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  1. #851
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    Quote Originally Posted by iceman View Post
    Quite frankly, you couldn’t make this up if you tried.
    DPF: I would slightly dispute the characterisation of Professor Quigley as only having peripherally relevant expertise as he in fact lectured me in monetary economics at Victoria University. But I agree with the concern expressed by the reader that the board is very light on people with expertise in monetary policy.
    Well there's Mario Draghi who had a mediocre performance in the GFC despite being well qualified. Inflation was too low which means low growth.

    Now its christine lagarde, a politician, who is doing better.

  2. #852
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    Quote Originally Posted by iceman View Post
    Here is a guest post on David Farrar's website that I thought I would post here, mainly to ease Aaron's concerns about things all going wrong. As you can see, we are in good hands and can rely on these alumni and high powered professionals to guide us through the rough waters ahead:
    I don't know, some seem qualified for Adrian's main focus at the RBNZ at the moment, Maoritanga. Hopefully it is not their only focus at the RBNZ but how much effort and brain power does it take to print money electronically and drop interest rates. I don't think you need a Phd for that. It sort of feels like they are raising rates so they have something to cut.

    We are all currently discovering that more money chasing the same amount of goods and services creates inflation so they might be a bit more conservative with the presses next time... I would hope.

    I am sure there will be many voices joining with Rodney Dickens to curb interest rate rises and increase immigration and they will have compelling arguments.

    More growth more consumption, all good.

  3. #853
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    Aussie to look at targeting inflation with interest rates.

    https://www.abc.net.au/news/2022-07-...gime/101253846

    Can't say I have looked hard but wonder who did the study to prove constantly rising prices at a low level is a good thing. Must have been a kiwi as our reserve bank kicked it all off.

    ...

    To quote the article "Many economists think inflation targeting helped Australia's economy record nearly 30 years of uninterrupted growth before the COVID-19 pandemic hit in 2020"

    30 years of lower and lower interest rates, we have recently run out of interest rates to cut so I wonder where the "growth" will come from for the future? Money printing?
    Last edited by Aaron; 21-07-2022 at 02:49 PM.

  4. #854
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    A scheme to ensure depositors and savers have time and spending power stolen from them through inflation while ensuring home owners and speculators take no risk or suffer no losses. Thanks Adrian.

    https://www.interest.co.nz/banking/1...ding-programme

    I wonder if this has played any part in the current house price inflation? hmm... the businesses are creaming it but who has provided the demand for new housing. Monetary policy and immigration perhaps?? I am not smart enough to know.

    https://www.interest.co.nz/property/...esnt-let-it-or

    Confirmation bias at work. Article about passing the buck and the lack of accountability of our current "leaders". Leadership is something Adrian has talked about at length but shows absolutely no ability at it. A weak spinless jellyfish is not the ideal person to be RB Governor.

    A government of the homeowners, by the homeowners, for the homeowners. Interesting neither Labour or National want to address the real cause of inflation. We know why, it adversely affects their voter base. Chloe Swarbrick was the only MP who wanted a review but was blocked by labour. Possibly as one of the only MPs without a house (David Seymour does not count). I would hope it is not envy politics or tall poppy syndrome, for me it is about giving everyone a fair go. When did it become the RBNZs role to protect house prices? Their role is price and monetary stability independent of govt as politicians could not be trusted with this. The RBNZ has failed miserably but is not held accountable by politicians from either major party.

    Does it matter if the people at the RBNZ worry more about their house prices than their role at the central bank if 60% of the country are happy with the result?
    Last edited by Aaron; 22-07-2022 at 10:11 AM.

  5. #855
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    Out of idle curiosity, how much would New Zealand house prices have to fall to conjure up a depression?

  6. #856
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    Quote Originally Posted by GTM 3442 View Post
    Out of idle curiosity, how much would New Zealand house prices have to fall to conjure up a depression?
    Definitely 100% would do it but not sure about falls less than 60%.

    For me personally a fall of about 10-20% would cause me to be depressed (most of my perceived wealth is in my house). Not sure about the economy as a whole. Probably a million other things to consider to be able to answer that question.

    Do any historians on here know of anything that has preceded previous depressions such as loose monetary policy, excess debt, excess speculation? Falling house prices may be a symptom but maybe not the cause of a depression. Tighter monetary conditions including higher interest rates and less liquidity will depress asset prices, but I am sure Adrian will have the "courage to act" if needs be.

    Housing stock would still provide the same amount of shelter for the same number of people so the economy would not produce any less goods or services at a lower house price, but the wealth effect might mean less consumption and less security for business loans as banks tend to want houses as security so less economic activity. This might help alleviate the climate crisis, the labour crisis, the supply chain crisis and the housing crisis all at once?

    https://www.interest.co.nz/property/...come-multiples

    Looking at that chart house prices could fall 50% and still be more expensive than historical averages.

