Abolish the RBNZ and let the market decide what the interest should be. Central planning doesn't work, and central planning of the interest rates only leads to the boom/busts cycle as has so clearly been demonstrated with the US housing boom.
No. Reduce the OCR and use macroprudential tools instead to control potential inflation of money supply. Don't get hung up on heading back to the OCR neutral - because even just using the erroneous idea of using the price of money to control inflation (the OCR) in our brave new post-GFC world, who knows where the OCR neutral should be?
yep ......there's room for that Les................ as to the OCR neutral ...I guess we will have to wait for black market hamburgers to gauge that one.
It is way too early to drop the OCR. Keeping the New Zealand dollar strong is the only thing keeping us from a ratings drop. When a country is locked into borrowing millions each week valued at USD - like we are - and rolling over old debt every 90 days, again priced in USD, then it makes no sense to devalue your currency.
That kind of stimulus only works for countries with a current account and trade surplus. To the Keynesians out there. YES, you can drop dollars out of helicopters to awaken the animal spirits, but that is ONLY after you have been storing the surplus accumulated during boom times. When the the bubble inflated here, Clark gave it out in pork to every interest group in the country. It left nothing during the bust that always follows a big bull market. Keynes also put that in the context of a global currency, but the Americans were having none of it. Our debt is denominated in strong currencies so we have no choice but to keep ours strong too.
Therefore a lower kiwi will make the debt easier to repay. However, if overseas invetors think the kiwi will drop NZ government bonds will be hard to sell. By signalling future OCR rises Bollard is indicating our dollar will remain strong encouraging external funding of our deficit by foriegn investors, who will enjoy both the fixed return and any fx gains.
Actually Clark and Cullen paid off a lot of Government debt and put money into the Cullen fund - instead of giving miniscule tax cuts and borrowing money. If National were in Government the last 10 years we would have big public debt just like Greece, but we would all have got little tax cuts that we could have used to spend on housing.
Raise the OCR immediately , by 500 pts , to 8 % . Then we can all get the sort of returns on term deposits that SCF debenture holders did ............ Yippppppppppeeeeeeeeeeee !
Exactly. Our spending culture needs to change, and the quicker the better. Savers should be encouraged by a decent return on their money. Debt needs to be punished by higher rates. If somebody wants to put their money into property assets, fine. But beware if you are leveraging your property, because when interest rates do take off... and they will, we will be looking at a repeat of the 80's. That scenario will result in your house/homes belonging to the bank.
Might I suggest that we replace world fiat currencies with the dried droppings from the Matabele upland goat . These share amazing similarities with gold , being both rare ( the goat is indigenous to northern Zimbabwe ) , and essentially useless . .........
......... No , the goat poo can be utilsed to fertilise crops , so on those grounds , it is superior to gold .
That way pensioners will get more money to spend and we will stop stealing their money by "inflation" which should really be called wealth destruction.
They will spend their extra income from their savings, which they themselves saved.
They will spend it in shops which will flourish and all will be well.
We will have jobs and earn more and then we can save too.
This sort of sentiment is shared by many of those in the late 50s-early 60s age group.
People a wee bit younger are less keen to skew the playing field in favour of the oldies, although they're still mindful of that future.
And people a lot younger are already wondering just how much more we skew it that way before it finally distorts so much that it vanishes into another dimension.
Why can we avoid extremes? Why does it always have to be 'feast or famine', where the oldies are either nibbling on stale cat food for a tin while freezing to death in crumbling pensioner flats, or else living it up in one of their mansions or aboard cruise ships and laughing uproariously as they leave nothing but debt for their kids and grandkids?
i dont see how a low OCR helps the economy, if its low it just steals from those that have saved and gives it to those that havent, our income from savings has halfed, and we are now thrifty with our money, so thoses businesses that we used to spend our money at now miss out, i dont get how that helps
Most businesses require borrowings to buy capital items. So if for example a furniture manufacturer requires a new machine he borrows money and has to pay back interest. So in times like these he suddenly find no-one is buying furniture, but he still has to pay interest on his loan. Suddenly he has to start cutting his workforce... People with cash in the bank want a free ride with high interest rates for doing nothing. I think low interest rates for a while may help to protect your job.
