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  1. #881
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    Quote Originally Posted by dobby41 View Post
    And I'd suggest not to assume as that experience is now 15 years out of date.
    Arthur Grimes and Graeme Wheeler also criticised the RBNZ but using your logic anyone who is not currently at the RBNZ has no clue.

    Admittedly economics is an arts subject rather than a science but easy money and lower interest rates have been going for 30 years so not much change over the years I would have thought.

    Adrian was just a bit more weak than previous governors about maintaining price stability in the (possible) face of declining asset prices and also running out of road to kick the can with the OCR near zero he turned to printing, as noted on the RBNZ website.

    As the Monetary Policy Committee's (MPC) ability to lower the OCR became constrained during the COVID-19 crisis, we expanded our monetary policy toolkit. The MPC implemented a Large-scale Asset Purchases (LSAP) programme and a Funding for Lending Programme (FLP).

    But I expect there will be some further unconventional policies to boost asset prices if they fall much further. They will have learnt their lesson and future money printing will only go into the banks to boost asset prices while keeping the CPI near 3%. No more helicopter money (govt bond purchases) as this has obviously gone to consumption and CPI inflation rather than assets.

    I know nothing but can confidently predict lower interest rates (possibly negative (insane)) and more money printing (sorry, expanded monetary policy toolkit) if house prices fall 20%.
    Last edited by Aaron; 02-08-2022 at 05:03 PM.

  2. #882
    Speedy Az winner69's Avatar
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    Monpol generally has a few unintended consequences
    The moment you pay top dollar for top dollar, you are hoping both the P/E and the margin is sustained indefinitely.

  3. #883
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    Quote Originally Posted by Aaron View Post
    No more helicopter money (govt bond purchases) as this has obviously gone to consumption and CPI inflation rather than assets.

    I know nothing but can confidently predict lower interest rates (possibly negative (insane)) and more money printing (sorry, expanded monetary policy toolkit) if house prices fall 20%.
    I wouldn't have thought that bond purchases act as helicopter money but I think the cost of living allowances do.
    For clarity, nothing I say is advice....

  4. #884
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    Quote Originally Posted by peat View Post
    I wouldn't have thought that bond purchases act as helicopter money but I think the cost of living allowances do.
    I may have it wrong but the govt issued bonds which the RBNZ printed up some money and bought, the govt then drops the proceeds of the bond issue into bank accounts all across NZ.

    I am guessing you are retired so were not receiving the wages subsidies, resurgence support payments and the other renamed resurgence support payments.

    I can't find anything on the total cost of the resurgence support payments but this was the wage subsidy cost after the first lockdown and does not include the wage subsidies from the second lockdown in August 2021.

    https://www.rnz.co.nz/news/political...subsidy-scheme

    Does anyone have any information on the total cost of these support packages?

    https://www.treasury.govt.nz/publica...on-expenditure

    I can't find anything with google but the treasury link might break down somewhere how the $61.6billion was spent, a good chunk would have been wages subsidies and various support payments.

    If we said half $30billion or $6,000 for every man woman and child in NZ ($30bill/5 mill). That is a lot of moolah dropping into bank accounts. If that is not helicopter money I don't know what is.

    Admittedly it offset the money people would have normally "earnt" by going to work and doing something productive.

    The govt bonds are a debt that future generations will have to repay, although with Adrian on the case inflation should take care of it provided he can keep suppressing interest rates while inflation runs rampant. Too bad if you are an investor wanting a return on investment. It's a funny old world we live in thanks to central bank economists.

    I am not even sure why the RBNZ is on-selling the bonds and inflicting large losses on the bonds to the nz taxpayer. If it is just funny money, use the delete key instead of adding zeros, it is just as easy.

    https://www.rbnz.govt.nz/hub/domesti...vernment-bonds

    I mean I must be missing something. The RBNZ prints up some money buys the govt bonds, raises interest rates and sells those bonds at a loss to I assume banks or pension funds or private institutions. The govt has guaranteed any losses on the bonds so somehow the taxpayer ends up paying for this. I am obviously not smart as I cannot understand why they are doing it this way. Maybe someone on here can enlighten me. Why can't they hold the bonds to maturity and then it is a money go round with the NZ govt.

    I have a vague memory of an article posted on this thread about the massive losses being inflicted by the RBNZ's actions I will have to look back when I have some time.
    Last edited by Aaron; 03-08-2022 at 08:59 AM.

  5. #885
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    I wonder if Adrian and his monetary policy committee share this ladies view.

    https://www.zerohedge.com/political/...ir-ivory-tower

    A slip of the tongue I imagine. They might all feel the same way but unusual for someone to say it out loud. Their policies have been great for people who are well off and look set to continue.

  6. #886
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    Article in the herald this morning on the "nation of debt" page it had a small article in the bottom corner about the cost of printing money.

    https://www.nzherald.co.nz/business/...GVCYVSZ5MEGTU/

    It discussed how the RBNZ and govt are joined at the hip. I had thought that the RBNZ was independent of govt but this is not correct. At a quick glance of the Reserve Bank Act I can see nowhere that it mentions independence but just confirms it is a tool of the minister of finance. Not sure why it was set up as a separate body from govt now.

