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Targeted inflation or planned price instability to make people feel like spending.
An idea started in NZ around 1989/90. I can't help but think it is a bad idea. Confirmation bias got me looking at this article.
Maybe he is right and this is only adding to the wealth gap. Certainly is when it comes to housing in NZ.
https://www.zerohedge.com/news/2019-...nt-one-percent
Mind you another conclusion is that if you save something rather than spend everything on consumption you can get ahead although that is difficult with savings rates of 2%-3% and asset price inflation at 8%.
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FYI Interesting thoughts on inflation vs deflation.
https://www.zerohedge.com/news/2019-...s-graphic-form
Just trying to promote the idea that targeted inflation is a dumb idea whose time should be up.
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This article recognises the problem but proposes no solutions.
https://www.abc.net.au/news/2019-03-...-bank/10887958
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There was a good opinion piece in the herald this morning regarding the different inflations we have. i.e. massive asset price inflation but lower labour and goods and services inflation.
This possibly is creating a lack of social mobility. i.e it won't be too long before you will need to have help to get onto the property ladder and if your parents can't help then you are left out. Even if you can get on the property ladder your mortgage is so big it will be a noose around your neck for many years (maybe not that bad as long as inflation keeps working its magic).
But I suspect a growing lack of social mobility will eventually create a feeling of hopelessness and resentment that could lead people to vote for change, any change good or bad.
While trying to find the herald article online I did find this
https://www.interest.co.nz/opinion/5...its-time-focus
Bernard Hickey may be a visionary. TIME FOR INFLATION TARGETING TO GO a bad idea that has been around too long.
I appreciate the pointlessness of posting on a website that only a few people read but I suspect you people are the only ones who might even consider the effects of inflation. Talking to friends and family usually gets a blank stare and a shrug.
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Actually thinking about it a bit further and the responses to this thread I may be talking to myself.
That said eliminating the inflation targeting would be politically feasible and relatively easy and would hopefully make for a less unequal society in the long run.
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Hard to blame european banks for reckless lending when they have Mario "Whatever it takes" Draghi in charge.
https://www.cnbc.com/2019/03/27/bank...heres-why.html
"Banks will typically make money when interest rate curves are steep by lending out at higher rates and paying deposits with lower rates. But the ECB deposit rate is currently set at negative 40 basis points, forcing cash rich banks to pay for placing deposits and current account reserves with the central bank.
The ECB has set a negative rate to encourage banks to lend out to the real economy, drive growth and stimulate inflation."
Assets prices are high Draghi wants them higher (trickle-down economics?)how is the average new home buyer in NZ taking on a $400,000 mortgage to buy a house good for the economy?
I assume they all studied at the John Law school of economics. What lessons were learnt back then? None I guess.
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the amount of negative-yielding debt has nearly doubled in just six months, and confirms that the global asset bubble is back
https://www.zerohedge.com/news/2019-...negative-yield
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Inflation is winning hands down in America according to this guy.
https://www.zerohedge.com/news/2019-...g-asset-prices
It seems obvious and I guess it will never change unless people think it is unfair as I do. If Trump, was a protest vote by working class middle America I think they might have picked the wrong guy, although they seem more concerned with immigration rather than a system that is increasing wealth inequality.
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Central Bank success story price rises thanks to minimum wage increases. Although wage inflation bad, asset price inflation good seems to be the general consensus of the central banks and political commentators.
They also tend to have a poor view of MMT and a good view of QE although no one has been able to explain to me what the fundamental difference between these two acronyms is as at it's core it is a belief that money printing is limitless and we should do more to make the world a better place. F**king morons on the left and the right as far as I can tell.
https://www.msn.com/en-nz/money/news...cid=spartanntp
Petrol on the way up but that is due to political turmoil.
My 2.8% on term deposit is not looking very good.
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If this guy and Janet Yellen are correct waiting for the next downturn is a bad strategy.
https://www.cnbc.com/2019/04/30/fed-...tiya-says.html
My strategy keeps getting worse and worse. Yet each year is one more year closer to my imaginary investing opportunity of a life time. My eventual capitulation will be the bell at the top.