Here's our summary of key economic events overnight that affect New Zealand, with news the fall in bond prices (rise in bond yields) is biting even harder today. Equity market valuations are taking a hit from the pressure on capitalisation as rates rise.
And a looming US government shutdown isn't helping sentiment either. JP Morgan boss Jamie Dimon is now worried the Fed could take its policy rate all the way up to 7% and the world is "not prepared" for that.
The US Redbook retail sales index we follow was up +3.8% last week from a year ago, barely holding on to inflation-adjusted gains.
New home sales were expected to slip in August, but in the end they fell more than expected from July. But they are still running at a +5.8% rate higher than year-ago levels. The slip from July does not take it out of the overall trend higher however.
September consumer sentiment as tracked by the Conference Board was also expected to slip from August, and it too retreated more than expected. But that retreat only took it back to levels it has held since mid-2022 until the more recent rises. The survey did find little-change in present conditions but that the political situation and higher interest rates are affecting future expectations.
Improving present conditions is helping the Richmond Fed factory survey, with a stronger-than-expected expansion in September. We should note the rise in new orders.
Meanwhile, the Dallas Fed services survey turned much more negative in September than expected, expanding still but at a much slower pace and clouding the outlook in America's oil patch.
And staying in the US, regulators have sued Amazon, alleging that the internet giant is illegally maintaining monopoly power. The Federal Trade Commission said Amazon uses "a set of interlocking anticompetitive and unfair strategies" to push up prices and stifle competition.
Singapore is investigating a large money-laundering case, one likely to damage its banking system integrity in the island hub.
And Singapore's industrial production shrank more than -12% year-on-year in August, more than market forecasts of -3.1% drop and slipping further from a downwardly revised -1.1% fall in the previous month. This was the 11th consecutive month of decline and the sharpest drop since November 2019, mainly due to a steep fall in output for electronics.
And in Hong Kong, major law firms there are shedding staff at an increasing rate as deals with the mainland dry up.
The clouds from China's economic woes are affecting the whole region.
And perhaps we should note that steel rebar prices in China, an essential concrete construction component, are falling and failed to hold the rises driven by expectations their property market would recover at some time. The winding-up of troubled Evergrande is now very much closer.
In Australia, the popular (with voters, not business) premier Daniel Andrews has suddenly quit, calling time on an active period as premier of Victoria.
The UST 10yr yield starts today up another +2 bps from yesterday at 4.55% to another recent high. Their key 2-10 yield curve is unchanged from yesterday at -59 bps. And their 1-5 curve is now at -85 bps and marginally less inverted. Their 3 mth-10yr curve inversion is less inverted too, also at -85 bps. The Australian 10 year bond yield is now at 4.42% and up +2 bps from yesterday. And the China 10 year bond rate is unchanged at 2.73%. But the NZ Government 10 year bond rate is +8 bps higher at 5.28%.
Wall Street's Tuesday session is sharply lower on the strong bond market signals, with the S&P500 down a full -1.4% to a three-month low. Overnight, European markets were all down about -0.8% although London was unchanged. Yesterday, Tokyo ended down -1.1%, and Hong Kong fell a sharp -1.5% but Shanghai only fell -0.4%. The ASX200 ended its Tuesday session down -0.5% and the NZX50 was down -0.3%.
The price of gold will start today at just on US$1901/oz and down -US$15 from yesterday.
And oil prices are +50 USc firmer at just over US$90/bbl in the US. The international Brent price is just over US$92.50/bbl.
The Kiwi dollar starts today at 59.5 USc, little-changed from this time yesterday. Against the Aussie we are unchanged at 92.9 AUc. Against the euro we still at 56.3 euro cents. That all means our TWI-5 starts today still at 69.5.
The bitcoin price has moved fractionally lower from this time yesterday, and it is now at US$26,247 and is down only -0.3% from then. Volatility over the past 24 hours has been low at just over +/-0.6%..
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144 Comments
Markets that was starting to roar back has absorbed the Higher for Longer rhetoric and is now shuddering..
So will our housing market.. it's just people here are a bit slower to absorb that fact...
I walked past a house I bought in '86 this morning, paid $142k in the days of 20% interest. The site is now 3 x townhouses at 2.5m each.
I was earning about 15k a year in 86.
I'm guessing there was no more solar energy landing on the site, than back then?
It was a silly move we made, when we set money up to be unrelated to its underwrite.
