ADRIAN ORR our NEW RBNZ GOVERNOR

[Aaron]

Heard Jarrod Kerr (kiwibank economist) on national radio this morning. So enraged I felt the need to post.

Snippets from the conversation that I recall. Jarrod said the RBNZ is hurting households with high rates. Perhaps he should have said "home owners" or "asset owners" or "landed gentry". The bottom half of society is not being affected by the interest rates, in fact if it brings inflation down they should be better off.

Jarrod thinks the RBNZ should get more creative how it measures inflation and should allow for some structural inflation (rates & insurance). In other words accept higher inflation.

What a di*k. I don't suppose he ever criticised the RBNZ when rates were too low for too long. Or when Adrian opened his dumb trap and suggested negative interest rates. Inflation is hurting the bottom half of the nation but economists don't understand this. They only want asset price inflation, it is all they have known for the last thirty years. Yield doesn't even matter anymore it has got so crazy.

In other good news the S&P500 down for a third day in a row so rates cuts not far away. Gold bugs should give thanks to the Chinese central bank and Chinese investors, if what I read is correct. Sounds like china might be moving away from bubblenomics to something more real but I doubt it.

I am waiting for an "economist" to suggest interest rates should be set by supply and demand. Although I am not sure what that would look like, I do know I don't like what is happening at the moment.

Thinking about it further a bit silly suggesting interest rates be set by supply and demand for capital as there will always be limitless demand for capital and in a fiat world there is always limitless supply especially when you have clowns like Adrian and Jerome.

[Aaron]

This guy popped up on youtube. The algorithms doing their job with confirmation bias or sending me down a rabbit hole.

Australia exactly the same as NZ housing is a ponzi that needs cheap money and lots of immigration. It is just that the numbers are starting to look crazy as they get more and more extreme.

https://www.youtube.com/watch?v=kjZTpUWAaYc

Still if you are invested in a ponzi scheme you definitely do not want it to stop and that could be why no politician or party is proposing any significant change.

[kiora]

Finally some signs of inflation relief?

"Oil Extends Slump Below $80 a Barrel After US Stockpiles Swell"

https://finance.yahoo.com/news/oil-e...234247967.html

[Aaron]

Lucky unemployment has been taken away as the RBNZs responsibility or we might already have the long awaited for rate cuts.

https://www.nzherald.co.nz/business/...KCNKD7HTMANKY/

Exacerbating wealth inequality helps no one in the long run.

https://www.zerohedge.com/markets/fe...alth-gap-chasm

Not a NZ example but we have the same sort of people in charge.

[Aaron]

Probably behind a paywall so no good for some of you.

https://www.nzherald.co.nz/business/...NKFS42ENL7FZU/

Talks about the RBNZ balance sheet expansion, LSAP and Funding For Lending. Some quotes.

The RBNZ becoming such an active player in the bond market also helped suppress bond yields, which ultimately affect mortgage and term deposit rates. The RBNZ wanted rates to be low to encourage more borrowing and less saving. Once the RBNZ realised its work stimulating the economy (too much) was done, it got Treasury to agree to start buying the bonds back and retiring them.

The issue is this whole exercise, which supported the economy through the peak of the pandemic, is now costing taxpayers.

Treasury is having to borrow more (in a high interest rate environment) to get the funds to buy the bonds back from the RBNZ.

The rise in interest rates has also seen the value of the bonds the RBNZ bought fall. Treasury is sending money the RBNZ’s way every month to cover the cost of these losses, ultimately expected to total about $11b.

Taking a step back, it’s highly debatable whether going as big on money-printing as the RBNZ did was worth it.

The Funding for Lending programme is deemed by many experts to have been unnecessary, while some have argued - in hindsight - the RBNZ didn’t need to buy as many bonds as it did.

The funding For Lending and interest rate suppression drove house prices to ridiculously high levels. Adrian and the MPC probably don't mind but some old fashioned fair minded kiwis might not like the idea of a govt organisation actively supporting the wealthy at the expense of the less wealthy (via a cost of living crisis and being shut out of the housing market.)

The RBNZ is buying up foreign currencies, or assets tied to foreign currencies, to give itself the firepower to intervene in the currency market if there’s a crisis.

I wonder why the RBNZ feels the need to interfere in the currency market, perhaps they think that sensible people watching Adrian debase the currency might conclude that it is dangerous to hold NZ dollars while Adrian is in charge. Oh the tangled webs we weave.

[kiora]

"Competition, oddities and RBNZ's conspicuous no-show"
"Jenny Ruth's Just the Business"

https://substack.com/@justthebusines...m_medium=email


"The Reserve Bank was conspicuous by its absence at the first day of the Commerce Commission's conference on competition in personal banking services.

That's even though the subjects for discussion included the impact of RBNZ's prudential regulation on competition and concerns about the impact of the deposit insurance scheme once it comes into effect.

The importance the major banks place on the commission's study of banking competition was highlighted by the fact that all four chief executives of the four major banks were present at the conference.

That made RBNZ's absence all the more conspicuous.

Of course, RBNZ had already published its reaction to ComCom's draft report, basically rejecting everything ComCom had to say about the regulatory barriers to competition.

That could be, and has been, characterised as RBNZ's contempt for the commission's inquiry..."