    I would hazard a guess that any fall of more than 10% will depress most home owners and will result in politicians being told to "do something"

    Disclaimer I am very risk averse so have very little debt. Higher interest rates and tighter monetary conditions do not worry me as much as some, although a drop off in house construction will hurt a lot of people and my business would take a hit.

    You have a lot of idle curiosity, it might be better served by not listening to a moron like myself, but I guess I choose to post despite my lack of understanding and you can choose whether or not to read it.
    Last edited by Aaron; 22-07-2022 at 04:07 PM.

  7. #857
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    Quote Originally Posted by Aaron View Post
    Definitely 100% would do it but not sure about falls less than 60%.

    For me personally a fall of about 10-20% would cause me to be depressed. Not sure about the economy as a whole. Probably a million other things to consider to be able to answer that question.

    Do any historians on here know of anything that has preceded previous depressions such as loose monetary policy, excess debt, excess speculation? Falling house prices may be a symptom but maybe not the cause of a depression. Tighter monetary conditions including higher interest rates and less liquidity will depress asset prices.

    Housing stock would still provide the same amount of shelter for the same number of people so the economy would not produce any less goods or services at a lower house price, but the wealth effect might mean less consumption and less security for business loans as banks tend to want houses as security so less economic activity.

    https://www.interest.co.nz/property/...come-multiples

    Looking at that chart house prices could fall 50% and still be more expensive than historical averages.

    I would hazard a guess that any fall of more than 10% will depress most home owners and will result in politicians being told to "do something"

    You have a lot of idle curiosity, it might be better served by not listening to a moron like myself.
    Today reminds me a bit of 1974 to 1977.
    Huge housing boom in 1973/74.The 73/75 third labour govt was spendthrift. Terms of trade dropped(this hasn't happened yet today!). High oil prices. Trade deficit $1b(1975),today $10b(half in terms of gdp today)
    You could not sell a house in '76(I'm exaggerating) Labour booted out in' 75,big reversal of landslide in '72.
    Cheap houses till the 80's.Then a new boom('82 to 87)
    Last edited by clearasmud; 22-07-2022 at 03:57 PM.

  8. #858
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    Quote Originally Posted by clearasmud View Post
    Today reminds me a bit of 1974 to 1977.
    Huge housing boom in 1973/74.The 73/75 third labour govt was spendthrift. Terms of trade dropped(this hasn't happened yet today!). High oil prices. Trade deficit $1b(1975),today $10b(half in terms of gdp today)
    You could not sell a house in '76(I'm exaggerating) Labour booted out in' 75,big reversal of landslide in '72.
    Cheap houses till the 80's.Then a new boom('82 to 87)
    Maybe we have peaked early, 2025 might be a good year to buy a house after all. Where are we at the moment 1975? 2023-2025 might be the best chance you have to buy a house.

  9. #859
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    Quote Originally Posted by Aaron View Post
    Maybe we have peaked early, 2025 might be a good year to buy a house after all. Where are we at the moment 1975? 2023-2025 might be the best chance you have to buy a house.
    I still think house prices are dear.

  10. #860
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    Quote Originally Posted by Aaron View Post
    Definitely 100% would do it but not sure about falls less than 60%.

    For me personally a fall of about 10-20% would cause me to be depressed (most of my perceived wealth is in my house). Not sure about the economy as a whole. Probably a million other things to consider to be able to answer that question.

    Do any historians on here know of anything that has preceded previous depressions such as loose monetary policy, excess debt, excess speculation? Falling house prices may be a symptom but maybe not the cause of a depression. Tighter monetary conditions including higher interest rates and less liquidity will depress asset prices, but I am sure Adrian will have the "courage to act" if needs be.

    Housing stock would still provide the same amount of shelter for the same number of people so the economy would not produce any less goods or services at a lower house price, but the wealth effect might mean less consumption and less security for business loans as banks tend to want houses as security so less economic activity. This might help alleviate the climate crisis, the labour crisis, the supply chain crisis and the housing crisis all at once?

    https://www.interest.co.nz/property/...come-multiples

    Looking at that chart house prices could fall 50% and still be more expensive than historical averages.

    I would hazard a guess that any fall of more than 10% will depress most home owners and will result in politicians being told to "do something"

    Disclaimer I am very risk averse so have very little debt. Higher interest rates and tighter monetary conditions do not worry me as much as some, although a drop off in house construction will hurt a lot of people and my business would take a hit.

    You have a lot of idle curiosity, it might be better served by not listening to a moron like myself, but I guess I choose to post despite my lack of understanding and you can choose whether or not to read it.
    20% fall would still see our house back at levels I'd never imagined back in 2016 ... prob is for those that purchased or leveraged in recent years paying these bubble prices ... seeing a 20% fall would be pretty deflating esp. if they only had 10-20% equity in place pre fall .. then next refinance bank will be asking for a top up in equity or telling the lender to go elsewhere ..
    "With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future." — Carlos Slim Helu

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