Targeted inflation and monetary policy are designed to destroy savers and help borrowers and owners of assets. I am coming to a personal view that it is unlikely to change in the near to mid term, although it is unlikely long term as it doesn't seem sustainable and each crisis requires larger amounts of debt (think March 2020). Negative interest rates would not exist in a sane world.
I think it is unfair and that the bottom rungs are being kicked out from the ladder of financial success. It is possible that people are starting to feel that the chance for upward mobility is being taken away (it is) and that may be what is partly driving the housing market frenzy (that and low interest rates). I could get upset about it as I have done for too long now or I can invest so it doesn't upset me as much.
Imagine saving money and having runaway inflation decrease your purchasing power while interest rates stay low and house prices rocket up?(it doesn’t take much imagination does it) What about a debt jubilee, you won't benefit as a saver. What about if there is a big crash in the financial system, further debt will be harder to come by just when you want to borrow and just when asset prices are falling and it is time to invest, your savings will be frozen through the Open Bank Resolution as savers help the banks get out of trouble.
https://www.rbnz.govt.nz/regulation-...ank-resolution
I don't think it is right or fair but it is hard to see saving cash as a sensible investment option with insane central bankers forgetting their primary mandate of managing monetary policy to maintain price stability and promote the maintenance of a sound and efficient financial system.
I could be wrong as I have been most of my life but at least getting ulcers worrying about my mortgage is preferable to the ones created by being angry at the way things are.
Monetary policy ensures my house price rises (at least in nominal terms) and my debt becomes manageable over time. As traditionally wages don’t rise as quickly as asset prices the nz taxpayer can pay my tenants rent through an accommodation allowance ensuring my mortgage is paid and my house price stays up.
Thanks for starting the thread Logen you have helped me solidify my thinking and my next investing steps, although I appreciate that may not have been the intention of the thread.