Apparently letting the bubbles pop will create something worse than Weimar Germany, Zimbabwe, Venezuela or Japan. Think depression era USA.
Japan is probably the desired result but I wonder if their 1989 stock and housing crash will happen here.
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Apparently letting the bubbles pop will create something worse than Weimar Germany, Zimbabwe, Venezuela or Japan. Think depression era USA.
Japan is probably the desired result but I wonder if their 1989 stock and housing crash will happen here.
Last centuries ideas and policies worked very well. It's Quantatitive Easing, ZIRP, NIRP, helicopter money etc that has stuffed things up in this century.
You don't think social unrest and revolution cannot come through hyperinflation and a wealth transfer to the 1% via money printing and interest rate suppression? I think artificially raising asset prices to benefit one group of people at a certain point in history - as has happened from the GFC all the way to 2022 - has more potential to cause revolution than umeployment. Some European countries had unemployment rates as high as 22% after the GFC and European Debt Crisis, and there was no revolution.
'Mass unemployment' doesn't come about from a common or garden recession in any case. If we didn't have central banks trying to suppress the natural business cycle then we wouldn't have events like the GFC, where the system finally collapses under the weight of debt and malinvestment.
You can keep harping on about employment all you like, but the idea that everyone should have access to an unlimited supply of dirt cheap money is just flawed thinking and would not pass muster under any economic system.
I would disagree, the RBNZ has/will use its employment mandate as an excuse to ignore its price stability mandate. I think you will get social unrest sooner by carrying on with current policies. The transfer of wealth and income over the last couple of decades to a few has been pretty obvious. It is not the central banks job to boost asset prices and protect the well-off. Justifying it as trickle down economics (sorry wealth effect).
More tools? like what?
They just need to grow a pair and do their job.
Why doesn't Labout just step in and set the interest rates payable on loans made
and deposits (it was good enough to lose the plot completely and shoot from
the hip blaming probably wrongly Landlords with appropriate Penalty taxes inflicted
- no commercial basis for removing selective Interest deductions etc)
for House prices while leaving the other major culprits untouched financially to
continue ripping all and sundry off in the Finance Sector thus enriching Greater
Australia's Financial Sector in the process .. :)
Are Faafoi, Robertson and comrades that stupid to not notice or scared to stir the nest
in case they get stung more badly than the NZ Public are likely to inflict
on them & Labour next year on the job so well done mostly blindly ? ;)
We know that between Govt and RBNZ most of their endeavours over the terms
they have been in have missed target, generally been misaimed, produced the
opposite of the desired effect delivering up more harm than good - in effect
a string of large Failed Passes .. even the man on the street is fast waking up
to this now .. as many are being hit hard in the pocket and are no better off out
of the hastily concocted Labour hatchet jobs and meddling :)
Each time the Govt & RB Finance bods have taken aim - the desired target has been seen
shortly thereafter disappearing into the distance, laughing and chuckling away untouched. ;)
The targets that have run away or been conveniently overlooked:
House Prices & Affordability
Inflation
Rental Accomodation
Rental Pricing levels (largely a result of Govt red tape)
Interest Margins - the Large banks
A lot of those targets heavily influenced by RBNZ policy.
Richard Prebble in herald today, concerned about the poor (which is laughable for an ACT party man) but Labour is not doing anything to curb the RBNZ excesses either.
https://www.nzherald.co.nz/business/...KZ3QQMEMP45DA/
To quote from the article "While the Reserve Bank procrastinates, the rich will get richer and the poor will get poorer." and that is from an ACT party supporter.
Another opinion piece about inequality between generations. To me vaccinating the oldies first made sense as they are the ones more likely to die from covid, but she does touch on the inequality being created in the housing market.
https://www.nzherald.co.nz/nz/a-capi...JHH6ADCG44QMA/
How badly does a reserve bank governor fail before they get the boot?
The Conversation: Inflation is raising prices and reducing real wages – what should be done to support NZ's low-income households?
https://www.nzherald.co.nz/business/...M2OUK6BP4VJ4A/
Sack Adrian Orr and explain to his replacement the objectives of the reserve bank, i.e.
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
Increasing the amount of overall debt does not promote stability in financial systems. I would guess the RBNZ's reluctance to do their job in the face of rising inflation and near full employment is to protect those with too much debt, which the RBNZ encouraged with its overly loose monetary policy and historically low interest rates. Their current policy protects the well off at the expense of the poor, by boosting asset prices and now the CPI as well.