Reconciliation is going to be interesting...
Still living in our first and only house we bought in 87, just before the crash, for 150000, probably worth 1500000, now only approx 10x increase in 40 years
So about 5.8% pa if my maths is correct?
On a physically depreciating asset.
The built parts yes
And remember that 5.8% is tax free...(although maintenance costs have to be factored in too. Over 40 years? 200k?)
That and the fact you actually have to physically live somewhere. 5.8% + whatever tax rate+ not living in a cardboard box with your shopping trolley of belongings. What's that worth?
About $800 a week currently.
In share terms the share price has increased at 5.8% PA plus you have been paid a yearly dividend of around 4% in terms of the not having to pay rent. And the share was one of the safest around with very low risk. And all that was tax free for some unknown reason.
Remind me why anyone starts an actual company...
Pint of beer was .50 cents back then now $10 so 20 x times should of purchase beer. Most things have gone up at least 10 x in forty years including wages.
Go here, select M3 and Historical Chart and you'll see why: Money Supply M0, M1, M2, M3 in New Zealand 2023 | Take-profit.org
Then ask yourself if this trend can continue based on finite resources?
Yeah DTRH, I was possum hunting back then. One possum skin was worth $8 so it was quite easy to get drunk on one skin.
Now a possum plucked for fur is worth about $4 so can't even buy one beer.
Yet it's worth as shelter, as a sanctuary, has never changed. It's only the number of tokens required and what are they worth?
Wow, and if we repeat that bull run then in 2060 there will be 9 apartments there worth $44m each and the average wage (the one that pays the rent) will be about $70/hr…
Those with property acumen understand that rental yield is of little relevance.
Buy now if you don't want to be locked out when starter homes are fifty times upper quartile income.
Hard to tell if this is satire or not
Pretty bang on take on TTP / Tim Mordaunt.
If anything, in my opinion, the risks are currently being understated. What we learnt in the early 80s is that stagflation can push rates a lot higher than 7% (the level cited by Dimon). That is worry enough, but throw in the Ukraine war, BRICS' rise, and US hostility (trade and potentially military) toward China, and there are more than enough potential exogenous shocks that could cause rates to spike well above present levels.
With petrol at over $3/litre and the NZ dollar still 50% above its all time lows of 20 odd years ago (against the reserve currency), I don't see RBNZ failing to match Fed rises.
Not a good time to be taking on debt, to put it mildly.
Superinnuitants are beneficiaries.
Would go well on a t-shirt.
Especially if it was spelled correctly! 😁
I think they're referring to a race of humans living near the artic circle with special powers.
Huskies?
Only the ones who were smokers
Our one only smoked when she ran fast!
Probably sledging...
Mush.
"Don't eat the snow where the Huskies go" Frank Zappa
Difference is most of them would of contributed a whole lot of tax during their working life, but the beneficiaries in their twenties have contributed not much at all.
But guess for the future superinnuitants unless you have pile money into KS, your government top up will hardly pay for a loaf of bread, we already see this play out.
When I first started work for NZ Railways back in '79 my pay slip had a line at the bottom advising that a portion of my tax was funding pensions.
Very important point Zac. The young who resent older generations getting Super are ignoring our history, and blaming the wrong people.
Remember - the tax deducted funded current superannuants at the time, of which there were less.
The baby boomer peak means the young will ultimately fund a much bigger burden than the boomer generation ever had to (as well as the increasing healthcare this peak demands).
Too simple Ras. The Government Super Fund which we all paid into was huge and that funded Super primarily. But the politicians pillaged it, because they were useless at managing the economy and escalated their commitment by stealing from the people who funded it. That promise that Zac refers to was their promise to those generations.
"The Labour government’s New Zealand Superannuation Act, passed in August 1974, required mandatory pension contributions by employees and employers for all workers over the age of 17. Contributions could only be withdrawn if people were leaving the country permanently and payments would begin upon retirement from the age of 60. The new scheme came into operation on 1 April 1975 but its life would be short. In that year's election the National opposition proposed an alternative tax-funded National Superannuation scheme. This wooed many voters who were unhappy about their take-home pay being reduced to fund their retirement. The affordability of National Super, which replaced Labour's scheme in February 1977, would be severely tested as the numbers eligible for it grew. The question of how to pay for our retirement has dogged successive governments."
