ADRIAN ORR our NEW RBNZ GOVERNOR

[Aaron]

What is the inevitable? higher for longer inflation?

If that is the case then maybe inflation is planned as this is the only way out of the debt they have encouraged. Without defaults and without anyone having to sell their assets.

Bull reckons higher for longer interest rates on the black monday thread. Interest rates on term deposits would disagree as they drop after 12 months and go lower the longer the duration of the deposit.

https://www.interest.co.nz/saving/te...s-1-to-5-years

Some companies are reaching their March 2020 lows which was an opportunity of a lifetime. If rates are only going to fall from here then anything with a yield and the ability to increase earnings along with inflation would be a good idea, would it not? They will cut rates if there is a recession or a financial crisis and we have seen over the last few days there is no need to increase yield to attract capital as central banks will provide all the capital banks need at next to no yield.

The only question then is what the real economy is going to do. Most likely slow down with a recession reducing earnings putting marginal businesses under which might flow to the landlords etc. Still don't know but have an itchy trigger finger.

[Aaron]

An economist saying things I think are idiotic, trying to reduce the cost of capital because it is easy and pushes up the price of his house.

https://www.msn.com/en-nz/news/natio...2d72653c&ei=19

Cameron argues in a world of supply shock after supply shock, you wonder whether a 1-3 percent inflation target is actually the right target. He is a bit vague on where he thinks it should be but I reckon a -1% to +1% would be an inflation target if price stability was the aim. I base this inflation target on the dictionary definition of "stable" Cameron obviously defines stability, differently.

So supply shocks are the cause of inflation? According to Cameron, nothing we can do about those so we should accept higher inflation.

I assume his next utterance would be to drop interest rates (he must still have a sizeable mortgage) and provide easy money to support asset prices and get the wealth effect going again.

I wonder if he thinks the money supply might play a "bit part" in the inflation storey? Probably not.
https://tradingeconomics.com/new-zea...er%20of%201977.

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https://tradingeconomics.com/united-...er%20of%201986.

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[Aaron]

https://www.interest.co.nz/public-po...bank%E2%80%99s

Inflation will be extended if Kiwi's can't accept they are worse off, Reserve Bank’s Chief Economist Paul Conway says
Paul Conway said inflation was “high and widespread” because strong demand had outstripped supply.

What caused strong demand Paul? Could it have been excessively stimulatory interest rates, a huge increase in the money supply, cheap and easy credit being funneled to the banks through FLP and govt through LSAP.

Gee whizz Paul an apology for the RBNZs incompetence would mean more than these bull*hit explanations.

I can't tell whether they are pretending that they did not play the biggest role in the current inflation or maybe they genuinely do not understand what they are doing.

https://www.stuff.co.nz/business/mon...st-and-poorest

They pushed inflation to 7% and according to this article average household income rose 5.4% so we are all poorer. The pandemic response was partly to blame, maybe the war in Ukraine as well but the majority is the fault of the RBNZ and its crazy monetary policies. Now Paul Conway just wants us to accept that we will all be poorer on average for it.

They also exacerbated wealth inequality, Bernard reckons by roughly $1trillion.

https://www.1news.co.nz/2021/12/13/w...-began-hickey/

With people like Adrian and Paul getting away with what they are getting away with it is good that the hate speech laws never came in because I am almost certain to break them when I think about what has happened and the results it has produced.

[Waltzing]

YES well said!!! Posted the same on the BRISC thread that with leaders like these who needs an enemy...

These remarks are a disgrace and sure older RBNZ GOV;s would not enter politics.

And that is the job of the PM and any comments like that should be made in a briefing to the executive.

As it is a danger to the currency,

[Aaron]

Interesting article on the rise of government rescues. Probably behind the paywall though.

https://www.nzherald.co.nz/business/...GBHRNKS6DXERQ/

Waltzing, I would suggest the biggest danger to the $NZ is the RBNZ, Adrian Orr, Paul Conway and the MPC.

[Aaron]

Another reminder that Adrian and the RBNZ is impoverishing average NZers.

Inflation will be taking care of government and wealthy asset owners debt while we all struggle more. Well done the RBNZ. Not only are wages falling in real terms but employers and business leaders are screaming out for more immigration to keep wages down. We discuss the need for doctors and nurses, but I suspect a large chunk are unskilled labour here to help keep pesky CPI inflation down, so the RBNZ can get back to asset price inflation sooner.

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

[Aaron]

I have radio nz on in the car when going to and from work sometimes. Last night some leftie economic commentator seemed angry that the RBNZ was engineering a recession and causing people to lose jobs by raising the OCR.