Productive Public Credit issued as Primary Monetary Base in the public interest at the cost of administration only without compounding interest attached. To make available the necessities of life supplied freely by nature as a public service within the boundaries of sustainability. What a society we would have. Was how the labour and resources were mobilised to build the state housing project in 1936. Borrowed from no-one, owed to no-one, non-inflationary, backed by the productive asset it created, that could then be provided with a social motive, not a purely profit driven motive.
The National Opposition leader of the time said this;
From The Cradle To The Grave – A biography of Michael Joseph Savage (New Zealand Labour Party) by Barry Gustafson 1986;
Pg 198-9
The National Opposition was astonished by the use of Reservebank credit for housing, which disregarded traditional principles of budget finance. Forbes admitted confidentially to Stewart,
“This places them in a unique position, the houses after erection carry no interest on capital cost, and for instance a thousand pound house can be let for 5s per week and be a financial success. The millenium seems to have arrived and it makes one wonder why we had to struggle in the bog, when there was such an easy way out of our troubles, houses, after being built with the highest paid workers in the world, at the lowest cost heard of, makes our policy of orthodox finance seem almost prehistoric.”
Put that in the survey Bernard, ask the people if they want a road to equal opportunity or a road to slavery?
Not quite sure when people will begin to get it here. The RBNZ can only react to what the US/UK does, to prevent our economy from tanking so badly and obviously, that even spin and more lies, and manipulated statistics can't hide the extent of the problem.
Because we produce nothing but agriculture, the current exchange rates are killing us, and our primary industry, on the other hand higher interest rates would possibly encourage savers, if they could beaver a little away, but would damage our accounts far too much right now. We are at the mercy of when the bankers pulling the strings decide it is time for the US/Uk to begin to raise their rates again...
We have no control over our currency or our economy, FACT. This is the result of treacherous govt policies being mixed in with globalization. Of course it is a complex subject, but as with all things the fundamentals are and should remain basic.
Boom and bust will continue, because it allows a contraction in all markets, where the powerful become moreso. Will I t eventually eat itself totally….that is the $700trn question
Not quite sure when people will begin to get it here. The RBNZ can only react to what the US/UK does, to prevent our economy from tanking so badly and obviously, that even spin and more lies, and manipulated statistics can't hide the extent of the problem.
Because we produce nothing but agriculture, the current exchange rates are killing us, and our primary industry, on the other hand higher interest rates would possibly encourage savers, if they could beaver a little away, but would damage our accounts far too much right now. We are at the mercy of when the bankers pulling the strings decide it is time for the US/Uk to begin to raise their rates again...
We have no control over our currency or our economy, FACT. This is the result of treacherous govt policies being mixed in with globalization. Of course it is a complex subject, but as with all things the fundamentals are and should remain basic.
Boom and bust will continue, because it allows a contraction in all markets, where the powerful become moreso. Will I t eventually eat itself totally….that is the $700trn question
20 Comments
Abolish the RBNZ and let the
Abolish the RBNZ and let the market decide what the interest should be. Central planning doesn't work, and central planning of the interest rates only leads to the boom/busts cycle as has so clearly been demonstrated with the US housing boom.
I can't vote,
I can't vote, Bernard.
There's no choice for one who thinks the future can no longer go guarantor for the interest demanded in the present.
There should be another
There should be another option in this poll:
No. Reduce the OCR and use macroprudential tools instead to control potential inflation of money supply. Don't get hung up on heading back to the OCR neutral - because even just using the erroneous idea of using the price of money to control inflation (the OCR) in our brave new post-GFC world, who knows where the OCR neutral should be?