I would not expect Adrian to care but I would expect a labour govt to do something, except that I don't see any difference between Jacinda and John Key they both have to pander to the boomers to stay in power.
Bernard Hickey probably says it better.
https://www.rnz.co.nz/national/progr...ly-column-ever
I hate to pile on with Jacinda being responsible for every cry baby on the front page of the paper but she and Labour and Greens have presided over the biggest transfer of wealth from current and future renters, to asset owners, in the history of New Zealand. The reserve bank was also complicit in this. If Bernard Hickey leads a political party at the next election maybe I will vote for them.
https://www.rnz.co.nz/national/progr...ers-and-losers
John Key would be proud.
And the losers out of all this will be hit hardest with the inflation tax currently being imposed on everyone.
A small insight into the thinking of a central banker.
https://nypost.com/2022/02/04/uk-cen...or-big-raises/
It would be interesting to know whether he showed the same concern while he was pumping up asset prices.
Labour defending inflation under their reign.
https://www.msn.com/en-nz/news/natio...?ocid=msedgntp
Inflation has gone nuts but they blame "supply issues". Also jacinda uses the "well other countries are doing it too" argument. Sounds like if USA, Japan, UK wanted to jump off the harbour bridge labour would join them.
Am I just a fringe fruit cake. Milton Freidman said inflation is always and everywhere a monetary phenomenon. Has this been disproven?
https://www.rbnz.govt.nz/markets-and...-sheet-at-work
In response to COVID-19 we’ve introduced a range of initiatives to provide additional monetary stimulus and to support the smooth functioning of New Zealand’s financial markets. These initiatives have enlarged our balance sheet from its December 2019 (pre-COVID-19) level of $24.60bn to $89.18bn at the end of December 2021. During the month of December the size of our balance sheet increased by $1.41bn.
The RBNZ is responsible for managing inflation, its only tools are monetary, therefore you could deduce that monetary policy plays a large role in causing or reducing inflation.
If inflation is a problem (and the paragraph above might indicate where the inflation has come from) why is the RBNZ not doing anything about it.
They f**ked up by overreacting to covid but now seem reluctant to do anything to fix this.
I am guessing inflation will be easier to defend than a recession or slowing down of the economy prior to an election so the root cause gets ignored and incompetent people at the RBNZ get to keep their job.
To maintain "independence" I don't imagine parliament can sack the RBNZ governor. I wonder who can??
Inflation is getting close to a crisis according to this article.
https://www.msn.com/en-nz/news/natio...?ocid=msedgntp
Inflation is always and everywhere a monetary phenomenon.
What is the RBNZ doing about the problem they have created, along with other central banks around the globe.
Ray Dalio obviously expects inflation to continue and he expects central banks will keep devaluing their currencies.
https://www.linkedin.com/pulse/where...ity-ray-dalio/
I was hoping for a better buying opportunity before levering up.
Central Banks have to raise rates or they will face the guillotine. The peasants are usually pretty placid but every now and again they will revolt and revolt hard, usually when they can't afford to eat.
A lot of countries survive with high inflation, turkey, argentina, venezuela etc.
If you read the article and look at what is going on, inflation is preferable to increasing taxes and balancing budgets. People with assets will still be OK. It is the poor who get hit hardest. Printing money is more politically preferable to raising taxes. Printing money increases inflation.
I selfishly want stable money so that asset prices come down and I have a chance at social mobility. History has apparently shown that will not happen. I guess we need to see what happened in the past to invest for the future.
maybe the central banks pretending to fight inflation will set off a crash of the financial markets. At that point in time I borrow on the house to buy shares on margin in companies that already have debt. I then rely on central banks to inflate away the debt rather than stablise the money supply. Risky as it relies on the central banks continuing to be as weak and retarded as they have to date. No major interest rate rises, more money printing after an attempt to tighten, that would be my guess.
How does Adrian Orr keep his job.
https://www.msn.com/en-nz/news/natio...?ocid=msedgntp
Inflated assets, inflating prices no action being taken to ensure price stability.
If history is a guide the RBNZ may not be responsible for the protests in Wellington but they might be responsible for the feelings of anger and frustration that some parts of society are feeling.
I had assumed the govt would be constrained from being able to sack him to keep some sort of independence but like everything it is up to our elected officials and the queen.
