ADRIAN ORR our NEW RBNZ GOVERNOR

[Bjauck]

The target is 1%-3% CPI so has been in the range since 2017.
https://www.rbnz.govt.nz/statistics/...raph-inflation

The average for the last 20 years is 2.1%

My concern is the housing portion averages 7.3% for the last 20 years. Housing is 24.23% of the index and includes electricity, water, rates. Rent is 9.22% (c.f. alcohol and tobacco which is 6.96%) housing is 4.2% not including land, so basically asset prices do not form part of the CPI although asset values and interest rates have a direct inverse relationship. Using cheap chinese labour to manufacture a large chunk of our consumer goods while irresponsibly sending house prices beyond the reach of the next generation is good for the older generations who failed to save for retirement but are an absolute disaster for the younger generations.

Leaving out land from inflation calculations taken into account by the RBNZ seriously underestimates the inflation rate. kiwis spend a significant percentage of their income on buying land. Consequently the way interest rates have been set in NZ inherently inflates land because buyers have easy access to leveraging.

I disagree with you about the older generation failing to save for retirement. Partly because of the above, in addition to fiscal settings, the NZ Govt has encouraged leveraged investment into housing, whether owner occupied or investor housing, as the de facto pension scheme.

Even when Kiwisaver eventually appeared, it was given no tax incentives to encourage people to contribute more than the minimum to get the now reduced annual credit. Contributions are taxed and income within the scheme is taxed despite being locked up until retirement age. No early retirement is allowed. It is a scheme with a weak begrudged incentive. There is no tax on withdrawals on retirement as it has already been fully taxed when locked up.

Hence NZ real estate prices have continued to rocket as Kiwis, especially the higher paid and wealthier, put their money in the tax efficient investment with the best incentives.

It is a disaster for some of the next generation - those who do not have wealthy family. The kids with parents who have multiple properties stand to inherit these. NZ does not have death duties or inheritance taxes.

[SBQ]

Leaving out land from inflation calculations taken into account by the RBNZ seriously underestimates the inflation rate. kiwis spend a significant percentage of their income on buying land. Consequently the way interest rates have been set in NZ inherently inflates land because buyers have easy access to leveraging.

I disagree with you about the older generation failing to save for retirement. Partly because of the above, in addition to fiscal settings, the NZ Govt has encouraged leveraged investment into housing, whether owner occupied or investor housing, as the de facto pension scheme.

Even when Kiwisaver eventually appeared, it was given no tax incentives to encourage people to contribute more than the minimum to get the now reduced annual credit. Contributions are taxed and income within the scheme is taxed despite being locked up until retirement age. No early retirement is allowed. It is a scheme with a weak begrudged incentive. There is no tax on withdrawals on retirement as it has already been fully taxed when locked up.

Hence NZ real estate prices have continued to rocket as Kiwis, especially the higher paid and wealthier, put their money in the tax efficient investment with the best incentives.

It is a disaster for some of the next generation - those who do not have wealthy family. The kids with parents who have multiple properties stand to inherit these. NZ does not have death duties or inheritance taxes.

I must say, well said!

NZ is heading into an oligarchy society where the top 5% will own 90% of the wealth of the country. We're not much of a democratic nation when voters ask for a fix to our housing problem but all we get is 1 elected party after another, ineffective gov't policies.

I'm not very hopeful. The UN for decades has told our NZ gov't we have a housing problem. Nothing will change. The RMA won't change.

[Aaron]

Not a fan of the NZ Initiative but we can agree on some things.

https://www.nzherald.co.nz/business/...X6VP2G2V3OQUQ/

Although they have been silent while QE and interest rates were used to push up asset prices I guess they get concerned when it is not specifically beneficial for the well heeled or aligned with neo liberal ideology.

Maybe Adrian will do his job but I bet any rate rise will be minuscule.

https://www.stuff.co.nz/business/mon...-from-november

Who wants to bet that interest rate rises will dampen the housing market more than tampering with the tax laws.

[JBmurc]

Not a fan of the NZ Initiative but we can agree on some things.

https://www.nzherald.co.nz/business/...X6VP2G2V3OQUQ/

Although they have been silent while QE and interest rates were used to push up asset prices I guess they get concerned when it is not specifically beneficial for the well heeled or aligned with neo liberal ideology.

Maybe Adrian will do his job but I bet any rate rise will be minuscule.

https://www.stuff.co.nz/business/mon...-from-november

Who wants to bet that interest rate rises will dampen the housing market more than tampering with the tax laws.

All talk >> on the rates rise ...we are a tiny nation that must follow the BIG nations we get most of our funds from and that own are banks .... if they move we will until then any move will be token amount at best

[winner69]

I wonder how many billiions the RB has lost on the largely ineffectual large scale asset purchase program (LSAP)

Always good to be seen doing something though

[Aaron]

I wonder how many billiions the RB has lost on the largely ineffectual large scale asset purchase program (LSAP)

Always good to be seen doing something though

They bought govt and local body bonds but was this newly issued bonds or off the secondary market in which case they might have been buying them off the banks who have invested it in housing by the looks of things which is going really well.

Could it be that some MPs have worked out that economists are Arts graduates not scientists.

https://www.msn.com/en-nz/news/natio...?ocid=msedgntp

Treasury rather than the RBNZ but still all populated by the same type of people with the same type of ideas.

[Panda-NZ-]

ECB willing to accept inflation above 2%.

https://www.cnbc.com/2021/07/08/ecb-...o-decades.html

Great move & should help their economy in the future.

[Aaron]

ECB willing to accept inflation above 2%.

https://www.cnbc.com/2021/07/08/ecb-...o-decades.html

Great move & should help their economy in the future.

What is the benefit of constantly rising prices?

[GTM 3442]

I wonder how many billiions the RB has lost on the largely ineffectual large scale asset purchase program (LSAP)

Always good to be seen doing something though

There are a few clues in here if you read between the lines. . .

https://croakingcassandra.com/2021/0...netary-policy/

[Aaron]

The rebrand wasn't much compared to the cost of their artwork.

https://www.nzherald.co.nz/business/...4XO7Y27BTARCQ/

No wonder Adrian is too busy to do his job and raise interest rates.