ADRIAN ORR our NEW RBNZ GOVERNOR

[FTG]

Yip. As with her colleagues, on matters economic & monetary, consistently glib.

[Aaron]

Worried about group think at the RBNZ. Hard not to think it might be a problem when the justification for a lot of decisions appears to be "central banks in other countries are doing it too."

https://www.stuff.co.nz/business/130...-ocr-decisions

I mean is there much though required? easy money, low interest rates good, tight money, higher interest rates bad. Asset price inflation good, too much CPI inflation bad. Deflation equals the end of the world and lots of really bad stuff, very much to be feared.

At the moment globally I think it is a matter of waiting until pesky CPI inflation subsides so they can get back to boosting asset prices and getting back to the trickle down economics we know and love so much. Adrian is a master of the "wealth effect", it must be killing him with house prices down, not being able to drop rates. Adrian will be concerned about his "sustainable" house price rises.

It might be more subtle than that, possibly inflate away debt for a while, rob savers and entrench wealth disparities before heading off to the races again.

Didn't stock markets jump this week because Jerome Powell said something about slowing interest rate rises. Closer to the pivot so smart investors getting in ahead of the central banks.

Not that much to economic management and stock market investing really. Just a tweak to interest rates here and there and ramp up the printing press if deflation threatens. And for the investor it is a matter of anticipating the timing of the central banks actions. Risk on and risk off, TINA, BTFD, FOMO, YOLO.

[Aaron]

Some accountability at last????

https://www.msn.com/en-nz/news/natio...842688cbc4c8df

The terms of reference say: "The inquiry may assess whether New Zealand’s initial elimination strategy and later minimisation and protection strategy in response to the COVID-19 pandemic, and supporting economic and other measures, were effective in limiting the spread of infection and limiting the impact of the virus on vulnerable groups and the health system, having regard to New Zealand’s circumstances, what was known at the time, and the strategies adopted by comparable jurisdictions.

So did they do the right thing at the time? Did they reduce the spread of covid initially? I would have to say yes but with hindsight we can see it was a massive over reaction and that I am almost embarrassed at the way I(we) treated the anti-vaxxers. If they weren't such a bunch of dumb ar*e d*ckheads an apology might almost be appropriate. It is like a bad cold and I see no masks or any concern at the weekly deaths currently.

Sadly what we want to look at is the actions of the govt and the RBNZ in creating a housing bubble and massive wealth transfer and exacerbating inequality in NZ. No one gives a **** about covid anymore, but the effects from a reckless RBNZ and finance minister are still with us today. The important stuff will be ignored.

It won't look into, vaccine efficacy, or some individual decisions by the Reserve Bank. Monetary policy will be looked at by the inquiry, but not decisions by the RBNZ's independent monetary policy committee.

What is the point of the commission then? to waste more taxpayer money and rubber stamp the govts pandemic response without addressing the wealth inequality created by an incompetent, out of control RBNZ following a path of least regrets.

It will be chaired by epidemiologist Professor Tony Blakely. I wonder what an epidemiologist will find regarding the govt pandemic response. Particularly as it was the end of world scenarios being put forward by his peers that created the panic in the first place and in hindsight caused a massive overreaction to a bad cold.

What a waste of time and taxpayer money. I am predicting the findings ahead of schedule below.

"The commission has found that the government acted appropriately at the time of the pandemic and we would note that other countries followed a similar approach. There was some dodgy legislative bulls*it but it doesn't matter anymore. We did not consider the actions of the RBNZ or the ongoing economic results of the pandemic response as these reflect poorly on the Labour govt", P.S thanks for the cheque.

[peat]

S
It will be chaired by epidemiologist Professor Tony Blakely. I wonder what an epidemiologist will find regarding the govt pandemic response. Particularly as it was the end of world scenarios being put forward by his peers that created the panic in the first place and in hindsight caused a massive overreaction to a bad cold.

Yes I think it is a bit stupid for an epidemiologist to chair that inquiry. their vested interest is in a broad and detailed response to the virus, so as to utilise their expertise.

That first variant was much worse than omnicron though wasnt it? so we dodged that bullet which was a good move I think.

[Aaron]

That first variant was much worse than omnicron though wasnt it? so we dodged that bullet which was a good move I think.

It certainly sounded bad and the lock downs allowed everyone who wanted to, to be vaccinated. I guess the efficacy of the vaccine has already been proven so is not included in the scope of the commission.

My concern is Adrian has only just stopped handing out freshly printed dollars to the banks today on top of everything else. I would have thought the major concerns were not so much the medical initiatives but the economic ones.

To quote Bernard Hickey, writing in The Kākā newsletter, argued that - contrary to many assumptions - New Zealand’s economic response to Covid-19 was among the worst in the world in terms of widening wealth inequality and being a wasteful use of taxpayer funds.

$15million of taxpayer funds to go into the commission and the important questions have been left out.

[Aaron]

The FLP may not be that big a deal.

https://www.interest.co.nz/banking/1...vided-economic

"The Funding for Lending Programme provides funding to banks at the Official Cash Rate. So as the OCR is increasing so does the cost to the banks. Compared to the wholesale markets it is comparatively cheaper, but it represents less than 2% of total bank funding. So it's at a very marginal level still providing some stimulus and hold rates back a little bit. We take that into account when we're setting the OCR levels. Our estimate is that it is adding roughly five basis points to the OCR track," Silk said.
The FLP hasn't been good for savers

However, by the time it launched the FLP was arguably already a solution looking for a problem, with the most dire economic predictions in the early days of the Covid-19 pandemic not coming to fruition. Earlier government and Reserve Bank support measures including the Wage Subsidy, OCR reduction to just 0.25% and Reserve Bank quantitative easing, or government bond buying programme, were already stimulating economic activity. Asset prices were surging with Real Estate Institute of New Zealand data showing national median house prices up 18.5% year-on-year to a new record median high of $749,000 in November 2020.

Up 18.5% year on year to $749,000 median in November 2020. The average house price in NZ is currently $987,887 (September 2022) down from the $1,043,261 peak in March 2022 but still up 32% in just under two years on top of the 18.5% gain prior to that.

I guess Adrian and the MPC saw the wealth effect and trickle down economics as a better option to young people being able to buy a house of their own and having a more egalitarian society. The commission will not consider this so expect the same actions in the next downturn. The Labour govt has effectively provided a stamp of approval for the RBNZ to continue to exacerbate wealth inequality in NZ.

A firing squad might be more appropriate for a review of the actions of the RBNZ IMHO.

[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.