The problem is we don't hold our politicians to account well enough, and now they deflect the blame for their and their predecessors cock ups, while they pillage tax payer funds to fund their own exorbitant pay and benefits.
The boomers voted for those governments / policies.
The generations after the boomers will pay a lot more towards superannuation than the boomers did, and may actually receive a lot less (or nothing) when they get there. Those generations also get to vote remember, maybe they will vote in some changes to superannuation that benefit them.
Yes they did. I was too young. But what information did they have available to them to challenge the promises made to them? They didn't have computers of the information sources. And their reported issues with the super at the time was they couldn't afford the mandatory payments of the plan. that was how Piggy Muldoon wooed them away. No one was talking to them of the long term costs.
One man who harnessed the power of TV and who had too much power. Far too much power. 1970s NZ society was ripe for the picking and he plucked it dry.
Yes he did. But it continues today. Look at Trump. A lot of people deride Winnie and while at his age he can't really achieve too much in government, he does have a record of holding Governments to account and calling them on their BS.
Personally i find most of his critics too shallow and not recognising the bigger picture.
Government Superannuation was a retirement income scheme for government employees and some other public sector workers. It was separate from New Zealand Superannuation (NZ Super), which is a universal pension scheme available to all eligible New Zealand residents and citizen.
Many retirees are on both.The classic two public servants couple who have 4 super sources between them. 20 years of retirement and pulling large incomes. No way did they fund this in their working years. Justify this to tax payers.
Are you sure? Where were the mandatory super deductions of 1975 being paid to when taken from pay packets? My understanding is that it was the Super Fund which Piggy pushed into the consolidated fund? I've looked for detail but can't easily find it.
My understanding is that the payments being paid now are from a bottomless pit. i.e straight govt spend guaranteed and unconnected to any fund performance or to what was contributed
Someone might know otherwise..
The other very important point is that the universal pension benefit was part of a much more reciprocal society. The young boomers received affordable housing and deb-free entry to the workforce in exchange for helping the oldies.
That reciprocity has been lost in favour of speculators' entitlement mentality to free wealth from housing, and a preference for indebting young people for their gaining access to work.
It's not the presence of a universal pension that's the problem; it's the absence of the former reciprocity.
Also they didn't pay enough tax to cover their medical costs and current super payments.
Just because you think you paid a lot of tax doesn't mean you actually paid enough.
Rick.
Funny, but the last time I looked I found out that NZ is still a democracy. That means that, instead of spending countless hours glued to your computer key-board ceaselessly moaning and blogging, you may not realize that citizens do have the right to be politically active on the streets and yes, they are permitted to form their own political party or, en masse, join existing parties to influence their policies.
I spent my youth working and, at times, out on the street protesting. And I can prove it: A friend of mine was browsing in a second-hand bookshop when he came across a book called "The Swinging Sixties...when NZ changed forever" by Graham Hutchins. On page 247 there is a large photo which portrays some protesters on the Queen Street pavement protesting against the French above-ground nuclear tests on Mururoa atoll in the Pacific. I am shown on the left-most side of this picture holding a placard. The result of these and many other larger protests was that the French did stop their testing.
Unfortuntely, the generations younger than myself have been agog under the all-pervasive influence of the mighty "computer" hoping that it alone will fulfill their dreams........ no need to be more active.....too much effort to get up off the couch.
SW, good contribution. I'm a fan of participatory democracy, myself, and of in-person participation in groups. Bowling Alone, Vivak Murthy and others have highlighted well the peril of erosion of these social structures - in part caused by making people more economically precarious and time-poor too.
Digital is also a part of such things, though - Cambridge Analytica, Trumpism, Brexit et al demonstrated that, especially with regard to impact on less technologically savvy demographics.
I always support the young marching, rightly calling out our failures on climate change and other policy matters. They should definitely march (and more) on the blatantly immoral approach to housing and taxation we're operating under right now.
Don't mistake me, though - I have property so I too am a beneficiary of Natbour's welfarism for property too. I just support better morals and a better approach to our society.
What portion of people's income tax was funding pensions? Was that the 66% tax bracket that was halved by 1989?
The pension tax was a separate deduction, we all paid it. IIRC Muldoon conflated it into general taxation.
Zachary said "a portion" of his tax, not a separate line item. And he said "funding pensions". Not yours, but your parents.