90Removal of Governor from office
(1)
The Governor-General may, at any time for just cause, on the advice of the Minister given after consultation with the Attorney-General, remove the Governor from office.
(2)
The Minister may give the advice—
(a)
for a cause referred to in section 92(1)(c) or (f) only if the board has made a recommendation under section 91 that the Governor be removed from office:
(b)
for any other just cause whether or not the board has made a recommendation under section 91 that the Governor be removed from office.
91(c)failure to adequately perform or exercise the functions or powers that are delegated by the board;
Single or double shot. My pick is single with a weakling like Orr or none at all. We need strong leaders in important roles not spineless jellyfish.
https://www.nzherald.co.nz/business/...4QLIN77CWRIPU/
If the retards in Wellington had any clue they would be protesting Adrian Orr keeping his job after basically denying social mobility to the bottom 30-40% of society with his massive overreaction to covid. The top half has enjoyed the asset price inflation and the bottom half get to pay the inflation tax along with the top half. It is yet another regressive tax in NZ, Labour or National no difference.
Orrsome +.25
Like the cover to the latest MPS
My mate Michael tweeted - Brought to mind Norman Kirk's promise to "hit inflation for six". Unfortunately, over the term of that govt the inflation rate tripled....
and
And I'm still not sure what messaging the Bank wanted readers to take from putting an aerial shot of the Basin on the front cover of the MPS
https://www.rbnz.govt.nz/-/media/Res...6-f6bbbc45be5a
delete delete
Moving to slowly??
Time will tell
https://www.msn.com/en-nz/news/natio...?ocid=msedgntp
A 1 percent OCR is a 'stimulatory' interest rate, he said, questioning why the economy currently requires that level of support. 5.7% inflation not high enough for Adrian.
The biggest fragility for the economy is the financial sector and debt which was encouraged by the RBNZ for the last 30 years.
Have we ever had a tough Reserve bank governor?
https://tradingeconomics.com/new-zealand/interest-rate
What they are doing with trickle down economics is becoming obvious even to a moron like myself and more blatant every crisis. It is not working but they can't stop now unfortunately.
You sometimes wonder if the RBNZ (ie Governor of) is the cure or the disease
Aaron - look at some of those charts in the MPS and see what happened when Bollard took over from Brash in the 2000 to 2008 period
Maybe history is repeating and we heading to another big recession
What charts are you looking at in particular, in other publications you can see oil prices rising, interest rates rising into the 2008 crisis and then dropping abruptly. What do you suggest print money to avoid a recession, keep creditors whole with negative interest rates?
Many commentators have described central banks as both arsonist and fire fighter. Sounds like they prefer running things hot as rising asset prices make rich voting people happy and rising consumer prices can be shared by everyone. I am sure most renters are more than happy with their rent increases to justify the prices being paid for rental properties.
Risk takers need to be just that, taking risks. It isn't risk taking if you know the central banks will save you from bankruptcy. TeslaGod had an unshakeable faith in the central banks. Any first home buyer paying the current prices was always taking a risk that interest rates might rise and property prices might fall. Likewise any overleveraged company or speculator.
Adrian suggests RBNZ is "incredibly" worried about inflation.
https://www.stuff.co.nz/business/127...bout-inflation
I guess that is why he raised the OCR the smallest increment possible. BUT he dramatically raised its forecasts of future rates.
My guess he will be doing as little as possible in the hope that a crisis of some description gives them an excuse to stop and reverse course.
Perhaps he could have qualified that statement with the fact asset prices don't form part of the CPI and they love inflation of asset prices, in fact that is the main reason they are too chicken s*it to deal with the CPI inflation.
More finance news out.
https://www.stuff.co.nz/life-style/h...r-westpac-says
Apparently rising interest rates are LARGELY responsible for the housing boom being over according to the article. They should talk with Adrian at the RBNZ as he is of the view interest rates and RBNZ policy only play a BIT part in the housing market. Bascand confirmed this by explaining it is a supply issue. Supply is increasing and demand is falling until immigration opens back up. Surely the RBNZ increasing the OCR can't have had much effect.
Discussion regarding the RBNZ's handling of the covid crisis.
https://www.interest.co.nz/banking/1...8-billion-date
Did I read that right the Funding For lending Program (FLP) not only was not required but only benefited Australian owned banks lending to residential property in NZ by and large. Way to go Adrian.
