ADRIAN ORR our NEW RBNZ GOVERNOR

[Aaron]

Posted August 2018

Seemed to have come true .... even if in an unexpected way.

Orr wil go down in history as the worst RBNZ Governor we've had ... think I even said that in 2018 as well

I have given you credit in past posts for predicting the March 2020 downturn years before it happened, but they kicked the can down the road once more so the March 2020 downturn was only very brief.

Jeremy Grantham has called a lot of crashes but sometimes he can be a few years too early, although his latest statement ramps up what he said a year ago.

p.s I think Jeremy has been pretty good at calling the bottoms as well as the tops.

[Aaron]

What happened to Logen Ninefingers posts this morning?? He had a couple of what I thought were relevant posts about how central banks preventing every recession is not a great idea.

can you delete posts??

[Logen Ninefingers]

What happened to Logen Ninefingers posts this morning?? He had a couple of what I thought were relevant posts about how central banks preventing every recession is not a great idea.

can you delete posts??

Looks like all my posts back to October got deleted.

[TeslaGod]

Looks like all my posts back to October got deleted.

Don't mess with a god..

[Logen Ninefingers]

Don't mess with a god..

You had that done?

[Aaron]

So the Fed is still only talking about raising rates and reducing the extent of money printing. Listening to a you tube video from Peter Switzer he reckons Jeremy Grantham is full of s*it and also that there is no way the Federal Reserve will raise interest rates like they are suggesting.

Closer to home an excerpt from a monthly update from a NZ wealth manager.
"Responding in part to higher inflation, the RBNZ is now targeting a cash rate of 2.5% over the next two years. Despite the current path, we remain unconvinced that the OCR will ever reach these lofty levels. Central to our thesis, is that debt serviceability, particularly for households, will be the key impediment."

Sadly they might be right but if we have continuing inflation is the RBNZ's job price stability or making the rich richer and protecting them from any downfall??? Something definitely wrong with society if this is the case.

[Logen Ninefingers]

So the Fed is still only talking about raising rates and reducing the extent of money printing. Listening to a you tube video from Peter Switzer he reckons Jeremy Grantham is full of s*it and also that there is no way the Federal Reserve will raise interest rates like they are suggesting.

Closer to home an excerpt from a monthly update from a NZ wealth manager.
"Responding in part to higher inflation, the RBNZ is now targeting a cash rate of 2.5% over the next two years. Despite the current path, we remain unconvinced that the OCR will ever reach these lofty levels. Central to our thesis, is that debt serviceability, particularly for households, will be the key impediment."

Sadly they might be right but if we have continuing inflation is the RBNZ's job price stability or making the rich richer and protecting them from any downfall??? Something definitely wrong with society if this is the case.

I don't think you can allow inflation to run rampant. Brent crude has now gone through USD 90 a barrel and rising oil prices flow through every part of the supply chain. It's not as simple as just pain at the pump for motorists, it's higher costs for goods across the board. The choice is stark: either the RBNZ raises rates and the NZD maintains its purchasing power, or we become a banana republic battling high inflation.

No matter what the RBNZ does, households will face higher costs either way. If they raise the OCR it means higher interest costs, if they do nothing it means higher costs for goods and services. There is no way out of this for highly indebted households. So the RBNZ just has to raise the OCR and turn down the credit spigot and maintain the purchasing power of the NZD. People who took on large amounts of debt will have to manage as best they can; they've made their own bed and will have to live with the consequences of their own actions.

[Aaron]

I don't think you can allow inflation to run rampant. Brent crude has now gone through USD 90 a barrel and rising oil prices flow through every part of the supply chain. It's not as simple as just pain at the pump for motorists, it's higher costs for goods across the board. The choice is stark: either the RBNZ raises rates and the NZD maintains its purchasing power, or we become a banana republic battling high inflation.

No matter what the RBNZ does, households will face higher costs either way. If they raise the OCR it means higher interest costs, if they do nothing it means higher costs for goods and services. There is no way out of this for highly indebted households. So the RBNZ just has to raise the OCR and turn down the credit spigot and maintain the purchasing power of the NZD. People who took on large amounts of debt will have to manage as best they can; they've made their own bed and will have to live with the consequences of their own actions.

