A review of things you need to know before you go home on Thursday; NBS cuts, Wheeler holds, food prices rise, split housing markets, swap rates rise, NZD rises

Why would we be concerned about low inflation when its not being delivered by poor growth as is often the case with very low inflation or deflation (the latter being extremely rare) ? Yes Bill would like a bit more inflation to get his tax take up but that's not a good enough reason, especially when the debt loading isn't a burden. Theres a miriad of reasons for the low inflation, a high NZD (that most exporters are handling) that is dragging down imported costs and making Kiwis richer, very low interest rates globally that have seen an abundance of borrowing by business that has gone into production facilities that are producing an over supply of goods, an oil price crash that has put money in everyones pockets.

Yes Steven some poor people don't have cars, and the bottom 20% might be struggling, but at least we're living in a country that is capable of supporting them through the likes of accomodation supplements, working for families etc. But if its only the top 20% benefiting from it, please tell the other 80% to stop being so bloody positive in consumer sentiment surveys (only 6 points off its 2007 pre-GFC highs). People should start understanding what's not good for them. Things can change certainly, we are after all a small boat on a very big ocean and potentially vunerable, but until they do, lets stay positive and watchful

The private side has done remarkably well and some would say unduly so if the US is a market leading example. I doubt society can afford to reward capital so well into eternity.

“Total Securities” as a percentage of GDP is helpful for Bubble Analysis. After beginning the nineties at 173% of GDP, “Total Securities” ended the Bubble year 1999 at an unprecedented 341%. The bursting “tech” Bubble saw this ratio decline to 267% to end 2002. Mortgage finance Bubble reflation then pumped this ratio to a record 360% by the end of 2007. The Bubble burst and “Total Securities” ended 2008 at 297%. Six years of incredible monetary inflation had Total Securities ending 2014 at a record 417% of GDP.

I have on a quarterly basis chronicled the inflation of Household sector Net Worth as a key facet of Federal Reserve reflationary policies. Household Assets inflated another $1.61 TN during Q4, with a 2014 gain of $4.431 TN. For the year, Household Real Estate Assets increased $1.223 TN and Financial Assets rose $3.045 TN. And with Household Liabilities growing $363bn, Household Net Worth (assets minus liabilities) jumped another $4.068 TN in 2014 to a record $82.912 TN. Since the end of 2008, Household Net Worth has inflated $26.403 TN, or 47%. This “wealth creation” goes a long way in explaining the economic recovery – as well as its vulnerability to asset market weakness.

 

As a percentage of GDP, Household Net Worth began the nineties at 379% ($21.5 TN). Net Worth rose to 446% ($43.1 TN) of GDP to end 1999, only to fall back down to 398% ($43.7 TN) to close 2002. Net Worth inflated to a record 461% ($66.7 TN) to end 2007. Net Worth closed 2014 at a record 476% of GDP ($82.9 TN). Read more

Hospitals, schools, universities, polytechnics, IRD, Winz, DOC, kindergartens, Police force, military etc are all best delivered under the service ethos of a Government. 

This provides a good framework for businesses and private enterprise to operate alongside.  Without these services it would be difficult to run a business and bring up a family. 

All these govt funded workers spend their wages in their local community and so also serve their community in this way as well. 

In times of recession, Govt spending through these enterprises benefits communities far better than 'trickle down'  or from QE type operations which simply funnel money into financial assets and equities bypassing the general economy. 

Take away the Police,  your kids school, your grandkids university etc. - then just see how successful your efforts in private enterprise are - lawlessness, corruption & illiteracy make businesses difficult to run! 

The push to privatise everything really just puts public-good assets/services in the hands of non-benevolent corporations only concerned with the bottom line. these corporations are now competing for political power against the legitimate Govt. E.g. tobacco, electricity, 

At least Govts are still accountable to their citizens in some way. Not so many corporations.