Some spectacular results.
https://www.stuff.co.nz/business/300...ected-recovery
https://www.1news.co.nz/2021/10/28/c...s-huge-profit/
https://www.1news.co.nz/2021/10/31/w...ping-earnings/
No doubt NZ is better off with houses up 30% rather than down 10% as predicted prior to covid. Great that the Aussie banks have made record profits thanks to the RBNZ. Plenty of boomer votes for Labour not rocking the boat and plenty of wealth to trickle down no doubt.
It is obscene, can anyone honestly say we are better off shutting the next generation out of the housing market.
What are the odds Adrian will get some nice speaking fees from the banks at some future date (ala Janet Yellen in the US. Ben Bernanke went to work for Citadel) or a nice Chairmanship on one of their boards once he retires from the RBNZ.
This person is doing more to destroy NZ than the retards protesting in Wellington, yet no mention in the media or concern from Labour who said something about "affordable housing" a long time ago despite Adrian working hard against that stated policy they have said and done nothing regarding the performance of the RBNZ.
Actually the protestors might be a sign of things to come as a result of social mobility becoming a thing of the past thanks to Adrian, people with no opportunity or hope of getting ahead should be angry.
Headline on NBR this morning: "Cheap credit trumps all in pandemic housing market -“You can talk all you want in the long run about getting housing supply up and keeping it running ahead of population growth, that’s absolutely right, but in the short run, it can be trumped by credit factors.” - Corelogic.
Shhh, no one tell Adrian.
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.
Maybe this is the reason. Employers having to up wage rates as no foreigners around to accept minimum wage.
https://www.stuff.co.nz/bay-of-plent...ng-60-per-hour
"Labour" seems an outdated name for the party these days.
I thought David Parker was a rhodes scholar, but maybe I am wrong on that, as he comes across as quite thick in this article.
https://www.msn.com/en-nz/news/natio...ffc7c5eacb0fba
The labour govt accepts no responsibility for the inflation... but here is the RBNZ balance sheet.
https://www.rbnz.govt.nz/statistics/r2
I have just realised I do not understand what I am looking at, but assets increased $47,099 million. From $31,302 to $78,401 or a 150% increase over one year. I know the RBNZ was shovelling money into the banks to juice the housing market (well done by the way Adrian very successful) but a lot was for govt bonds so they could turn us into a nation of bludgers sitting at home waiting for the next handout. Free money is how many people have described it, but it is not free and inflation is the result.
Asset owners with lots of debt will enjoy the inflation free lunch (if the RBNZ's weak response to inflation continues) but everyone will pay the inflation tax particularly the poor and assetless.
The govt and the RBNZ should be front and centre when blame for inflation is being allocated. David Parker either lacks the intelligence or the balls to admit it.
How many houses does David Parker own? :)
Funny that Ms Swarbrick whats an investigation into the covid economnic response when no one else does, when going of GV she is the only Auckland MP whos property portfolio hasn't seen large tax free capital gains. Why is no one else interested?
You undermine the currency as a means of exchange and a store of value, you get problems.
Historically those in power try to keep the game going until there is social unrest.
Interesting point that just over half of France just voted for an extreme alternative. Admittedly I do not know anything about the French political system, it may be that the presidents powers are limited.
https://www.zerohedge.com/political/...ves-status-quo
At this stage there is no way I would vote for either Labour or National.
Chris Trotter is a bleeding heart lefty but he sums it up pretty well in this article.
https://www.interest.co.nz/public-po...3-writes-chris
Neither party will challenge the neo-liberal status quo.
Stop inflation targeting or reduce it to 0% and trickle down economics is bullsh*t
+0.5 % to 1.5 %
you called it right. I had assumed a weak .25% rise. Although if I were to cherry pick the language doesn't look too frightening for asset owners.
They agreed that moving the OCR to a more neutral stance sooner will reduce the risks of rising inflation expectations. A larger move now also provides more policy flexibility ahead in light of the highly uncertain global economic environment.
"Policy flexibility" ??? Something to drop in the event asset prices fall to far.
They say to a "more neutral stance"
The Committee noted that the OCR is stimulatory at its current level.
While both inflation and employment targets are being exceeded they have stimulatory rates?
Not exactly going to scare away inflation, but maybe if they have stopped printing money, prices will settle at their new levels.