Not sure why current tax payers should be burdened with poor outcomes from decisions that were made by and directly benefit previous generations? Will meet you half way though and propose income testing Super. If the economy was left in better shape then we could afford universal super, but you left the cupboard bare.
Every generation has the burden of having to suffer through the poor decisions of earlier generations of politicians Dan. Not sure how you can change it without becoming a victim of it when your time comes?
At the very least I'd hope our generation when it comes time will not possess the same selfish entitlement mentality. Having witnessed how current superannuants behave, I think future generations will look to those sorts of traits with disdain.
I'm not expecting what I say to result in a huge policy shift, but I'll continue to call it for what it is.
Keep doing that Dan. People with the courage to call BS when they see it and back it up with a rationale are worth their weight in gold. the debates are great too. My perpetual question is how do we fix it, but I think that would take a radical reform of the entire system. We need to be able to cater for all ages. But the young at the very beginnings of their working lives need to be able to at least afford the basics and this includes a roof over their heads, and we've lost that to greed and ideology. It has to change.
Thank you. None of what I say is to benefit my own means. Means testing superannuation would own goal myself when I retire, but I think if I'm comfortable in retirement why should I take from the pot if others are struggling, when we could keep the same level of funding but redistribute to those who need. The issue is more likely to be fixed if it's talked about than dressed up.
Now if I got to retirement and nothing had changed, then of course I'll claim it. But I won't pretend I deserve it which seems to be the narrative today. I'd probably siphon it off to my kid(s) or donate to charity.
Today's older generations benefitted mightily from the post-war generations' and govts' advocacy for and delivery of stacks of new affordable housing supply and associated efforts. Quite different from the folk who flipped that on its head and took affordable supply they received and turned it into a speculative investment at the cost of following generations.
To be fair, post war there was a lot of socialist policies that benefitted them and it's easy for recipients to develop an entitlement mentality from all the handouts. Rather than selling their first home to the next generation, the bank let them leverage up into their next home under the guise they're creating "much needed rental supply". It was even encouraged by my broker...almost forcefully....when I traded up in 2021. "Use your equity, get in tenants". Deny other FHB a shot at home ownership, gotchya.
In how many of the years between 1979 and now has the government managed to run a surplus?
There's no requirement to have contributed anything to collect super - just got to have lived here and survived to 65. That beneficiary in their 20s might have contributed more tax than some super recipients.
Sure, in some outlier cases. That doesn't negate FCM's assertion though.
Difference is most of them would of contributed a whole lot of tax during their working life, but the beneficiaries in their twenties have contributed not much at all.
They may have contributed tax but not enough tax.
"But guess for the future superinnuitants unless you have pile money into KS, your government top up will hardly pay for a loaf of bread, we already see this play out".
No doubt the system will fail at some point. The question is will the baby boomers get paid out before it does. My guess is yes.
If only there was a way that superannuation could be more targeted, so those who need it get enough and those who don't, get nothing.
I think they do something with unemployment benefit that works well don't they?
Maybe the different benefits could learn from each other?
Even the unemployment doesn't include asset testing and they even get supplements to help pay the mortgage.
Crikey, I didn't realize that was the case. Protect the banks at all costs.
45,000 super recipients getting the accommodation supplement as of three years ago.
It's estimated by 2048, 40 per cent of the population 65 and over will be renting. The socialised cost of NZ's obsession with selling houses to each other for more and more money is going to be huge.
We supposedly need to give tax breaks to property investors to keep rent down, but that will quite obviously make property investment more attractive and result in more people renting. This causes massive issues for society like the one above.
And that points to the core of the problem - politicians!
If these 45,000 zero wealth Super recipients were getting the accommodation benefit on the lowest of the four supplement areas it would persuade them to move from overcrowded cities to rural areas with empty properties.
Our cities aren't overcrowded, they are underdeveloped.
Shifting old people out to the wop wops is a really poor outcome for their mental health. People like being around other people, especially if they have lived in one particular area all their life, that's where their social support will be.
As an old person I'd say we are both over generalising. Many would prefer small town living; many have had all their family move to other places. I live next door to my grandsons and a couple of miles from my granddaughter - so I'd not be moving on. If they leave Auckland (quite probable since they cannot afford to buy here) I'd either follow one of them or if they leave NZ I'd move into a city apartment. However when I was assisting in cleaning chimneys, I met many retirees with the opposite attitude - happy to be far from the madding crowd. Good friends chose to sell in St Heliers and move to Whangarei - they were in their eighties.