I don't think you appreciate the inflation free lunch. Prices will rise but so will wages (probably not as much) so the highly indebted get to pay back their loans with worthless tomorrow dollars. 10 years of 5% inflation halves your loan all else being equal. Hard on people who don't have any wealth but great for the risk takers or those already wealthy.

Inflation is a tax and it hits the poorest the hardest but after John Key raising a regressive GST to reduce progressive income tax rates it has become obvious. The poor don't vote so they get what they deserve good and hard.

It is hard to see central banks doing anything as they need inflation to clear the debt. The only problem is they seem to be increasing the debt just as fast as inflation is getting rid of it.

Why do you think property investors prefer interest only? It is because central banks can take care of their debt they don't need to repay it.

Inflation could also be considered theft, but it is state sponsored so it is OK legally but morally...? who knows.
https://www.rbnz.govt.nz/research-an...in-your-wallet


The balance is rescuing the poor from soaring inflation with rescuing the rich from asset-wealth destruction. I think we can guess which way it going to go based on recent history.
https://www.zerohedge.com/economics/...ly-hawkish-fed

[Logen Ninefingers]

I don't think you appreciate the inflation free lunch. Prices will rise but so will wages (probably not as much) so the highly indebted get to pay back their loans with worthless tomorrow dollars. 10 years of 5% inflation halves your loan all else being equal. Hard on people who don't have any wealth but great for the risk takers or those already wealthy.

Inflation is a tax and it hits the poorest the hardest but after John Key raising a regressive GST to reduce progressive income tax rates it has become obvious. The poor don't vote so they get what they deserve good and hard.

It is hard to see central banks doing anything as they need inflation to clear the debt. The only problem is they seem to be increasing the debt just as fast as inflation is getting rid of it.

Why do you think property investors prefer interest only? It is because central banks can take care of their debt they don't need to repay it.

Inflation could also be considered theft, but it is state sponsored so it is OK legally but morally...? who knows.
https://www.rbnz.govt.nz/research-an...in-your-wallet


The balance is rescuing the poor from soaring inflation with rescuing the rich from asset-wealth destruction. I think we can guess which way it going to go based on recent history.
https://www.zerohedge.com/economics/...ly-hawkish-fed

If you can pay back your loans like that between inflation & the interest rate rises then well done. Will be interesting to see how much free cash flow highly indebted households have when they are hit by rises in two areas. When economists warn that rising interest rates could prick asset bubbles and cause prices to start falling then I pay attention. The US housing market crash was caused by defaults at the sub-prime end, not by defaults by the wealthy. But one area of the market faltering will flow through and effect everyone's equity position. Most people won't even realise they are over-leveraged until its starkly apparent that they are.

[Logen Ninefingers]

I don't think you appreciate the inflation free lunch. Prices will rise but so will wages (probably not as much) so the highly indebted get to pay back their loans with worthless tomorrow dollars. 10 years of 5% inflation halves your loan all else being equal. Hard on people who don't have any wealth but great for the risk takers or those already wealthy.

Inflation is a tax and it hits the poorest the hardest but after John Key raising a regressive GST to reduce progressive income tax rates it has become obvious. The poor don't vote so they get what they deserve good and hard.

It is hard to see central banks doing anything as they need inflation to clear the debt. The only problem is they seem to be increasing the debt just as fast as inflation is getting rid of it.

Why do you think property investors prefer interest only? It is because central banks can take care of their debt they don't need to repay it.

Inflation could also be considered theft, but it is state sponsored so it is OK legally but morally...? who knows.
https://www.rbnz.govt.nz/research-an...in-your-wallet


The balance is rescuing the poor from soaring inflation with rescuing the rich from asset-wealth destruction. I think we can guess which way it going to go based on recent history.
https://www.zerohedge.com/economics/...ly-hawkish-fed

It is hard to see central banks doing anything as they need inflation to clear the debt.

It may be hard for you to see but it has already started happening. Price stability is in their mandate and it is politically untenable to have inflation running rampant and unchecked. The RBNZ has raised the OCR already and ANZ Bank's economists are now forecasting that the Reserve Bank will need to increase the Official Cash Rate (OCR) to 3% by April next year, compared to their previous forecast of just 2%. No point having our heads in the sand about this, rate rises are on their way.