ADRIAN ORR our NEW RBNZ GOVERNOR

[dobby41]

Both Labour and National can shut the f**k up about concerns around the housing crisis or climate change as they both can't wait to juice the economy with more people. Townies love it, and sadly there are less and less country folk as land gets subdivided for housing.

Isn't one of the complaints against Labour that they aren't letting enough people in?
So how can you say that they are trying to 'juice' the economy with immigrants?

[Aaron]

Isn't one of the complaints against Labour that they aren't letting enough people in?
So how can you say that they are trying to 'juice' the economy with immigrants?

Surprisingly (to me anyway) it is a complaint against the Labour govt. Townies in Auckland are not sufficiently cheek to jowl in their living arrangements, businesses do not like paying higher wages to retain staff. Real estate agent aren't getting their commissions and developers need more people to sell houses to.

More people consuming more stuff equals more growth. Higher GDP, higher house prices, happier voters. A juiced up economy.

Maybe "revving" the economic machine is a better metaphor than "juicing". Juicing probably refers more to monetary policy and taking the punch bowl away or adding to it as the case may be.

You will notice it is mostly only developers, real estate agents, home owners, business owners and possibly some bleeding heart lefties (wanting to BE KIND) and maybe w*nkers who don't have enough variety of restaurant to visit who are concerned at the lack of immigrants.

I know Mike Hosking laments the dearth of cheap labour and house buyers without 50,000 immigrants a year coming into the country.

Deflation of prices, population and especially wealth will be the death of us all.

[Aaron]

RBA getting some stick after raising rates. A review, although not clear what the complaint is. They are upset at the rate rises obviously but

The inquiry is aimed at modernising the central bank, which has come under pressure for its handling of pre-pandemic settings.

Panellists flagged that in the five years prior to the pandemic, the central bank was failing to meet its targets.
Personal Inflation Calculator
Since the 1990s, the independent bank has used interest rates to control inflation, as higher costs reduce demand.
With inflation rates averaging 1.75 per cent, well below the target 2 to 3 per cent, and interest rates already at record lows, the bank was unable to do much to drive economic stimulus and left the role to the government.
But the low interest rates ultimately helped to fuel Australia’s inflation crisis.

So if I read it correctly they are suggesting the RBA needed lower rates or more printing prior to the pandemic to reach their inflation target of 2-3%. It would be interesting to see what house prices and the ASX were doing over this time.

Unfortunately asset prices would not form part of the inflation measure. So after inflating asset prices, the extra stimulus during the pandemic kicked off CPI inflation and now that the RBA is raising rates to combat this they are being criticized as CPI inflation continues but asset prices deflate.

Personally I think they should have been criticized for creating excessive inflation of housing and asset prices but this was not part of their mandate and CPI inflation was low and dear I say it the people in power and owners of the assets would not criticize asset price inflation.

https://thewest.com.au/business/blun...haul-c-8248012

The makeup of the board is also up for review. Currently, there is just one monetary policy expert on the panel which votes on rate hikes. Obviously only the monetary experts understand: rate hikes = bad.

Economist/Arts student do you really need anything more than some vague theories and a strong opinion on matters of economics and monetary policy??

Asset prices up good, asset prices down bad. Pretty simple really. Lower interest rates and easier money. Hopefully they learned from the pandemic response that you can't give the money to the plebs or you get CPI inflation but if you run it through the banks, then asset owners with existing collateral can buy up the remaining assets without kicking off CPI inflation.

The issues paper makes the case for a reconsideration of monetary policy in an increasingly volatile world where inflation is driven by supply shocks, a fragile geopolitical environment, pandemics and natural disasters caused by climate change.

Really?? monetary policy does not drive inflation or deflation?? Has the money supply been expanding faster or slower than population growth or GDP or any other measure that might indicate a need to increase the money supply.

very confusing better leave it to an arts graduate.

[Aaron]

Which is the bigger of two evils, inflation or unemployment? A difficult one for Cameron the economist.

https://www.msn.com/en-nz/news/natio...0ffe8225494f68

Perhaps I can help. The RBNZ interprets the term 'maximum sustainable employment' (MSE) or full employment to mean the level of employment at which the job market is tight, but not so tight that inflation is rising out of control.

Consumer Price Inflation for the June 2022 quarter, was
quarterly inflation rate was 1.7 percent
annual inflation rate was 7.3 percent.