Walk around the city and you will meet many old people with serious mental troubles. maybe the wop wops and better housing would solve their mental issues.
To be paid by tax on incomes - hitting renters doubly hard.
Meanwhile, rather than raising rates adequately some MPs with large property portfolios are proposing to tax working Kiwis' wages to subsidise infrastructure to properties too. Seems rather entitled, really. Property wasn't supposed to be a welfare scheme for the wealth.
Anybody think National are going to put these beneficiaries on their new traffic light system.
Its asset tested (home/car exempt). So these people have less than $8,200 in assets. How bad is that.
FCM - wrong way to look at it.
What they did was consume resources, using a finite energy-resource to do so. The 'taxes' we the same; 'spent' (a better way to think of it is as exchanged for) on consumption of resources ditto.
That is cumulatively a draw-down - and any infrastructure extant as a result, is merely decay-in-waiting (a demand on resources etc etc).
So those who indulged, have NO claim on resource-consumption in the future (which is what a pension represents; competition with the young forfuture resources/energy).
Belief in money was like belief in a flat earth - bound to get us into trouble at some point.
The beneficiaries in their twenties may be drinking and smoking and die of a heart attack at 65. Its the ones that live to 100 spending the last 20 years in a tax payer funded rest home while in and out of free hospital and collecting super for 35 years that get the biggest benefit. And yes they may have paid tax for 45 years, but they also received services then too.
Average life expectancy: 84. Single pensioner's super: $20k p.a. Total cost not inflation adjusted = $380k.
Median Salary = $65k. PAYE: $12k p.a.
Which means not just a "portion" of one's PAYE must go to Super, but an accumulated 32 years worth. Did 32 out of 45 years of their income tax go to just Super???
Luckily the Powers That Be have also dumbed down maths education so that most youngsters can't comprehend the scale of the grift.
Let's say a portion of their PAYE really did go towards their own Super. Then you'd need to consider what the annual return on that accumulated fund would be. That would offset a good chunk of the $380k from your example.
Then there's Median salary. It's highly unlikely that someone earns a consistent median salary throughout their working life. They probably started on a lower a salary in the early years then earned well over the median salary later in life. Even if that averages out to the median salary over their working life, due to tax brackets you can't just assume PAYE on median salary because they would have been paying proportionally more PAYE in the years they were earning higher salaries. So PAYE $12k p.a. in your example is too low.
Fair points. But they're quite emphatic that a portion of their PAYE went towards their own Super, so what is the annual accumulated return? Where are these funds? Y-y-y-y-you mean politicians squandered it? How's that a problem for today's taxpayers?
If we take the average earnings of 45 - 49 year old's (this appears to be the peak age group) then $90k p.a. with PAYE = $20k p.a. So 19 years out of the 45 years is funding super on average.
Yeah it's obviously not fully self-funding for the boomer demographic bulge. I just wanted to note that it's not quite as bad as in that earlier example.
100% correct NZDAN.
You may have paid tax but not enough tax.
I think some are aware of this, which is why they try justify by saying a high income earners paid a crap load of tax therefore they should get some of it back when they retire. They're not seeing at it as welfare but a loyalty rewards/rebates scheme.
I arrived aged 54 and 11 years later qualified for Super. In the Uk it would have been proportional (say 11/30th of full pension).
Lol it'd be interesting to see some data.
Most who invested in negative gearing got their tax refunded already. There are many others who through capital gains, tax structures etc paid minimal tax, are sitting pretty and believe they're entitled to Super. They're usually the ones bitching about others negative tax contributions, and think they worked hard for their gains.
When you really think about it, by virtue of being born on this planet, we're all beneficiaries and trustees.
It's amazing how our language and words, the connotations and energy behind them get distorted over time.
Pretty grim reading. Need a black swan event to move things along. Will we get one? Probably not.
I see many flying around, but they are yet to land... they will soon and it will be a frenzied landing
How are you preparing for it DGM...?
Collecting a lot of food scraps to throw around.. all those piled up with debt will come scavenging
Prepping by stashing anyway food and by food I mean popcorn :)
If you can see them, they are not black swans.
How long have they been circling you? 20 years?