Someone asked about cash levels on another thread, mine are about 20% of my investment portfolio currently and I will use debt if there are significant declines and opportunities arising, but I do not see central banks allowing asset prices to fall too far. Even if they do they will get juiced back up reasonably quickly with more money printing and utilising policy flexibility.
I need more debt but do not like borrowing for a 3% yield but with inflation clearing debt at 6% per annum, it is confusing for the weak minded like myself.
A Mike Hosking Minute I finally agree with.
https://www.newstalkzb.co.nz/on-air/...onomic-basics/
Even now US Federal Reserve not yet fighting inflation very hard. But it is no surprise I guess.
https://www.zerohedge.com/markets/if...till-expanding
My mate Michael reminding us how useless Orr and his mates (and the govt) are
@MHReddell
Another month, another $1.3bn of losses for the taxpayers from the Reserve Bank's reckless LSAP programme - rashly put in place to look active back in early 2020, but with the risk still on the books now.
These are losses - real losses - that the Minister of FInance seems unbothered by, and which the Herald's politics and economics columnist recently dismissed as "slight". The lack of accountability is staggering....
...especially when compounded by the apparent complete lack of accountability for the same MPC's responsibility for allowing core inflation to blast through the top of the target range.
The govt sets the target, the govt appoints (and can fire) the key people....
...but if they had acted, on our behalf, to hold the key RB people to account we might absolve them of further responsibility. Instead, by their indifference - whether to high inflation or massive LSAP losses - they directly share the responsibility.
Very true. Blowing up the biggest real estate bubble in living memory (aside from immigration's effects). The losses will fall on the Crown with the indemnity purchases by the RBNZ I think. Correct me if this is not right please.
Those losses will blow out as interest rates rise with some mitigation from hedging I guess. The losses are at 30 June, 2021 balance date around $3.1 bn NZD.
The RBNZ pays fees for the indemnities as far as I can tell which were not cheap. Might also be wrong on this (please correct me).
They could sell some of the bonds but that would increase rates quickly I imagine. And solidify bigger capital losses to be passed on to the Crown.
One thing I didn't realise about the RBNZ is its position as the top central bank in the world. How do I know this?
Federal Reserve Chairman Salary USD 203,000 = NZD 300,000 pa
Responsibility: Largest economy in the world & global reserve currency.
RBNZ Governor Salary NZD 1 million + pa or 3.3 times Powell.
Responsibility: country the size of small US city.
Obviously the RBNZ has a massive secret global footprint (sarcasm).
The truth is we are all just cows to be milked by our Wellington masters.
Bernard Hickey writes what I consider to be a scathing piece about Orr and the RBNZ because the way I read that article it blames a large chunk of inflation, (the housing component) on the RBNZ and their lifting of the LVR and their Covid induced bond buying
The dirty little secrets inside our nation of inflation (substack.com)
Thanks for posting that Peat. Doesn't seem to be behind a paywall. Cheers.
Thanks for the posts.
Interesting stuff but a bit depressing on a day we remember the futility of war and the ultimate sacrifice made by earlier generations to ensure a better life for future generations.
Almost the complete opposite now with future generations likely to be worse off than the current generations.
Winners mate Michael Reddell popped up randomly on you tube.
https://www.youtube.com/watch?v=-PxXVF05l9M
The interviewer seems awkward.
Also in todays herald a case against the reserve bank and the finance minister.
https://www.nzherald.co.nz/business/...WES3N2URJZROM/
The irony that after overseeing the biggest transfer of wealth in NZ history David Parker wants to look at the fairness of our tax system. I guess we could blame monetary policy first for creating the tax free capital gains and tax policy second.
https://www.beehive.govt.nz/speech/s...our-tax-system
haven't actually read this yet, better get onto it before commenting.
Although this is nationals response. The tax system is fair????
https://www.msn.com/en-nz/news/natio...4b15c3a509e622
Chris obviously wanting to help aspirational voters rather than bottom feeders.
Although not related to RBNZ Michael Reddell on immigration
https://www.newshub.co.nz/home/new-z...g--expert.html
And another but not sure about the qualifications of a Cambridge-based economic commentator.
https://www.nzherald.co.nz/nz/john-g...ORLN4EVSHC6RM/
Personally mine is not an economic argument against immigration, I just don’t like lots of people and think we should invest in the people already here. Too many townies no good for anyone.
Tim Hazledine an economics professional says that inflation is supply chain related, nothing to do with money printing by the RBNZ or historically low interest rates.
