Depression in the USA - Deflation verus Inflation

[SCHUMACHER]

Liam Dann at it again in the herald today on why the reserve bank must cut interest rates (He could get a job as a bank economist if journalism doesn't work out for him).

According to the statistics inflation is at .4% and this is terrible. I would have thought price stability would be good for people.

Unfortunately we know inflation isn't at .4% especially if you are wanting to buy a house. The only valid reason I can think for cutting interest rates is because everyone else is and we don't want our currency to rise and screw our export industries. Possibly savers getting 3% nominal returns is upsetting for the over indebted baby boomers running the country. At 3% less .4% equals a 2.6% real return when it should really be closer to zero or less than zero according to the great minds running the worlds financial system.

It must be galling for rental investors not having 2% taken off their mortgages each year. Even more galling that anyone should suggest their capital gains be taxed. Keep in mind the over 10% house price appreciation is tax free while your 2.6% real return is a lot less once tax is taken off your 3% return.
I suspect baby boomers have worked out how to fund their retirements as they haven't put anything aside. Create a society of haves and have nots and they can rent NZs housing to young NZers and the poor wage earners whose wages are rising at less than half the rate of house price inflation.

Good one Liam and Graeme Wheeler. It makes sense but only if you want to penalise savers and reward borrowers. How long can you discourage saving before even the most conservative and timid investor wakes up to the fact that cash and debt are becoming the most risky investment option. I wonder if they really believe that low inflation is a problem or if they are being deceitful and actually know which side of their bread is buttered.

All the talk of a housing crisis and the fixing the supply side of the equation. The Demand side could be looked at as well I suppose, raise interest rates and lower immigration for a start.
Interesting reading what was said back in Feb 2015.
https://www.tvnz.co.nz/one-news/new-...es-key-6228040

Even Bill Gross the "Bond King" has been recently quoted as saying real assets such as real estate and gold are the best investment options currently.

That's my morning rant over. Still sitting on cash like a big dummy, I shouldn't be worried about what seems right or fair but should go with whatever the economists and finance people want. Just angry at myself because I haven't and having missed the boat continue to be frustrated by the bulls**t coming out of the media and world central banks.
Time for change at the top.

We all know why Chinese devaule their currency - to gain trade advantage so seems like rest of world doing similiar tactics however there is more to this - there is actually no or little GROWTH - fact
This is the NEW world we live in - 0% growth - historically low interest rates - 200 trillion of global debt , paper money worthless , central banks expanding the monetary base ( QE 1 , 2 ,3 ,4 ...ETC ) Iits all got to come to a head as printing money and kicking the can along the road for next 20 years is all they can do to stop a global collapse - the world is based on one thing - Exppnential growth year upon year upon year and it cant sustain - this is why countries love immigration as its boosts their economies - without it we shrink

Countries Debt ratio to GDP is scary - too much debt = defaults , lowering of credit ratings however the rating agencies are built on BS as we saw with the aa mortgage bonds that were worthless and toxic and guess what American banks doing it again - hiding toxic debt and selling it as a derivitave SAD deceitful world

In 2015 Several large banks started selleing billions in something called a "bespoke tranch opportunity"

which according to Bloomberg news is just another name for CDO's LOL

cheers Schu