You would know better, since you seem to have similar characteristics
Published 24 Jan 2019
In a widely publicised speech interpreted as a rare acknowledgement of the serious risks facing the Chinese economy, President Xi Jinping warned hundreds of top Communist Party officials that China must be on the alert against black swans and grey rhinos. Presumably, they don’t need fiscal reform or credit restrictions, they need a park ranger.
A grey rhino is a “highly probable, high impact yet neglected threat … grey rhinos are not random surprises, but occur after a series of warnings and visible evidence,” according to the US author who popularised the term. Its increasing use in Party media, and now by Xi this week, has been interpreted as a warning to officials to seriously confront the ballooning risks in the Chinese economy like hidden provincial government debt, referred to elsewhere as an “iceberg of debt with titanic credit risks”...........................
https://www.lowyinstitute.org/the-interpreter/china-cabinet-black-swans…
When BOJ stops yield curve control - Contagion spreads fast and then it all collapses.
Absolutely, the moment they change from easing to tightening, maybe the turning point
The impact of Evergrande tumbling will create huge problems across the region’s who have dealings with China. NZ will get affected how badly remains to be seen, the rest of the world are not doing much better with recession looming in many places. A big turndown should probably be expected in New Zealand.
This unprecedented bubble in housing valuations is due not to shortages but to decades of massive financial stimulus that incentivized speculative capital to flood into housing as a low-risk way to skim stupendous gains for creating zero gains in productivity.
So say many of us on this site. Should be an election talking point.
That stimulus at record low interest rates also went into global share buybacks at inflated valuations.
Because money is the medium of exchange: if the price of money (interest rate) is lower the real asset prices will typically increase.
.
Housing is a must have, playing investor in the markets is optional and most don't play that game. However the money players have pulled everyone into their game by dragging in housing and making us all pay for their benefit..
Should never have been allowed.
Kiwisaver values dropped along with global shares down 20-30% last year so most earners affected
And ACT want to turbocharge dispossessing our assets. But it's ok because ACT says it will be reputable foreign owners buying our state assets. So benevolent landlords. Someone give Seymour a knighthood.
We'll likely sell them into a recession for cents on the dollar
It is because the money does not hold its value. Because of this people have allocate a monetary premium to other assets that are above their utility value. In NZ Property has been the most consistent and tax advantaged method to do this, hence why values are significantly above utility value.
Gold used to be the purest/hardest form of money because it was naturally limited to an inflation rate of 3% per year, because you just couldnt extract more than that from the earth over a long period of time. And Silver was the next hardest from of money, but with an inflation rate closer to 7-10% and with a much higher stock available.
Ergo gold held its value over time. Fiat currencies are printed freely at no cost hence they loose purchasing power very rapidly.
Bitcoin is the first time in human existence we have absolute scarcity. there will only ever be 21m tokens. Hence it is the best form of money because it has a set inflation rate and a terminal rate of 0%. It will absorb the monetary premium from hundred of trillions in stocks, bonds, real-estate and other goods that have a monetary premium. And prices will drop back towards their utility value.
Encourages hoarding, discourages spending. It’s speculative, and deflationary. It will go up in value as more is produced, so discourages investment as the investment vehicle is worth less in time. It would be like buying an investment property at the peak, it will go down in value and become more expensive in the future.
The benefit of fiat over bitcoin is the ability to be both inflationary and deflationary. We just have yet to see the full effect of deflationary fiat, because we keep kicking the can down the road.
It discourages frivolous consumerism where you waste money on shit you dont need because you are told to by advertising.
By hoarding you mean saving your money and spending less than you earn? You still have to live and purchase things that you wither need or would like, so you will still have to spend it. This means that if you do not offer a service or produce a good that someone is willing to part with their Bitcoin for, you will not get it for free. Ie no free lunch.
It is disinflationary, which means it is inflating as a decreasing rate, to a terminal rate of 0. So yes, if you account for lost coins at some point the amount in active circulation will decrease/be deflationary. All this means is that the wealth stored in the system (ie its market cap) will be distributed over the active coins, making all holders purchasing power slightly higher.
Please have a quick look at the statistics on this page, it is all just maths and physics
What is speculative about it? That it will increase in purchasing power? It is just basic maths really as outlined on the above link. Decreasing supply with an increasing number of people that will use it for one of its many different properties (store of value, medium of exchange, self sovereignty) as peoples situations change around the world. It is also the first hard asset that everyone in the world can purchase an amount of, without having to have a bank account or access to first world services such as lending, brokerage accounts, trading desks or massive loans to buy relestate etc. Perhaps you are looking at it on too short of a time scale, zoom out.
