House prices have not increased in value, your purchasing power has decreased.
And if they increase the OCR too soon you will not get the chance to increase your income/ salary.
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He hasn’t got many options to sit around and Not raise the OCR , CPI above the band and Unemployment down at 4 %.
There are a lot of price increases yet to come through , Placemakers has been advising this week of a raise in price for many products . Increased fuel costs will keep feeding through . Labour costs have risen and will continue to rise as many industries struggle to get workers .
Our inflation rate is 3.3%
The U.S is 5.4% and the sky isn't falling there.
There not even considering raising there OCR
Neither is OZ or the EU.
If we raise the OCR we will fall further behind other countries in wage growth.
raising the OCR won't make imports any cheaper, you will just have less pricing power.
If Orr hasn't learned the lessons from past OCR increases ,
New Zealanders will pay the price for his mistake.
That $1 purchasing power has been slashed due to events created by the US president in 1971.
The continuation of QE over that same time period has made your cash more and more worthless.
House prices have not increased your fiat currency has decreased along with its purchasing power.
As FTG and Milton Friedman point out inflation is always and everywhere a monetary phenomenon. Is that why interest rates can't rise. The velocity of money is falling but the amount of money is increasing. If people stop paying and borrowing larger and larger amounts for their houses will we get deflation as money creation decreases? My understanding is bank lending increases the money supply.
Brian Fallow from the herald seems fairly level headed and says interest rates should be on hold as things are precarious due to covid and its new strains.
https://www.nzherald.co.nz/business/...IYQ2S5UINMYCQ/
TeslaGod is suggesting any increase in interest rates is a disaster.
I guess my view that capital should have a price is at the extreme.
Years after the pain of the recessions Paul Volcker created to combat inflation in some circles he is viewed as a hero, but I imagine at the time he was vilified. History will be the judge but I don't have that many years left so it is very frustrating for me as I try to find investment opportunities.
It is hard to know what to do but these sentiments should be pushing up the price of gold as the purchasing power of fiat currencies decreases. Just wish young speculators had the same faith in gold as they do in BitCoin. A house and a mortgage might prove to be a better inflation hedge.