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  1. #201
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    Janet Yellen's about face on interest rate rises or tightening of the monetary supply.

    https://www.reuters.com/world/us/tre...ly-2021-05-04/

    Yellen said during The Atlantic event the main goal of Biden's programs is to help reverse decades of widening economic inequality.

    Fed policy while she was governor has exacerbated economic inequality and more govt spending isn't going to change inequality while the underlying problem remains the same.

  2. #202
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    Wasn't she only stating the obvious - that interest rates will inevitably rise, sooner or later.

  3. #203
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    Quote Originally Posted by macduffy View Post
    Wasn't she only stating the obvious - that interest rates will inevitably rise, sooner or later.
    She was saying that they may need to rise a bit to stop the economy overheating as in the near future.

    Is it obvious they will rise? A 20-30 year trend down, obviously not straight down but no thought of raising rates in a significant way as the debt becomes too large to deal with an interest rate rise.

    I would have to check but I think the Japanese govt would have to use its entire budget to service debt if interest rates in Japan rose 1 or 2%.

    Obviously she spooked the markets and she isn't even in charge of interest rates.

    Powell has said he is not even thinking about thinking about raising interest rates.

  4. #204
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    Powell knows he can't raise rates.... the bubbles will pop .. he will keep kicking the can down the road talks about normalising rates at some time in the not too distant future
    People don't have ideas, ideas have people

  5. #205
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    Interesting speech by one of Adrian's offsiders

    The Future of Maori
    https://www.rbnz.govt.nz/-/media/Res...7-ee2cd5d14487
    When investors are euphoric, they are incapable of recognizing euphoria itself.

  6. #206
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    Looks like I am not the only one unsure about the outcomes of NZRB policy.

    https://www.interest.co.nz/news/1103...hat-impact-low

    Do low interest rates raise asset prices? hmm tough question to answer Adrian Morron.

    per the NZRB
    “The overall effect of monetary policy on inequality depends on the strength of each channel, which may reinforce or offset each other. Therefore, the overall effect of monetary policy easing on inequality is indeterminate."

    Well we have had 20-30 years of falling interest rates so what has happened to wealth and income inequality in NZ over this time? It would be interesting to know if it has increased, decreased or stayed the same. Even then we can't be sure if interest rates and monetary policy were the reason for any change.

    This from Berl
    "In March, the Reserve Bank dropped the Official Cash Rate (OCR) from one percent to a record low 0.25 percent. Interest rate cuts at all major lenders have followed. The intention is to maintain confidence in markets. However, this has the potential to have a long term impact on home ownership and wealth inequality."
    https://berl.co.nz/our-pro-bono/ineq...nd-new-zealand

    I am unsure if BERL is making stuff up or perhaps have some insights or common sense not available to the NZRB.
    Last edited by Aaron; 13-05-2021 at 03:13 PM.

  7. #207
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    Quote Originally Posted by Aaron View Post
    Looks like I am not the only one unsure about the outcomes of NZRB policy.

    https://www.interest.co.nz/news/1103...hat-impact-low

    Do low interest rates raise asset prices? hmm tough question to answer Adrian Morron.

    per the NZRB
    “The overall effect of monetary policy on inequality depends on the strength of each channel, which may reinforce or offset each other. Therefore, the overall effect of monetary policy easing on inequality is indeterminate."

    Well we have had 20-30 years of falling interest rates so what has happened to wealth and income inequality in NZ over this time? It would be interesting to know if it has increased, decreased or stayed the same. Even then we can't be sure if interest rates and monetary policy were the reason for any change.

    This from Berl
    "In March, the Reserve Bank dropped the Official Cash Rate (OCR) from one percent to a record low 0.25 percent. Interest rate cuts at all major lenders have followed. The intention is to maintain confidence in markets. However, this has the potential to have a long term impact on home ownership and wealth inequality."
    https://berl.co.nz/our-pro-bono/ineq...nd-new-zealand

    I am unsure if BERL is making stuff up or perhaps have some insights or common sense not available to the NZRB.
    Your last link is of most interest and should be a real eye opener on NZ's inequality.

    The problem with monetary policy is it does not discriminate. When the approach to lowering interest rates, with the intent to provide economic stability to businesses does collateral damage. That being it makes the rich get richer. Something so elementary in macroeconomics that I wonder why people never come to that conclusion.

    Anyways about rising asset inflation (particularly residential houses) in NZ. I bring back the question, 'which came 1st, the chicken or the egg?'. Central banks around the world are not at fault for this and instead, I put the blame at "investor behaviour" because they got a free ticket to borrow more cheap $ and buy more and more houses because the banks and the NZ Gov't makes it so easy. All while the reserve bank wanted to maintain liquidity for the financial markets to keep things afloat, at the same time causing more inequality (as the report cites)

    I put it all down to bad gov't policy - such one as allowing no CGT on residential investment properties - yep best game in town. Bring on the inequality band wagon with Kiwi Saver at the working class and houses for the wealthier which is a better ride. The 20% that own 70% of NZ's wealth enjoy rubbing their hands and the wealthier oligarchs love sending their children to private schools.
    Last edited by SBQ; 14-05-2021 at 08:25 AM. Reason: grammar fixes

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