We will never see a deflationary fiat currency, because governments will always abuse the fact that you can create money for no cost, therefore inflating the supply and decreasing the purchasing power of all other units in the monetary system. So this is a stealth tax on everyone whose savings are denominated in that currency. The only thing we see world wide is how different management styles result in different rates of inflation. The two options are: default on debt and live with a nations means (which is politically unpalatable) or inflate away the debt, which allows governments to continue as normal by stealing the wealth of its citizens.
All "money" today is based on trust and is backed by nothing other than "the full faith and credit" of the issuing institution, and all that promises you is you will receive the nominal number amount of that unit. It doesnt matter what that units actual purchasing power is. EG Turkey, Venezuela, Zimbabwe, Argentina, Egypt or any nations using the Colonial French Franc.
"Bitcoin is the first time in human existence we have absolute scarcity. there will only ever be 21m tokens."
What are you on about? Humans have chosen different materials as a form of money throughout history. To all intents and purposes Cowry shells were absolutely scarce.
I don't get the Bitcoin obsession. Do bitcoiners seriously think that it will become the representative value of all human wealth on the planet?
But their supply changed with increasing technology didn't it? So it went from scare to the Native Americans to abundant when European technology arrived. Same with glass beads in Africa, and blankets or muskets or anything else people attached value to that could be produced more efficiently with better technology. This inflated the supply and decreased the purchasing power of each unit.
What you choose to store your time in (ie money) will dictate how well your purchasing power will be preserved over time. Anyone who had their savings all in Shells, or glass beads, or in the case of China Silver (they were on a silver standard until 1935) will have their wealth eroded.
With Bitcoin NO ONE can make more units. It is digital scarcity and the proportion of the network that you own can never be diluted. So as long as the overall networks purchasing power increases, so will yours. So if I own 1 Bitcoin out of the 21m that will ever exist (of its fully diluted amount) I will always have 1 Bitcoin. Where with the USD if I have 1m out of 10T, and they print another 10T, now my 1m is only worth as much as 500m in purchasing power, because there are now twice as many units in circulation, so each one is only worth half as much.
Hence asset prices will go up, because the value of the units it is measured in is going down.
And yes, that is exactly what Bitcoin will do.
Might I suggest A good quick read, The Bullish case for Bitcoin (about 40m-1hour) and goes over the properties of a good money.
Or The Bitcoin Standard for a longer read, which goes deeply into the history of money through out human civilisation.
If all that is true, why has it halved in price?
Again, time frame mate. Its a new technology and commodity that is only 13 years old.
We are watching it being monetised in real time as human try to figure out how much it is worth. And since it has a set supply, the only thing that can change is its purchasing power.
I am talking decades in the future. It is not going to go from literal non existence to global reserve currency in 20 years is it. Add the fact it is not particularly user friendly (like the internet was back in the 1980s) and it takes a certain amount of work to figure out what it is.
Information asymmetry on Bitcoin is what will reward the people who understand what it is and put the effort into understanding it.
100% rastus, I have always been against housing as investments. Best way to ruin an economy.
Ah, but National are going to tax that zero productivity, to fund...
Everything.
And there's a heaven above the bright blue sky...
It sort of is...but primarily it's National MPs with large property portfolios campaigning on policy changes to benefit their portfolio wealth.
We fuss about night time ramraids for paltry amounts while our older property-speculating politicians are happy to ramraid following generations so they can live beyond their own means.
If you steal millions, you go to jail. If you steal billions, you get a knighthood.
Now they're planning to ramraid the young's retirement scheme a second time, to fund bonds for landlords and dodgy property management companies starting with the letter Q.
The insatiable desire for money, land, power, prestige is a human frailty.
Right there, that's why we have wars, and will continue and as resources get more scare, the more wars and killing. its in our DNA and will take millions of years to evolve out of that, humans have not been around for millions of years and still behave the same as we did thousands of years ago.
Russia dodges G7 price cap sanctions on most of its oil exports
Shift in seaborne trade suggests Kremlin will benefit from rising prices despite west’s $60-a-barrel cap
Yeah nah it's not in our DNA. They're all emotional choices generally originating from fear and ego. Lust for power and control over others just highlights a deeper inner lack.
