ADRIAN ORR our NEW RBNZ GOVERNOR

[Aaron]

Who is to blame for inflation?

This article tries to address it but comes up short IMO.

https://www.stuff.co.nz/national/the...high-inflation

It begins with this definition.

Inflation is a general increase in prices and fall in the purchasing value of money. It occurs when the demand for goods and services is greater than the supply - and it is high, sitting at 7.2% at the moment.

Milton Friedman argues inflation is always and everywhere a monetary phenomenon. Perhaps it is just chance inflation took off after the largest amount of money printing NZ has ever seen. Unfortunate factors such as the pandemic and Putin are being blamed.

The Reserve Bank has two primary goals: to keep inflation low (between 1-3%), and to ensure maximum sustainable employment.
The Reserve Bank says today’s high inflation is half to do with overseas pressures, including supply shocks created by Russia’s war on Ukraine, and half to do with domestic issues.

Half to do with domestic issues. I wonder what issues specifically??? According to the article.

Those issues include labour shortages, which puts pressure on supply (that is providing goods) and can also push up wages – a pandemic-related immigration downturn has created workforce gaps, alongside the Government’s immigration ‘reset’.
These are factors Adrian Orr has no control over.

So not enough immigrants into an already overheated economy? Any other factors that Adrian does have control over??? No mention of any in the article except this.

The only thing the Reserve Bank can do to control inflation is to raise or lower the official cash rate – the rate at which it lends money to banks. Banks then pass those costs on.

I assume doubling their balance sheet through LSAP and FLP (money printing) and cutting the OCR to .25% (historical low). LVR restrictions were removed. Perhaps they played a "bit part" in house prices and the inflation. All within the RBNZs control, but don't forget how much worse it would have been without Adrian at the helm. He had the "courage" to act much like other heroic central bankers, like Ben Bernanke, Alan "Bubbles" Greenspan, Janet Yellen and Jerome Powell.

In summary
The factors creating inflation right now are complicated and intertwined. There are some obvious candidates – but it’s incorrect to point the finger at just one institution or person.

No one is responsible for inflation (except maybe Putin and the covid virus)?? Really?

I guess Bridie Witton is a political reporter not an economic one and long informative articles do not get read so I can partly take responsibility for the cr*p put out by reporters and would not want to hold Bridie responsible for the piece of fluff she produced. "The Whole Truth" my a*se.

I would like to get paid to find the whole truth rather than spouting uneducated/ignorant bull**** online. Being paid to take the time to properly understand something would be great in this day and age. Pity sometimes it feels like reporters are just phoning it in.

Here are some suggestions to get inflation under control.

There’s no mystery to controlling inflation. You just have to stop spending money you don’t have…stop lending out money at interest rates below inflation…and stop ‘printing’ up extra money to cover the holes in your budget.

[Aaron]

More people consuming more stuff, yay for immigration. More than 3,000 a month or 36,000 annually (conservatively). It should suppress wage growth and reduce pesky CPI inflation while putting pressure on housing and house prices.

What's not to like. Even if you don't like it, both major parties have the same policy. ACT likes it Greens like it. Is there an anti immigration party? because they will get my vote even if they are hate filled aholes.

https://www.nzherald.co.nz/business/...GS2EQXGDH2SUU/

[JBmurc]

More people consuming more stuff, yay for immigration. More than 3,000 a month or 36,000 annually (conservatively). It should suppress wage growth and reduce pesky CPI inflation while putting pressure on housing and house prices.

What's not to like. Even if you don't like it, both major parties have the same policy. ACT likes it Greens like it. Is there an anti immigration party? because they will get my vote even if they are hate filled aholes.

https://www.nzherald.co.nz/business/...GS2EQXGDH2SUU/

Yes locally every couple days I see people trying to find accommodation through our local FB accom pages ... and we have next to nothing right across the Central Otago region ... they have Jobs to come to hundreds jobs ... but pretty much ZERO places to stay .. more immigration isn't going to add low cost housing ...esp now with inflation in lending and build costs ...

[Aaron]

Yes locally every couple days I see people trying to find accommodation through our local FB accom pages ... and we have next to nothing right across the Central Otago region ... they have Jobs to come to hundreds jobs ... but pretty much ZERO places to stay .. more immigration isn't going to add low cost housing ...esp now with inflation in lending and build costs ...

Maybe apart from Queenstown and Wanaka the appeal of central otago is the wide open spaces and lack of people.

Apparantly immigration changes are needed as the international labour shortage had become "extremely severe". Where did all the labour go???

https://www.msn.com/en-nz/news/natio...84e831c5172dd1

They didn't all die of covid, that is mostly older retired people, so no. The million plus exodus never happened. Then why are we short of labour? maybe an overstimulated industry is taking all the workers?

