drop the inflation target to zero, trickle down economics is a dumb idea (if you aren't in the top 10-20%) that has had its day.
Regardless of which party they're in I'm sure all MP's just love Mr Orrs efforts over the last two years:
https://www.nzherald.co.nz/nz/house-...OHU476IKFJEWA/
Does not fit my narrative that it is all Adrian's fault but interesting none the less.
Good to see he is correctly blamed for overreacting before the pandemic.
30 years of declining interest rates do not get a mention. Immigration gets lumped in with population growth. Possibly mostly a supply issue and lack of investment.
https://www.msn.com/en-nz/news/natio...95936d22574218
Bernard Hickey said the same thing but he knows who to blame and once past blaming people maybe we should start taxing them and start investing in future generations, like we used to.
https://podcasts.apple.com/nz/podcas...=1000528251106
An example of the wealth effect which Adrian talks about. We are not America but our current reserve bank governor seems to be following the same policies.
https://www.zerohedge.com/personal-f...inflation-rest
Conclusion to the video is confirmation that anyone who does not own a home or have family help into one should not vote National OR Labour.
https://www.youtube.com/watch?v=Pg9yoibr8kY
Not really monetary policy or RBNZ related.
As history has shown once the printing starts eventually people start getting upset when inflation takes off. Traditionally blame has fallen on immigrants and foreigners (or jews in the case of Nazi germany although they blamed other foreigners as well).
https://www.nzherald.co.nz/nz/covid-...2TKJBQPPRFXFU/
probably behind the paywall, but the gist of it is the govt and immigration NZ keen to get the immigration spigot open. The "special" one off covid residency visas were forecast to attract 165,000 applications but the headline which is a little misleading is that there could be 60,000 more than this, so 225,000. I am unsure how many get approved but I imagine labour want lots to boost GDP numbers and house prices and to suppress wage increases.
Grow and consume while putting on a ute tax to save the environment. How much carbon will the additional people emit even if they are all using public transport and electric cars.
Why all the lip service to climate change when this govt and preceding govts are all about more people consuming more stuff.
What about giving young kiwis a chance to buy a house before they are crowded out by foreigners again.
yes I am xenophobic and a little racist but is grow and consume really the best way forward for NZ.
Housing supply was starting to catch up with demand but I guess that will not be the case for long. yay more demand for housing. That should help the housing crisis no end.