Over time we've created conditions that only exacerbate these lower level emotions, until it's become the everyday norm. We literally have a fear, shame and guilt based society and this has been hyped to the max in modern times. It's the only way a few can rule over the many.
We think we have a fact driven, data and science based system but if you look deep enough the choices we make are nearly all emotionally based. Just look at the origins of propaganda, advertising and marketing. It's all based on manipulation via your emotions.
We all have a choice. We just haven't had the education and training in self awareness to know our inner workings.
You might want to ask why wars, killing, violence etc are predominantly masculine behaviours and why throughout history we've been negative towards women for being "emotional". It might pay to learn about masculine and feminine principles from indigenous and eastern philosophies, and what is healthy and unhealthy in both. The balancing of these in each of us is how we go about evolving and creating new ways on Earth.
A desire for all those but not insatiable. As an introvert I'd prefer minimal prestige and my garden is bigger than i can manage and I only want power over whatever impacts me - no desire to be imposing on others. I'd be happier with just a little more money but not so desperate as to actually look for a job.
The price of gold will start today at just on US$1901/oz and down -US$15 from yesterday.
Indeed. Real yields onwards and upwards.
Gold is dead, has been for years, ask anyone under 35 their thoughts on it
2,000 years verse 35 yr old and under children.
Quite funny.
35 yr old and under children are the ones that will dictate the next 35 years, instead of being ignorant, get out and ask under 35yos their thoughts?
Let's take reality vs your ignorance seriously.
Anyone listen to Corin Dann with Luxon this morning? Have started the day somewhat despondent about the result the country is sleep walking towards. This isn't an endorsement for how Labour has done things, but the the inculcated uncaring nature of National, and Luxon's terse side is coming to the fore.
Throw in some economic and literal headwinds makes for a gloomy Wednesday!
They think they are far enough ahead now that they can go further right. Increasing speed limits at the cost of lives, making people beg for the benefit, etc.
The big risk is if they go too far they may lose their female voters, females tend to have a lot more empathy than males. Females decide the election these days...
We never see any economic refugees escaping to a Socialist economy ! Unless there is a refreshed conservative approach to things social, cultural and economic, Venezuela may look appealing after all 🤣
The Scandinavians have too many refugees for their liking...
Scandanavia is nowhere close to a ‘socialist economy’
Neither are we.
They don't offer that, though. National is offering welfarism for property, older folk, farming businesses, the wealthy, business owners, etc. "Own two feet" only applies to the younger and poorer. Just look any time there's a flood, a drought, a disease outbreak, an adverse event affecting businesses or the property market...
Property is the new Muldoonism.
re ... "We never see any economic refugees escaping to a Socialist economy!"
Wildly incorrect.
I suspect your view is overly influenced by western media that only reports refugees trying to get into western countries.
Economic refugees are in fact completely uninterested in the political leanings of the country. They're only interested in two things: 1. will I get a better life and 2. will I get caught.
Even Russian - back when it pretended to be communist country - got hundreds of thousands of economic refugees coming across their western and southern borders. And China - economic refugees stream into the country and cities. The police there round up a tiny fraction to pretend they're doing something and send them back; while Chinese businesses love the cheap labor.
https://www.rnz.co.nz/national/programmes/morningreport/audio/201890866…
Just listened to this interview...seems Luxon is looking after a new demographic...@ 04:50mins he mentions it is not fair on "..NZer's waking up hard"..crikey!!
ole Luxo, mate! Goes with his tax policy being solid, rock solid.
Thoughts on the interview?
They need to get in to real commodities like carbon bludging. Farmers can't do it here as NZ conveniently doesn't include soil carbon in the ETS.
"NORTH Burnett graziers, Carly and Grant Burnham, were today awarded 94,666 Australian Carbon Credit Units by the national Clean Energy Regulator – the largest allocation for an individual soil carbon farming project in Australia to date.
...Carly and Grant have not only removed a substantial amount of CO2 from the atmosphere but their beef is carbon negative (climate positive) to the tune of 6.6t of CO2 buried for every tonne of livestock carried, after accounting for all emissions."
https://www.beefcentral.com/carbon/new-soil-carbon-credit-issuance-beco…
which just reinforces what a rort the whole carbon trading process is
A large percentage of hill country farmers are reliant on carbon income in NZ now.
Many would be forced to sell up without ETS income and that includes Manuka honey producers who bought land to revert to scrub.
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