He is more worried that the RBNZ talking about controlling inflation will cause people to lose jobs and suggests what we might do to stop the deflation.
Reading this crap makes me want to buy a pitchfork.
https://www.nzherald.co.nz/business/...AAF3F7KNVWSA4/
Is it true that constantly rising prices are good for people and the economy. If so what is the proof. Currently all I see in NZ is rampant asset price inflation, a widening gap between the asset owners and the rest and a loss of social mobility meaning you can't become one of the asset owners. Probably a bit extreme at this stage, but it is the direction we are headed and all these economists suggest are ways to speed this up.
Is it also true that the financial system would collapse if debt stopped expanding. Maybe that is the real reason, no one wants to be around when the ponzi breaks.
Any economists posting on share trader? I would be interested to know.
Jenny Ruth was also in the herald this morning but I can't seem to find her articles online. She was criticising the RBNZ but not for the same reasons as me.
Hey Aaron …did I read it right in that Prof Tim was saying we should cut GST by 5% points
That would be good …even for those who already spend more than 100% of their income.
Normally I would support dropping the rate on a regressive tax like GST but if I understand him correctly as it is just a brief supply chain inflation problem (nothing to do with money printing or interest rates) we could get through the short term price increases by taking 5% off the price of everything, instead of raising interest rates and ending the bull market in asset prices.
Not only could we keep pumping asset prices but with the drop in GST even less wealth distribution going on.
But with all the wealth accumulating at the top no doubt amazing trickle down effects would result, creating a utopia for everyone.
What a genius.
So with inflation running rampart across there’s not much said about the Modern Monetary Theory these days
Isn't MMT just a flash way to say money printing?
From what I can gather when the money is printed and pumped into financial institutions it is capitalism and asset prices are inflated.
When money is printed and handed to people directly it is socialism and you get CPI inflation.
Neither are good for society long term as far as I can tell. After the initial high and euphoria of the first round of printing, larger and larger amounts of money and debt are required each time to keep it going. Much like methamphetamines, great for performance enhancement initially but once over the peak not so good.
That said it has done well for the last 22 years, no reason we can't get a few more decades out of it before the currencies collapse and become worthless.
Is this the article? Paywalled I think.
https://businessdesk.co.nz/article/o...nd-and-control
Amazing that Robertson saying that nothing about the inflation rate has anything to do with overheated economies and monetary policy mistakes here and abroad. Disowning any responsibility.
It seems there is no connection between inflation and monetary policy (printing and interest rates) or inflation and fiscal policy. or a combination of both monetary and fiscal policy. Handing out a freshly minted $20 billion wouldn't boost prices would it.
Adrian concerned about an unsustainable housing market. Gee I wonder what caused the housing market to become unsustainable
https://www.rnz.co.nz/news/national/...y-reserve-bank
The world has been printing money for 10+ years so why would it be a problem now.
It could also be the corona lockdowns and geopolitics.
Orr a bit loose with ‘truth’ and so so vague at the Select Committee yesterday
Pretty poor effort
And we have to live with / suffer with his decisions
I had assumed you were in the top half of society and were the half that have benefited from central bankers policies and lack of concern for the less well off.
That said can we get asset price inflation without CPI inflation. Adrian will no doubt give it a good go.
Another view on immigration and comment on the last link posted. "stupid analyses like Gascoigne’s."
https://www.interest.co.nz/public-po...conomic-growth
Apparently the productivity commission is giving the issue some thought. I will be interested to see if they come up with they ideal population for a country our size. I would suggest 5mill or less but usually they come out with double or triple whatever the current population is.
I noticed Winners concern at the declining NZD on the black monday thread. Imported or home grown inflation is Adrian's to control. A falling dollar might make it harder for him to stop raising rates in the face of declining house prices here at home. Here is hoping he discovers what his job is first and foremost and stops following the retards overseas.
Higher interest rates in theory will bring the dollar back up if you are worried about it winner.
BoE censured by senior Tories over soaring inflation
Can’t see that happening in NZ ….cos inflation is all imported eh
No they invited him in for a chat.
https://www.nzherald.co.nz/business/...FRLZEMUGVFMZQ/
he explained he took the path of least regret (resistance) and everyone in the room agreed that boosting all their house prices 30% instead of having them fall 10% was definitely the path of least regret.