    The article pointed out that trading banks were middle men with the RBNZ printing the money and buying the govt bonds off the banks rather than straight off the govt (probably because this looks like money printing). I guess this creates the illusion that the govt is not just printing itself up some cash and the banks probably make a wee margin on the trades so all good.

    Other than the trading banks making something out of the deals it is still the RBNZ creating $50-$60billion out of thin air and cheques getting sent to the people that met the criteria or applied (helicopter money).

    the Reserve Bank Act does have as its main purpose this broad objective.
    3Purposes
    The purposes of this Act are to—
    (a)
    provide for the continuation of the Reserve Bank of New Zealand; and
    (b)
    promote the prosperity and well-being of New Zealanders and contribute to a sustainable and productive economy.


    I would question whether low interest rates and money printing are sustainable as the trend has only been one way for 30 years and getting more extreme each time, but the article did point out the RBNZ now has to sell the govt bonds it purchased so that it can buy them again in the next crisis (more record bank profits no doubt). I assume this is an optics thing, i.e. can't have the govt money printer expanding its balance sheet too quickly. A slight of hand or obfuscation to make sure people don't realise what is happening as the portion of the population currently getting squeezed by inflation could get pretty angry if they appreciated it was their own govt screwing them over. Not only denying them a chance to own a home but making life real hard with inflation so that the people with the collateral and debt (already wealthy people) can get ahead or don't suffer loss, as this will create the wealth effect and the bottom feeders will benefit from the trickle down economy.

    At any point if anyone is actually reading this, feel free to point out where my way of thinking or understanding is wrong I would appreciate the help.

    I assume that I come across as so ignorant and stupid that it is not worth trying to set me straight.
    Last edited by Aaron; 05-08-2022 at 02:36 PM. Reason: article popped up on herald site

  7. #887
    FEAR n GREED JBmurc's Avatar
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    Quote Originally Posted by Aaron View Post
    Article in the herald this morning on the "nation of debt" page it had a small article in the bottom corner about the cost of printing money.

    https://www.nzherald.co.nz/business/...GVCYVSZ5MEGTU/

    It discussed how the RBNZ and govt are joined at the hip. I had thought that the RBNZ was independent of govt but this is not correct. At a quick glance of the Reserve Bank Act I can see nowhere that it mentions independence but just confirms it is a tool of the minister of finance. Not sure why it was set up as a separate body from govt now.

    The article pointed out that trading banks were middle men with the RBNZ printing the money and buying the govt bonds off the banks rather than straight off the govt (probably because this looks like money printing). I guess this creates the illusion that the govt is not just printing itself up some cash and the banks probably make a wee margin on the trades so all good.

    Other than the trading banks making something out of the deals it is still the RBNZ creating $50-$60billion out of thin air and cheques getting sent to the people that met the criteria or applied (helicopter money).

    the Reserve Bank Act does have as its main purpose this broad objective.
    3Purposes
    The purposes of this Act are to—
    (a)
    provide for the continuation of the Reserve Bank of New Zealand; and
    (b)
    promote the prosperity and well-being of New Zealanders and contribute to a sustainable and productive economy.


    I would question whether low interest rates and money printing are sustainable as the trend has only been one way for 30 years and getting more extreme each time, but the article did point out the RBNZ now has to sell the govt bonds it purchased so that it can buy them again in the next crisis (more record bank profits no doubt). I assume this is an optics thing, i.e. can't have the govt money printer expanding its balance sheet too quickly. A slight of hand or obfuscation to make sure people don't realise what is happening as the portion of the population currently getting squeezed by inflation could get pretty angry if they appreciated it was their own govt screwing them over. Not only denying them a chance to own a home but making life real hard with inflation so that the people with the collateral and debt (already wealthy people) can get ahead or don't suffer loss, as this will create the wealth effect and the bottom feeders will benefit from the trickle down economy.

    At any point if anyone is actually reading this, feel free to point out where my way of thinking or understanding is wrong I would appreciate the help.

    I assume that I come across as so ignorant and stupid that it is not worth trying to set me straight.
    You are correct inflation from money printing from the likes of CB , GOVTs ,banks is just like another tax on the working classes and works to further divide those with and without .... and of course they are all controlled by the likes of the WEF/WHO/UN groups that pushed for lockdowns (caused much of the issues with supplies=inflation) pushed easy money policy ultra low rates ...

    .. then just when the money flows and those trying to secure their first home (shelter) during the good times.. the rug gets pulled and along with all the basics of modern life costs to live going up far higher than wages .

    .. they get the CB to hikes rates up the fastest in recent history put the boot in .... and soon many FHB(+first time investors) will hit the wall and be forced by the same banks to sell at reduced rates .