Cheers, Les.
www.mea.org.nz
yep ......there's room for
yep ......there's room for that Les................ as to the OCR neutral ...I guess we will have to wait for black market hamburgers to gauge that one.
It is way too early to drop
It is way too early to drop the OCR. Keeping the New Zealand dollar strong is the only thing keeping us from a ratings drop. When a country is locked into borrowing millions each week valued at USD - like we are - and rolling over old debt every 90 days, again priced in USD, then it makes no sense to devalue your currency.
That kind of stimulus only works for countries with a current account and trade surplus. To the Keynesians out there. YES, you can drop dollars out of helicopters to awaken the animal spirits, but that is ONLY after you have been storing the surplus accumulated during boom times. When the the bubble inflated here, Clark gave it out in pork to every interest group in the country. It left nothing during the bust that always follows a big bull market. Keynes also put that in the context of a global currency, but the Americans were having none of it. Our debt is denominated in strong currencies so we have no choice but to keep ours strong too.
But
But DOUG............eventually...............and eventually is always inconvenient..... our Dollar needs correction.
Funny, in that respect
Funny, in that respect (emptying the coffers prior to the final curtain), Clark followed in the footsteps of Muldoon.
I'm not sure if you're
I'm not sure if you're refering to public or private debt.
Our government's debt is denominated in NZ dollars.
http://www.nzdmo.govt.nz/securities/govtbonds/infomemo
Therefore a lower kiwi will make the debt easier to repay. However, if overseas invetors think the kiwi will drop NZ government bonds will be hard to sell. By signalling future OCR rises Bollard is indicating our dollar will remain strong encouraging external funding of our deficit by foriegn investors, who will enjoy both the fixed return and any fx gains.
What too early! How? The
What too early! How?
The US has their target rate at 0.25% or less to zero, while GPD sits around 2% pa.
NZ at 3%, while GDP sits at under 1% or less!
Please explain :)
Send the OCR into a negative gear ... put jet engines on Bollards truck with fluffy dice on the rear vision mirror ...
Actually Clark and Cullen
Actually Clark and Cullen paid off a lot of Government debt and put money into the Cullen fund - instead of giving miniscule tax cuts and borrowing money. If National were in Government the last 10 years we would have big public debt just like Greece, but we would all have got little tax cuts that we could have used to spend on housing.
Raise the OCR immediately ,
Raise the OCR immediately , by 500 pts , to 8 % . Then we can all get the sort of returns on term deposits that SCF debenture holders did ............ Yippppppppppeeeeeeeeeeee !
Exactly. Our spending
Exactly. Our spending culture needs to change, and the quicker the better. Savers should be encouraged by a decent return on their money. Debt needs to be punished by higher rates. If somebody wants to put their money into property assets, fine. But beware if you are leveraging your property, because when interest rates do take off... and they will, we will be looking at a repeat of the 80's. That scenario will result in your house/homes belonging to the bank.
I can't vote either. The
I can't vote either.
The fiat currency system is unsustainable, and the current experiment is due to collapse.
Oh well....life goes on.....
Now, can we start thinking/talking about what to replace it with?
Might I suggest that we
Might I suggest that we replace world fiat currencies with the dried droppings from the Matabele upland goat . These share amazing similarities with gold , being both rare ( the goat is indigenous to northern Zimbabwe ) , and essentially useless . .........
......... No , the goat poo can be utilsed to fertilise crops , so on those grounds , it is superior to gold .
Put the rates up and stop
Put the rates up and stop messing about.
That way pensioners will get more money to spend and we will stop stealing their money by "inflation" which should really be called wealth destruction.
They will spend their extra income from their savings, which they themselves saved.
They will spend it in shops which will flourish and all will be well.
We will have jobs and earn more and then we can save too.
This sort of sentiment is
This sort of sentiment is shared by many of those in the late 50s-early 60s age group.
People a wee bit younger are less keen to skew the playing field in favour of the oldies, although they're still mindful of that future.
And people a lot younger are already wondering just how much more we skew it that way before it finally distorts so much that it vanishes into another dimension.