This morning they were debating whether the RBNZ should raise the OCR by .25%.

Never much debate when rates were dropping more just excitement that we had the lowest mortgage rates ever and the highest house prices to income ever.

More importantly no debate regarding Base money in NZ trilpling from under $20bln in 2020 to just under $60bln two years later. The GFC saw base money double from $5bill to $10bill but that just pushed up asset prices not CPI so all good. Adrian's inflation makes the GFC response look pretty weak.

Why is everyone getting hot under the collar about the symptoms not the causes of our cost of living crisis (just call it inflation because that is what it is).

https://www.rbnz.govt.nz/-/media/518...723f98974.ashx

I know I am not intelligent but sometimes it seems to me that all the yap in the news lacks a bigger perspective on things.

We won't have to worry about rate rises for long. Things are looking pretty grim so more unconventional monetary policy just around the corner to "fix" things. Did I read right this morning, ezibuy's sales dropped 51% over six months to December. Womens clothes and household stuff, demand falling off a cliff?? That can't be good for an inflate and consume economy largely based on building houses for immigrants.

The gold price this morning says some people other than me expecting more currency debasement and inflation as the answer to all our problems. Printing money and suppressing the price of capital is easy and the only thing they know.

[JBmurc]

I have radio nz on in the car when going to and from work sometimes. Last night some leftie economic commentator seemed angry that the RBNZ was engineering a recession and causing people to lose jobs by raising the OCR.

This morning they were debating whether the RBNZ should raise the OCR by .25%.

Never much debate when rates were dropping more just excitement that we had the lowest mortgage rates ever and the highest house prices to income ever.

More importantly no debate regarding Base money in NZ tripling from under $20bln in 2020 to just under $60bln two years later. The GFC saw base money double from $5bill to $10bill but that just pushed up asset prices not CPI so all good. Adrian's inflation makes the GFC response look pretty weak.

Why is everyone getting hot under the collar about the symptoms not the causes of our cost of living crisis (just call it inflation because that is what it is).

https://www.rbnz.govt.nz/-/media/518...723f98974.ashx

I know I am not intelligent but sometimes it seems to me that all the yap in the news lacks a bigger perspective on things.

We won't have to worry about rate rises for long. Things are looking pretty grim so more unconventional monetary policy just around the corner to "fix" things. Did I read right this morning, ezibuy's sales dropped 51% over six months to December. Womens clothes and household stuff, demand falling off a cliff?? That can't be good for an inflate and consume economy largely based on building houses for immigrants.

The gold price this morning says some people other than me expecting more currency debasement and inflation as the answer to all our problems. Printing money and suppressing the price of capital is easy and the only thing they know.

Yes RBNZ want higher unemployment ,,they want lower housing prices ...but the fact is if your a Landlord and your presently re-fixing rates or soon too for that big loan investment you got years back that massively increase in costs will be passed on to the tenants = inflation in living costs ... IMHO just lifting rates 500pts in couple years is a very blunt tool to bring inflation under control ... you can come up with so many scenario's ... less money in consumers pockets less spending money for businesses = having to increase costs to consumer to keep afloat etc

[Aaron]

Yes RBNZ want higher unemployment ,,they want lower housing prices ...but the fact is if your a Landlord and your presently re-fixing rates or soon too for that big loan investment you got years back that massively increase in costs will be passed on to the tenants = inflation in living costs ... IMHO just lifting rates 500pts in couple years is a very blunt tool to bring inflation under control ... you can come up with so many scenario's ... less money in consumers pockets less spending money for businesses = having to increase costs to consumer to keep afloat etc

I would suggest interest rates have been a very blunt tool for lifting house prices and debt levels, now that has reversed because house prices have reached ridiculous levels and we ran out of workers as the economy was overstimulated. Whether negative interest rates or printing our way to prosperity is realistic I will leave to economists.

I have been giving Adrian some hate over the last little while for getting carried away on the easing side of things, but now he is doing the right thing any shade I've been throwing will be nothing compared to the whining from over leveraged first home buyers, over leveraged property speculators(retirement village operators) and investors, farmers, company's with too much debt after buying back their shares and generally anyone who has had a care free relationship with debt over what has been an historically loose period of monetary policy.

I would almost feel sorry for him except he brought it on himself and I suspect the hysteria from spenders will force him to change course quick smart in the not too distant future.

Also if demand is dropping off a cliff maybe we can get back to 3% CPI, but if inflation is always and everywhere a monetary phenomenon tripling base money might take a while to work through the system.

[kiora]

"The root cause of financial instability is cheap debt. Whenever central banks suppress interest rates below the rate of inflation, the resulting negative real interest rates fuel financial instability."
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