Also Adrian explained "going it alone on monetary policy in the face of a global shock takes enormous courage," Orr observed. ENORMOUS COURAGE??? and that is why the RBNZ has pretty much followed the playbook of the rest of the western world as Orr is a gutless wimp.
Tradables inflation has jumped from 0.5 to 8.5 per cent, accounting for half the overall increase, while nearly half of the other, domestic half is down to residential construction costs. Get those immigrants flowing back in to keep the virtuous cycle rising.
The RBNZ has totally failed in its mandate, admittedly during difficult times but difficulties mostly brought on by 30 years of easier money and lower interest rates.
Chloe Swarbrick tried to formally investigate the results of his policy but was blocked by Labour.
I never like the term "elites" (to vague) but I imagine all the people on those committees are perfectly happy with rising house prices. What is galling is that the bloated public service gets paid about 30% more on average than people in the private sector and for a lot of the Arts graduates in Wellington there would not be any highly paid roles for them outside government in private industry.
No one actually believes central banks will fight inflation.
https://www.zerohedge.com/markets/ma...has-never-done
It is their only way out of the debt they have created. Save the "elites" while the poor pay the inflation tax.
Nice to see some of the elites struggling with the covid responses along with the common man.
https://www.msn.com/en-nz/travel/new...ac6dc302db8835
Although the hardships they are facing are probably a bit different to the common man.
I thought Paul Henry moved to Florida? He certainly sounds like an American now.
Sweden didn't print money or 'splash the cash' as they let Covid run (pretty much) yet their inflation is high - how come if it isn't imported?
https://www.usnews.com/news/business...ate-since-1991
"The consumer price index rose 6.4% in April from a year ago and was up from 6.1% in March, according to official figures from Statistics Sweden."
I guess Dobby because all central banks are doing the same thing. Maybe it is a global inflation. Is "Inflation always and everywhere a monetary phenomenon"?
if this information is correct the combined balance sheet for the four most important central banks in the world: the Fed, the European Central Bank (ECB), the Bank of Japan (BOJ) and the People’s Bank of China (PBOC).
On the eve of the great financial crisis in 2007, their combined balance sheets stood at just $5 trillion. Today the figure is $31.5 trillion.
15 years 530% increase in money or a 35.3% (530%/15yr)increase per annum.
The central bankers are caught now. The NZ treasury in the paper today said they were unsure of the direction of the OCR.
9% inflation in the UK, 4% drop in the S&P 500. Which way will they go? We know Adrian will take the path of least regret(easy option), which means he is more worried about the price of his houses and keeping asset values up. Only a matter of time before he flips, but how much inflation is there in 15 years of 35% money growth. Will more money solve the problem, much like more debt solved the 2008 debt crisis, are they just playing for time in the hope that growth will save the day.
Maybe, but there is appears to be a direct link to RBNZ policy at the start of the pandemic and house price inflation. Also probably more than coincidence inflation started rising when the govt started banking money into businesses and peoples accounts over the pandemic.
I have only seen the headline but Grant Robertson's plan to fight inflation (cost of living crisis) is to borrow money and hand it to people?
What a f**king genius.
How about sack Adrian Orr and reduce the inflation target to 0%. If a 1%-3% inflation is desirable why is 6% so bad. Why do we not count asset price inflation, house price rises appear to be flowing into rent increases?
My thinking is probably too simplistic and I am probably missing something.
Excessive company profits (a lot from much higher margins) one of main drivers of inflation
Good to hear definite views no matter how stupid, although your second line creates doubt. You “believe” or you “know” the payments will help?
As we all know inflation is like a regressive tax or a thief in your wallet as the RBNZ describes it. Why would you not address the cause of the inflation rather than add fuel to the fire.
Before you throw your hands up like a retarded David Parker or Grant Robertson and say it is all imported. You don't think/believe/know the RBNZ more than doubling its balance sheet in one year between 2020 and 2021 might have played some part in the current inflation issue.
https://www.rbnz.govt.nz/statistics/r2
Robertson signed off on the money printing and the removal of the LVRs, both of which required the agreement of the Government of the day. He was also warned by official advisers that money printing would cause a burst of house price inflation and a widening of inequality. But he and the Reserve Bank also knew that burst would create a ‘wealth effect’ that would support consumer spending and business confidence through the worst of Covid. That’s not a bug. It was the feature. Quote Bernard Hickey.
https://thekaka.substack.com/p/the-d..._source=direct
I guess it is only $735,000,000 borrowed and pumped into the economy. Annual GDP is $350,000,000,000 so only a .2% increase in demand.
