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  1. #531
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    Quote Originally Posted by macduffy View Post
    Interesting if I read it correctly house values make up 5.42% of the CPI, so not likely to play a big part in the overall CPI calculation. I guess rents, rates and power have been going up just as quickly as house prices to have a 7% compounding increase in housing costs over the last 20 years.

    Rent makes up 38% of the housing cost sector and home ownership 23%. So the 7% compounding is not just in house prices but rent, power and rates as well. I assume rents are rising to justify the price being paid for houses as an investment. Still these prices are rising at nearly double the wage portion of the CPI.

    It almost makes discussion of house prices and the CPI irrelevant. Quoting the CPI is a way to obfuscate discussions around asset price increases caused by monetary policy. It is sort of working in Japan so maybe I am getting upset about nothing. It is just that I am on the bottom of the ladder not moving up very far and currently not sure where the next rung is to climb the ladder of financial success.

    Maybe working instead of posting on sharetrader is a better way forward.
    Last edited by Aaron; 14-10-2020 at 02:19 PM.

  2. #532
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    Stanley Druckenmiller gets it, inflation targeting should go.

    https://www.youtube.com/watch?v=PLIko_4sb08

    Three years old, still relevant.

  3. #533
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    Quote Originally Posted by Aaron View Post
    Stanley Druckenmiller gets it, inflation targeting should go.

    https://www.youtube.com/watch?v=PLIko_4sb08

    Three years old, still relevant.
    Yes, he's still spot on with that!

  4. #534
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    Brian Fallow questioning monetary policy in the NZ herald today. Do the benefits outweigh the costs of lower and lower interest rates.

    https://www.nzherald.co.nz/business/...IEG4BSJXXWA74/

    Let the market decide interest rates and I am pretty sure we would see a repricing of capital and savings.

    I wonder if there is a single central banker in the world today with a spine or a pair of cajones.

  5. #535
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    Quote Originally Posted by Aaron View Post
    Brian Fallow questioning monetary policy in the NZ herald today. Do the benefits outweigh the costs of lower and lower interest rates.

    https://www.nzherald.co.nz/business/...IEG4BSJXXWA74/

    Let the market decide interest rates and I am pretty sure we would see a repricing of capital and savings.

    I wonder if there is a single central banker in the world today with a spine or a pair of cajones.
    Aaron ...it’s all a big game eh ....Central bankers controlled by a few
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  6. #536
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    Quote Originally Posted by winner69 View Post
    Aaron ...it’s all a big game eh ....Central bankers controlled by a few
    Central Bankers are controlled by economic theories that have pros and cons. Depends I think on if you own a house(s) if you think it is good or bad. You never know trickle down economics might work in spite of all the evidence building to the contrary. Not really a conspiracy theory just seems like they are taking the easy option. The inflation, free lunch might turn out costly in the future even though it appears to be working great at the moment. Particularly for the older generations who hold most of the capital.

  7. #537
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    Confirmation bias
    https://www.zerohedge.com/personal-f...terest-or-feds
    It would be interesting to see what people would say if the reserve bank governor got up and said thanks to targeted inflation we have pushed up the price of houses at double the rate of wages.

    What we would really like to do is push up the price of everything else as well as there is so much debt.

    Austerity will never work as voters won't vote for a government that proposes it.
    Default is probably secretly desired by a lot of people and govts with large loans but that is so obviously wrong it would upset the people on the other side, although provided you lose your security for the loan it isn't the end of the world.

    Finally inflation is the only realistic way to deal with too much debt so our insane policies will continue for the foreseeable future. so don't expect price stability anytime soon.

    In fact of the three purposes for our existence stated on our web page only supplying banknotes and coins is being achieved and this is getting simpler every year.

    The Reserve Bank manages monetary policy to maintain price stability, promotes the maintenance of a sound and efficient financial system, and supplies New Zealand banknotes and coins.

  8. #538
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    From Michael Every Rabobank.

    In New Zealand, we did see strong wages data – up 1.1% q/q in Q4 vs. an expected 0.3%, and with employment rising 0.7% y/y vs. an expected -0.1%, and unemployment fell to 4.9% from 5.6%. This is despite the utter destruction of the tourism sector, but obviously yet another housing boom/bubble and bumper agri production is helping in a housing- and agri-led economy. There is even market chatter that the RBNZ will be hiking rates in 2022(!) Good luck with that and keeping NZD at a level where all that lovely agri is affordable. The RBNZ started the inflation-targeting and fiscal prudence paradigm that lies at the root of our new normal: are they really going to try to normalise rates when everyone else is going the currency war route? Didn’t we see that end badly once already? I call quits on that double-down call. After all, Aussie building permits also surged 10.9% m/m, and yet the RBA was dovish this week and is extending QE.

  9. #539
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    I don't see the RBNZ being a first mover on increasing interest rates. Much more likely to move with the pack, if and when.

    Incidentally, what is this thread doing amongst the ASX stocks?

  10. #540
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    Quote Originally Posted by macduffy View Post
    I don't see the RBNZ being a first mover on increasing interest rates. Much more likely to move with the pack, if and when.

    Incidentally, what is this thread doing amongst the ASX stocks?
    You'd have to ask Tricha, I just took it over as it had deflation and inflation in the title and people will know to ignore me by now. No debate on inflation or deflation really the odd small dip is like the central banks taking a breath before breathing more money and lower interest rates into a bigger and bigger bubble. I am an idiot for not going with the obvious trend and leveraging up as much as I could at what were low prices.

    Like you say Adrian Orr would have the spine of a jellyfish but I wonder what central banker would raise interest rates? They want rampant inflation it is the only way to clear the debt. If you are buying a rental property at a 3% net yield eventually the repairs will mean 0% return except for the debasement of money clearing your loan. Prices are probably still low compared with money in the bank.

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