    ..the very RICH of course will pick up the assets at reduced rates ad sell them back on the next easy money cycle ... of course sometimes turn into a rental ..or just keep empty ...like I see all around where I live ...
    Last edited by JBmurc; Yesterday at 12:17 PM.
    CHN-5700% , WWI-2900% , CNB 2042% , POD 980% , MAY 760% , LRSOC 585% ,If only I sold the the peak!!!!

  8. #888
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    Probably not the right thread, but an economist stating the bleeding obvious about education and investing in the future of NZ.

    https://www.msn.com/en-nz/news/natio...740a27ab7ebde4

    Something neither national or labour are interested in for some reason.

    My suspicions of why this is were raised by this opinion piece in the herald. According to Matthew Hooton roughly 150,000 "low information voters" are the focus of the major parties. If I look at the statements both John Key and Jacinda Ardern have said about national superannuation and capital gains tax these voters are most likely older, possibly "boomers". If we said the voting population was 3mill then 5% of the voting population are the focus of the major parties policy initiatives. 5% who are greedy selfish a*seholes who will swing to whoever promises "them" the most are what drives the two main parties.

    Sad it is selfish older people driving policy when it is the young people who will create the future for our nation.

    https://www.nzherald.co.nz/business/...P35LA4OP3N76M/

    What is even more sad is that both major parties are pandering to these people at the expense of the young people and the future of NZ.

  9. #889
    Member Lego_Man's Avatar
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    Quote Originally Posted by Aaron View Post
    I may have it wrong but the govt issued bonds which the RBNZ printed up some money and bought, the govt then drops the proceeds of the bond issue into bank accounts all across NZ.

    I am guessing you are retired so were not receiving the wages subsidies, resurgence support payments and the other renamed resurgence support payments.

    I can't find anything on the total cost of the resurgence support payments but this was the wage subsidy cost after the first lockdown and does not include the wage subsidies from the second lockdown in August 2021.

    https://www.rnz.co.nz/news/political...subsidy-scheme

    Does anyone have any information on the total cost of these support packages?

    https://www.treasury.govt.nz/publica...on-expenditure

    I can't find anything with google but the treasury link might break down somewhere how the $61.6billion was spent, a good chunk would have been wages subsidies and various support payments.

    If we said half $30billion or $6,000 for every man woman and child in NZ ($30bill/5 mill). That is a lot of moolah dropping into bank accounts. If that is not helicopter money I don't know what is.

    Admittedly it offset the money people would have normally "earnt" by going to work and doing something productive.

    The govt bonds are a debt that future generations will have to repay, although with Adrian on the case inflation should take care of it provided he can keep suppressing interest rates while inflation runs rampant. Too bad if you are an investor wanting a return on investment. It's a funny old world we live in thanks to central bank economists.

    I am not even sure why the RBNZ is on-selling the bonds and inflicting large losses on the bonds to the nz taxpayer. If it is just funny money, use the delete key instead of adding zeros, it is just as easy.

    https://www.rbnz.govt.nz/hub/domesti...vernment-bonds

    I mean I must be missing something. The RBNZ prints up some money buys the govt bonds, raises interest rates and sells those bonds at a loss to I assume banks or pension funds or private institutions. The govt has guaranteed any losses on the bonds so somehow the taxpayer ends up paying for this. I am obviously not smart as I cannot understand why they are doing it this way. Maybe someone on here can enlighten me. Why can't they hold the bonds to maturity and then it is a money go round with the NZ govt.

    I have a vague memory of an article posted on this thread about the massive losses being inflicted by the RBNZ's actions I will have to look back when I have some time.

    It is an erroneous understanding. The net positive stimulus was a small part to households, but the money was never paid by govt into people's bank accounts - it was paid to businesses. This allowed them to keep paying staff their normal rates in most cases, but the largest benefit was the ongoing subsidy to business profits. It was in no way shape or form "helicopter money" in the commonly understood way.

    So yes, a renter got to survive and pay the bills. But unviable businesses got propped up for a year with a chance for the owners to squirrely away profits before folding. Foreign residents incorporated sole trader companies, claimed the handouts and then buggered off back to India. A homeowner got their mortgage paid via their "guaranteed income", but then the lower interest rates probably boosted their net worth by 200k+, and the more you borrowed the better off you were. Rates were so low that professionals were using their mortgage as an arbitrage to invest in higher yielding assets, that in turn increased in value due to lower interest rates. This was the inequality piece.

    To me the ludicrous part was thinking that lower interest rates were a solution to the govt locking us up inside. As if access to cheaper debt was the constraint. The whole fiscal response was a rort 100x worse than the Cost of Living Payment going to foreigners and dead people. But every abysmal decision from that era gets swept under the carpet.

    Real helicopter money would be keeping interest rates at their normal rate (say 3%) and giving everyone the same dollar quantity of time-limited vouchers to spend on goods or services. Existing wealthy people would see little benefit but the people who really needed it, would.

  10. #890
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    Quote Originally Posted by Aaron View Post
    Something neither national or labour are interested in for some reason.
    Labour has increased funding in Education whereas National spend years reducing the funding.

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