Why can we avoid extremes? Why does it always have to be 'feast or famine', where the oldies are either nibbling on stale cat food for a tin while freezing to death in crumbling pensioner flats, or else living it up in one of their mansions or aboard cruise ships and laughing uproariously as they leave nothing but debt for their kids and grandkids?
i dont see how a low OCR
i dont see how a low OCR helps the economy, if its low it just steals from those that have saved and gives it to those that havent, our income from savings has halfed, and we are now thrifty with our money, so thoses businesses that we used to spend our money at now miss out, i dont get how that helps
Most businesses require
Most businesses require borrowings to buy capital items. So if for example a furniture manufacturer requires a new machine he borrows money and has to pay back interest. So in times like these he suddenly find no-one is buying furniture, but he still has to pay interest on his loan. Suddenly he has to start cutting his workforce... People with cash in the bank want a free ride with high interest rates for doing nothing. I think low interest rates for a while may help to protect your job.
Productive Public Credit
Productive Public Credit issued as Primary Monetary Base in the public interest at the cost of administration only without compounding interest attached. To make available the necessities of life supplied freely by nature as a public service within the boundaries of sustainability. What a society we would have. Was how the labour and resources were mobilised to build the state housing project in 1936. Borrowed from no-one, owed to no-one, non-inflationary, backed by the productive asset it created, that could then be provided with a social motive, not a purely profit driven motive.
The National Opposition leader of the time said this;
From The Cradle To The Grave – A biography of Michael Joseph Savage (New Zealand Labour Party) by Barry Gustafson 1986;
Pg 198-9
The National Opposition was astonished by the use of Reservebank credit for housing, which disregarded traditional principles of budget finance. Forbes admitted confidentially to Stewart,
“This places them in a unique position, the houses after erection carry no interest on capital cost, and for instance a thousand pound house can be let for 5s per week and be a financial success. The millenium seems to have arrived and it makes one wonder why we had to struggle in the bog, when there was such an easy way out of our troubles, houses, after being built with the highest paid workers in the world, at the lowest cost heard of, makes our policy of orthodox finance seem almost prehistoric.”
Put that in the survey Bernard, ask the people if they want a road to equal opportunity or a road to slavery?
Not quite sure when people
Not quite sure when people will begin to get it here. The RBNZ can only react to what the US/UK does, to prevent our economy from tanking so badly and obviously, that even spin and more lies, and manipulated statistics can't hide the extent of the problem.
Because we produce nothing but agriculture, the current exchange rates are killing us, and our primary industry, on the other hand higher interest rates would possibly encourage savers, if they could beaver a little away, but would damage our accounts far too much right now. We are at the mercy of when the bankers pulling the strings decide it is time for the US/Uk to begin to raise their rates again...
We have no control over our currency or our economy, FACT. This is the result of treacherous govt policies being mixed in with globalization. Of course it is a complex subject, but as with all things the fundamentals are and should remain basic.
Boom and bust will continue, because it allows a contraction in all markets, where the powerful become moreso. Will I t eventually eat itself totally….that is the $700trn question
Not quite sure when people will begin to get it here. The RBNZ can only react to what the US/UK does, to prevent our economy from tanking so badly and obviously, that even spin and more lies, and manipulated statistics can't hide the extent of the problem.
Because we produce nothing but agriculture, the current exchange rates are killing us, and our primary industry, on the other hand higher interest rates would possibly encourage savers, if they could beaver a little away, but would damage our accounts far too much right now. We are at the mercy of when the bankers pulling the strings decide it is time for the US/Uk to begin to raise their rates again...
We have no control over our currency or our economy, FACT. This is the result of treacherous govt policies being mixed in with globalization. Of course it is a complex subject, but as with all things the fundamentals are and should remain basic.
Boom and bust will continue, because it allows a contraction in all markets, where the powerful become moreso. Will I t eventually eat itself totally….that is the $700trn question