Interesting article about economics, the main point is.
“There is no science, it's all made up, right?” Eaqub says.
“I mean, it’s whatever works at the time, and it keeps changing.”
https://www.stuff.co.nz/business/127...bout-inflation
The rest seems a confused mish mash confirming my view that economics is coming across as a load of bulls**t twisted to whatever suits your view.
David McLeish from Fisher Funds suggesting raising the price of capital will only add to the rising prices of everything else.
I am no economist but isn’t it the burden of interest rates that causes consumers to reign in their spending and slow inflation. Isn't a rising cost of capital that causes investors to allocate capital more carefully into things that will provide goods or services required by society.
Raf Manji suggests raising interest rates will lead to more inflation, and raise the price of petrol at the pump. I would have thought a rising $NZ reduces the cost of imports but I lack Raf’s intelligence so must be wrong.
I think it is Dileepa who suggests raising interest rates will cause a great contraction in economic activity. I agree with him on this point.
They ask why capital isn’t going into something useful like business rather than buying houses off each other at higher and higher prices.
Why would you invest in a business that takes effort and thought when owning a house, lets say $800,000 house going up 20% p.a. (thanks to easy money and low interest rates) earning $160,000 without tenants why would you invest anywhere else.
What I read is that raising interest rates according to these geniuses is bad no matter what happens although it would be interesting to see if they extrapolate this view to the future as more and more debt needs a bigger and bigger central bank response each time the economy tries to correct. They probably see negative interest rates as a sensible solution in the next crash. Why do we even listen to economists, they are all over the place but the main message is low interest rates and moah money.
Why don’t they just say “I am all right Jack” don’t rock the boat on asset prices I own some. The poor can pay through a loss of social mobility and the inflation tax we are imposing on them through loose monetary policy and low interest rates it is regressive so we won’t feel it as bad.
Effectively they are saying f**k the poor. What they will say is that in a depression the poor will suffer more but the reality the poor will suffer either way, it is just that they rich don’t suffer while crazy monetary policy inflates assets.