The RBNZ inflation target is 2% (1%-3%)

When was the last time we heard about an employer not struggling to find workers? What about the loud and long demands to loosen immigration as there is a worker shortage. If this graph is right it shows that we are near lows in unemployment over the last 30 years.

https://www.macrotrends.net/countrie...mployment-rate

keep in mind unemployment is usually lowest just prior to a recession when it should climb.

What is Cameron on about, worrying about a potential but currently non-existent problem of high unemployment or a very real inflation problem, currently running 250% above target.

At a guess news organisation need to fill pages with whatever crap they can come up with or maybe Cameron has a big mortgage and doesn't like to see his house price decline.

If he is worried about high unemployment he should be suggesting we close the borders to immigrants now as unemployment will rise as the wealth effect subsides.

At a guess the RBNZ is not facing "a fight between unemployment and inflation." as Cameron suggests, what will be worrying Adrian is the fight to boost asset prices without boosting CPI inflation. His lame attempts to fight inflation proof enough for me. OCR 3% Inflation 7.3%. Look how fast and how far he drops rates when faced with deflation. What a cu*t.

[Aaron]

Mike Hosking's opinion this morning

https://www.nzherald.co.nz/nz/politi...VSSNKBLAE25XU/

The usual Labour is doing everything wrong and we are on our way to hell in a hand basket unless National win the next election and save us.

He identifies the biggest problem.

The mistake we are making, is that we are handing out pay rises to anyone who asks and we are doing that because there is no labour. (hint: open immigration and suppress wages, thanks Mike)
As much as we might like getting more money, the pay rise isn't real, because the increases in sales production and productivity aren't there.
So someone is paying artificially to stop you walking out the door, eventually the bill for that falsity will come due, and that's when people start getting laid off. (Hint; accept your lot or lose your job, brilliant Mike)

It almost needs no comment. Obviously Mike's pay rises are linked to the numbers of listeners he has and as he is the most popular his wages are probably below where they need to be and there is nothing more useful and productive than talk back radio and opinion pieces in the herald.

How does Mike explain the rise in rents and house prices, no increase in sales or productivity there but he has never mentioned this as a problem.

I guess what Mike is saying in his simplistic way is that more immigrants mean lower wages (more supply) and higher house prices (more demand). Happy Days.

Fig 1 on the productivity commissions paper seems to refute Mike's claim about labours share of income. Although I haven't actually read it so the paper may refute my argument for all I know. 4 pages, I only look at headlines, the more inflammatory the better. Total ignorance is bliss but half ar*ed ignorance is rage inducing (i.e. reading headlines but nothing actually educational).

https://www.productivity.govt.nz/ass...ew-Zealand.pdf

[Aaron]

Take a bow Adrian Orr.

https://www.theguardian.com/world/20...says-economist

New Zealand has had a WORLD beating jump in wealth due to rising house prices. The best in the world, and we have one man to thank for this Adrian Orr, our Kaitiaki of stable prices. Well done Adrian.

Labour has played a part, let us not forget that, especially as they are sooo concerned about poverty in NZ.

Not sure how Mike sees this as he states pay rises aren't real, because the increases in sales production and productivity aren't there.
NZ houses definitely a lot more buying and selling of houses they must also have become super productive as Mike would no doubt see the rise in wealth as success for aspirational NZers. Maybe ask someone who doesn't own their own home whether the house price rises are real or not.

[Aaron]

Dual mandate of price stability and unemployment for the RBNZ.

https://www.stuff.co.nz/business/129...-under-control

Financial Services Council very worried about unemployment.

I guess this is because low interest rates and easy money pumping up asset prices has made them look like geniuses for the last couple of decades. Invest for the long term with us sort of style. Time in the markets rather than timing the markets. Bull et al may need to look away at that statement, SailorRob not so much.

I can understand why price stability is not as big a concern for them, one sector of society that is doing really well out of inflation.

Unemployment is hard on people but inflation is also hard on people so you have to choose.

Mood of the Boardroom in the herald thinks an independent review of the RBNZs actions over the pandemic is warranted. Not to dump on poor old Adrian but to make sure the same mistakes aren't made next time.