You keep believing what you like Dobby
Hey Dobby are you an economist?
I agree with Shamubeel Eaqub on David Seymours utterances but maybe he doesn't understand David's job is to talk sh*t to try and unseat the current govt.
https://www.msn.com/en-nz/news/natio...64eb562252e0cd
I would be interested to hear who/what Shamubeel thinks is responsible for inflation.
"It is not Government spending that is driving inflation. We had the UK hit 9 percent inflation yesterday because there is a global inflation crisis.
"Yes we should talk about inflation, yes we should talk about Government spending but you can't just tell lies about what is going on in the economy.
"This whole thing that it is wasteful Government spending that is causing inflation is simply not true.
He hints at "global inflation". Maybe a mysterious global force that is beyond comprehension is driving it all.
I would still put my money on out of control central bankers in NZ and abroad.
Maybe I am not the only one to think borrowing money to hand it out to people is a dumb way to address inflation (cost of living crisis)
https://www.nzherald.co.nz/nz/politi...GKVRBCQPUL4BU/
a "poor mechanism for supporting households with a longer-term problem" - and that it will make inflation worse in the short term.
Maybe Grant should just ask how much for your vote? and pay that. $350.00 seems a bit cheap.
The poor and middle class should appreciate that Grant (with the help of Adrian Orr (acting independently of govt no doubt)) has done more to create wealth inequality and screw the poor and middle classes than any finance minister in living memory. Grant has even managed to drastically reduce social mobility and continues to do so while not addressing trickle down economics.
At least National is honest, they say "screw the bottom feeders lets give big tax cuts to the well off" and carry on as normal.
Extract -
Yet on Budget Day yesterday, Treasury released its inflation forecasts which are HIGHER than 3% for all of 2022, HIGHER than 3% for all of 2023 and HIGHER THAN 3% for all of 2024. It was also over 3% this past year, 2001. Yes this inflation is not temporary, it is not "transitory". New Zealand will NOT be achieving its agreed inflation target, not even remotely, over the "medium term". My question is: since when can a Finance Minister and a Reserve Bank Governor put their signatures to an "agreed" course of action, then willfully ignore it? In monetary economics, we call it a loss of credibility.
https://www.downtoearth.kiwi/post/bu...ying-the-price
What you do is you , RBNZ, talk tough but act weak.
People think yes we have only a little temporary inflation, so savers don't demand ever higher interest.
No hard landing happens.
Lets hope our terms of trade hold up.
Loss of credibility or human nature Grant and Adrian are part of the 60% that own homes and assets, the plan to inflate away debt and prop up asset prices works well for them and for a spendthrift govt.
I just wish they could be honest about what they are trying to achieve rather than lying to the 40% who seem clueless as to what is going on. Having the central bank and govt work hand in hand is also galling as the RBNZ was set up to avoid excessive money printing and reckless monetary policy as politicians could not be trusted with the printing press.
I guess you won't hear Grant or Adrian talk about the NZ egalitarian ideal anymore.
Jacinda's concern for the poor will also seem ingenuine.
Adrian Orr is Hawkish on inflation according to Liam Dann and monetary policy is a blunt tool needed to be wielded carefully in the tricky balancing act that the RBNZ finds itself.
Maybe if they had taken more care how they wielded this blunt instrument on the way down the way back up would not be so painful.
https://www.nzherald.co.nz/business/...CIK4BKHDKVU54/
Nobody really expects weak central bankers to get tough on inflation, especially as they need it to clear the debt they have created.
Sorry not really RBNZ related but I like to tie up a single thread to make it easier for people to ignore me.
Another opinion piece admittedly but I liked the graph halfway down.
https://www.stuff.co.nz/opinion/1287...is-should-stay
Ostensibly about the continuing brain drain and how bad it is but the graph raises the question in the six years prior to 2021 we had net inflows of at least 50,000 a year and this year we have 7,000 in outflows that is creating a massive labour shortage. What the f**k are all the immigrants (over 300,000(6*50,000) that came in over the last six years doing??
Something doesn't add up.
ORRsome +.50% OCR 2.00%
Does Tesla God still post? He used to say inflation was transitory and interest rates would never go up. Another property spruiker looking like a mug I guess.