What industry would have been growing at an unusually fast pace spurred on by reckless monetary policy and immigration.

https://www.newshub.co.nz/home/money...es-expert.html

45,000 people available to work in the next little while. They probably do not want to be nurses or chefs though so if we bring in 36,000 to 50,000 more people each year it will be sweet. A virtuous circle of more people needing more houses. All politicians are on board as the townies love being crammed in cheek to jowl so it is a vote winner.

To me it does not make NZ a better place, just more like every other overcrowded s*ithole country on the planet.

Even the productivity commission thinks that "more" does not mean "better."

https://www.productivity.govt.nz/inq...tion-settings/

One of their recommendations to govt is "Reduce the use of Skills Shortage Lists for immigration purposes and encourage wages to reflect scarcity." i.e. let wages rise.

[Aaron]

Thanks Adrian, admittedly only plays a "bit part" in inflation despite being responsible for price stability but 10% food inflation outstanding work if only it were house prices.

https://www.interest.co.nz/personal-...ate-food-price

National have a plan to fix inflation though (see at the bottom of the article.)

"National has a plan to fight inflation. We will address worker shortages, reduce costs on businesses, bring discipline to government spending, give Kiwis more money in their back pockets through prudent tax reductions, and focus the Reserve Bank solely on managing inflation."

1/ More immigrants lower wages. I have already stated my dislike for this. Lower wages but higher house prices (not a big part of CPI fortunately) Does not seem to reduce the need for more immigrants rather an upward spiral much like using debt to solve a debt crisis, more required each time.

2/ Reduce costs on businesses. Wages for one but not sure about others maybe tax cuts.

3/ Reduce govt spending. Cutting wasteful spending, no one would disagree with that. Cutting essential services? a hard job to tell the difference sometimes. Depends on your viewpoint.

4/ prudent tax reductions. Inflationary, but based on earlier proposals european car dealerships and yacht manufacturers might be the most affected by increased demand. Cutting taxes for the rich not only provides the magical trickle down effect but, if the plebs don't get any tax cuts they can't spend anything either therefore limiting the inflationary effects of any tax cuts.

5/focus the Reserve Bank solely on managing inflation. Long overdue, but don't expect it to be a priority in the face of house prices falling and while Adrian is at the helm a path of least regrets and sustainable house prices might reduce the effectiveness. Any other competent RBNZ governor should make this work without the full employment mandate. Opening the immigration spigot and not worrying about unemployment levels, should really knock wage inflation on the head.

[Aaron]

Reads like an opinion piece on immigration but interesting to the debate none the less.

https://www.stuff.co.nz/business/opi...omic-direction

At least National can provide a vision that all here on share trader can appreciate. Flood the country with cheap labour, it is good for a consumption driven economy, it keeps house prices high while allowing capital to thrive by sharing less with labour. i.e. lower wages means higher dividends or company growth. It also means we have a greater choice of restaurants and coffee shops.

Labour is kowtowing to business and the consumer townie economy, at the expense of our quality of life and can't explain the real reason for their u-turn on immigration for fear of losing their voter base.

[Aaron]

John Key explains the need for immigration at 5.04 minutes in "the migration changes are good but a year late. The reality if you go to a restaurant these days and can't get a booking is not because they are full but they can't find staff"

https://www.youtube.com/watch?v=ZeRFm2vSbOY

The only reason it was a year late is that according to John "The Labour govt are controlled by the unions and unions like the idea of higher wages" but John points out that this increases pesky CPI inflation, so silly workers will lose their gains through inflation so they should just accept low wages. Better to have a low wage economy servicing the wealthy home owning half of society who are doing all right. This from the man whose main achievement in govt was increasing a regressive GST tax to cut progressive income tax rates (what a cu*t). His other great achievement was overseeing a housing crisis which he denied was a crisis. Again, maybe it is perspective. Rising wages are a problem but rising rents and rising house prices are not, in John's world at least, there might be other Kiwis with a different view but you won't see them on TV.

He points out housing has come back but won't go through the floor because to quote 10.34 "migration settings are going to change" so per John immigration keeps wages down but keeps house prices up. At least he is honest, most media commentators continually seem to ignore or deny this reality.

Building costs are going up and John thinks only the labour component might go down. Building costs increasing without house price increases will see construction stop and with increased demand from immigration we are back to a John Key utopia and young Max Key's property development company can make money again.

John Key, ladies and gentlemen a real down to earth kiwi bloke what a f*cking hero. I know he is right in what he says and maybe I should just accept that is the way of things and knuckle under.

Voters vote for what they think is best for them and I guess as long as you own at least your own home then continuing down the same path as the previous couple of decades is the way to go.

Good to see a NZ thought leader concerned about restaurant bookings and house price rises and suppressing wages. I wonder what director's fees at ANZ have been doing after record bank profits thanks to Adrian Orr.