[Aaron]

The UK going for growth with tax cuts and borrowing to fund the difference. Sounds like Sri Lanka and NZ once Chris gets in. Hope it works out well for everybody. Currency markets did not like it for some reason.

https://www.gov.uk/government/news/c...in-generations

Confirmation bias. An economist's opinion for what it is worth.

https://www.zerohedge.com/markets/ma...hing-gas-fades

The current global economic trainwreck demonstrates the deeply unethical nature of printing money and allowing central banks and governments to become lenders and providers of last resort. It harms the middle class on its way in and destroys it on its way out.

Artificial creation of money is never neutral. It favours the first recipients of newly generated currency, the government and the indebted, disproportionately, while severely harming deposits savings and real wages.

TeslaGod knows how it works.

Here is another view on Trussnomics

https://www.theage.com.au/business/t...26-p5bl36.html

This unflagged largesse injects demand into an economy already running at full capacity, constrained by a labour shortage and supply-chain disruptions. It draws forward consumption in a nation living beyond its means, with a chronically low savings rate and a structural current account deficit of 4 per cent of GDP (8.3 per cent this year).

The package is regressive in its distributional effects and needlessly provocative at a time of social convulsion. It tests the fragile Union almost to political destruction. It is more ideological than Margaret Thatcher’s opening bid and starkly different in fiscal character. The Lady was a budget hawk.

[Aaron]

UK central bank showing the way, promising to buy an unlimited amount of gilts (UK govt bonds). Unlimited money, what a wonderful idea. Wish I could get some.

On the fiscal side tax cuts for the rich on the monetary side asset prices propped up with unlimited money.

The UK is turning into a utopia for the rich. I think Chris Luxon and National have the same vision for NZ, I am sure a spinless Adrian Orr will be more than happy to cave at the first sign we are leaving our own utopia for something historically more normal.

The UK CB will do "whatever it takes" just as other central banks have promised in the past.

https://www.theguardian.com/business...-market-mayhem

The reason for the promise of endless funds according to the guardian.

There was evidence of a run on pension funds that was forcing them into a fire sale of their assets.

As a result, Threadneedle Street has been forced to extend its policy response. In a “whatever it takes” moment, the Bank said it would buy an unlimited amount of government gilts to stem the market panic. This represents a U-turn for an institution that less than a week ago pledged to start running down its stock of government bonds, but the Bank was left with no alternative.

There it is, there is no alternative to money printing and debasing the currency. It is all about capital gain not cashflow.

Better load up on debt in today's dollars and buy whatever is left. Mind you that has been good advice for the last 30 years.

Is Liz Truss confusing "inflation" with "growth". I don't think so, if you recall inflation is a very regressive tax, the very best kind of tax.

[Aaron]

Quick someone tell Adrian.

https://www.stuff.co.nz/business/130...ross-the-board

If it is good enough for the UK it is good enough for NZ. I think that is the reasoning for a lot of CB action.

Mohamed El-Erian would know a lot more than me.

https://www.youtube.com/watch?v=HN9fVqPBfI0

Funny when the talking head suggested the UK CB was "data dependent" Mohamed said no, just the opposite, inflation is going up in the UK supermarkets and the talking head clarified and said no I mean in regard to the CB "put". i.e. asset prices go down CBs print money to push them back up.

Reading the herald article

https://www.nzherald.co.nz/business/...EAZER6MSTLQQY/

The BoE suspended a programme to sell gilts — part of an effort to get surging inflation under control — and instead pledged to buy long-dated bonds at a rate of up to £5bn a day for the next 13 weekdays.

I have been trying to ramp up the fear in people nearing retirement on this site lately suggesting I would hate to be hitting 65 in the next year or two in the hope of encouraging an over reaction and increasing investment opportunities. Not very nice I know but a reminder to take everything you read on the web with a grain of salt.

Reading the herald article if I understand this right, pommy pensioners were pulling their money out of pension funds due to the fear. The pension funds were selling their gilts to meet the redemptions. I assume because this is the closest to cash. The CB gilt buying will prop up the gilt market while this is going on, once again saving the investing geniuses running the funds and keeping interest rates suppressed.
If the CB owns the overvalued gilts who is effectively taking the loss on these if inflation devalues the pound and the CB is holding long dated gilts at ridiculously low rates. Are they effectively socialising the losses for the asset owners once again?

5billion pounds a day for 13 days, sounds like a lot.