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  1. #271
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    Quote Originally Posted by GTM 3442 View Post
    There are a few clues in here if you read between the lines. . .

    https://croakingcassandra.com/2021/0...netary-policy/
    It was a long read but I am guessing the clue is the Crown Indemnity graph. I suppose this will fluctuate with interest rates but if they hold to maturity will it matter as long as there are no defaults by the NZ taxpayer? Wading through articles like that highlights how little I understand.

  2. #272
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    Quote Originally Posted by Aaron View Post
    It was a long read but I am guessing the clue is the Crown Indemnity graph. I suppose this will fluctuate with interest rates but if they hold to maturity will it matter as long as there are no defaults by the NZ taxpayer? Wading through articles like that highlights how little I understand.
    I'm picking that the liability occurs due to purchases at >$1 on the secondary market, followed by redemption/maturity at $1 - i.e. RBNZ knowingly paid >$1 for something worth $1.

    Let's hope that the income stream is sufficiently compensatory.

  3. #273
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    Quote Originally Posted by Aaron View Post
    The rebrand wasn't much compared to the cost of their artwork.

    https://www.nzherald.co.nz/business/...4XO7Y27BTARCQ/

    No wonder Adrian is too busy to do his job and raise interest rates.
    yeh this grates a bit ! public money for this sort of stuff really makes you think that Wellington is a bit disconnected.
    I actually quite like the analogy and am happy for Adrian to describe the RBNZ in these terms if that makes him feel good.
    But half a mill on a decoration?? Woooah no. I am Not cool with taxpayers money being spent like this.
    For clarity, nothing I say is advice....

  4. #274
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    The headline is a bit hyperbolic but well done Adrian Orr.

    https://www.nzherald.co.nz/business/...RB62YDXFXNICI/

    No one gives a s*it about rampant house price inflation but the concern that with the borders closed to foreign labour, wages in NZ might rise. Maybe that will be enough for Adrian to do his job and raise interest rates.

  5. #275
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    Quote Originally Posted by Aaron View Post
    The headline is a bit hyperbolic but well done Adrian Orr.

    https://www.nzherald.co.nz/business/...RB62YDXFXNICI/

    No one gives a s*it about rampant house price inflation but the concern that with the borders closed to foreign labour, wages in NZ might rise. Maybe that will be enough for Adrian to do his job and raise interest rates.
    The labour cost index increased by 1.6% in the year to 31/12/2020. I am not sure how it is tracking now. I think it may be likely that wage earners will have to work harder to cover inflation at over 3.3% pa now. I think this is to be expected in an economy that prioritises investment in residential real estate.

  6. #276
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    The guy who started the whole targeted inflation bull**it thinks it is bad in its current form. Agreed 0-2% sounds more like price stability than 1-3%.

    The bloke McDermott quoted lower in the article - says John McDermott - Motu Executive Director and former RBNZ Assistant Governor and Chief Economist - isn't convinced there's a strong enough relationship between interest rates and asset prices for the RBNZ to target the latter.

    He doesn't think there is a strong relationship between interest rates and asset prices?????? Holy c*ap what planet is this guy from. What an incredibly stupid thing to say.

    https://www.interest.co.nz/news/1113...-inflation-and

  7. #277
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    I think this guy is agreeing with me but I am always sceptical when I am agreeing with libertarians.

    I think we both agree Central banks are reckless and have forgotten their "Price stabilty" mandate. One thing money should be is a store of value. That is obviously not true long term and now it is also not true short term with 20% a year house price rises.

    To quote the article "For monetary policy to work, the public needs to believe that the central bank is serious about controlling inflation. Cutting inflation means taking politically unpopular decisions, like raising interest rates and creating unemployment.""

    https://www.stuff.co.nz/business/opi...is-in-disarray

    I would suggest the politically unpopular part of the decision to raise interest rates would be to slow or reduce asset price growth and to raise our exchange rate, rising unemployment would come a distant third. Lots of liquidity means plenty of speculation in FOREX as well as everything else. The worlds central bankers are out of control. Big mortgages are OK while house price inflation is running way ahead of mortgage interest rates. And Boomers feel more comfortable in their retirement or impending retirement with house prices inflating. These people are the voters and politicians know this so are happy to let central bankers disregard their mandate and pander to the voting public.

    Unemployment I am confused about. We need to import labour to keep restaurants, farms, construction, fishing fleets, orchards going. That indicates something other than unemployment to me. What is it lazy pieces of s*it happy to live off everyone else or else unnecessary competition to keep wages down. I am not sure which, maybe a combination of both. I did hear anecdotally and maybe read in the paper that wages for pickers had become more competitive due to the lockdowns.
    Last edited by Aaron; 25-07-2021 at 06:43 PM.

  8. #278
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    Interesting article on a heavily thrashed topic, doesn't discuss RBNZ's role.

    https://www.stuff.co.nz/national/125...t-house-prices

    Any talk from Jacinda about addressing poverty seems pretty empty for all those who don't own a house.

  9. #279
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    Quote Originally Posted by Aaron View Post
    Interesting article on a heavily thrashed topic, doesn't discuss RBNZ's role.

    https://www.stuff.co.nz/national/125...t-house-prices

    Any talk from Jacinda about addressing poverty seems pretty empty for all those who don't own a house.
    That's because the RBNZ has a wee little measuring stick for houses. The article hits all the right issues because while central banks do have an influence on housing prices, they can not discriminate between different asset classes. Meaning low interest rates to help the productive part of the economy such as businesses, ALSO affects the ability for banks to borrow.

    "Our policy responses to housing have been warped by our own narrative.

    “Houses are assets to be owned. And when they get more expensive they’re better, because the owner gets richer,” economist Shamubeel Eaqub says of the narrative.

    It sounds OK, doesn’t it? But there’s a flip side.

    Half of New Zealand [is] being made worse off because they can’t access the home-ownership ladder.

    I've hit this issue in another thread in this forum. Without a doubt low interest rates set by central banks have made the cost of housing going up. We don't have to argue about that. What I would like to argue about is 'what % of the people in the country are able to buy or own a house?'. With our limited supply of houses in NZ, it certainly does not help to see people that own 5 or 50 houses because they know they're getting rich beyond any of their future generation needs.

    As for poverty in NZ? Let's first try fixing our housing problem before we think about anything else. No other cost is greater in a person's entire lifetime than what it costs to pay off a mortgage - a significant sacrifice people do in NZ, becoming systematic that the choices they made for their children (ie private schooling, being in the right school zone) so they can achieve a level of skill that gets them into a home. No social mobility whatsoever for the have nots.

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