Putting a spotlight on the Reserve Bank's inflation fight with Fisher Funds Management's David McLeish

Perhaps using the OCR to fight the 'highest Inflation figure in 30 years' is not the real objective? It's the catalyst for a fundamental, structural change to our economy, and 'Inflation Fighting' is a useful by-product.

If the RBNZ let the Debt fed, speculation-reared cat out of the Monetary bag this one last time, it will tear them to pieces. Because, now, it's frightened, and can see what will happen if it doesn't escape. I'm not advocating throwing the sack in the economic river, just keeping the knot at the top really tightly tied.

Yes to all that.

And what is real for many right now with Aus and US shares, as if the fraudulent FIF regime wasn't bad enough on the latter, having now the highest interest rates in the OECD hence this monster NZD appreciation, losses are relentless on the damned currency.

Plus if this carries on - and why is this NZD strength against AUD?? - our exporters, ie, red meat and dairy - will be getting into trouble. It's not so much the fact the NZD is appreciating off lows, it's how quickly it's moving up.

From 12 years of monetary stimulunacy to the opposite right now, our bipolar RBNZ needs to sack everyone sitting, starting with Orr.

They're destroying NZ.

From BIS: How abundant are reserves? Evidence from the wholesale payment system

From Snider: Recession Is the Most Obvious Answer To All the Inversion

As I type, the eurodollar futures curve is exactly 200 bps inverted, solidly Holy Crap territory. US Treasuries aren’t far behind in terms of historical upset, while an unprecedented inversion in the market for Germany’s government debt gets more unprecedented by the day, week, and month.

In purely technical terms, all these together are betting heavily on lower interest rates all over the world in the not-too-distant future. As they’ve come to be this distorted and ugly, formerly aggressive central bankers who’ve been hiking rates as fast as they can are suddenly coming around to that possibility, too.

Good listen as ever Gareth. Monetary policy has 'done its job' at arresting our stupid housing boom. There are more targeted ways to deflate a housing bubble though - and anyone who thinks that the OCR hikes are doing anything about prices (or wages) doesn't understand market forces. The data on import prices came out yesterday (for year ending Sept 22) - a nearly 30% increase. That's not a typo. Our stats folk grossly underestimate the flow through impact of import prices on domestic prices, whilst our economists grossly overestimate the impact that reduced demand will have on those prices. It's a recipe for mismanagement.    

"Cost inflation is a phenomenon as old as money it’s self, although many left leaning critics delude themselves into associating it solely with modern capitalism.

It arises from the growth in the quantity of money and credit exceeding productive out put. As the money supply grows in relation to productivity so, too, does inflation.

In the final analysis governments have control over the money supply. Government policy and, most of all, government spending, are solely responsible for the increase in inflation." ....... Bob Jones in 1977

This is a little more complex than just the supply shock that David Mcleish talks about. 

( cost inflation running thru the whole economy , is a much "slower burning thing".. so to speak , than the Supply issues that David discusses).

Wage/price.....cost/price.... 

My feeling is that cost increases thruout all parts and levels of our economy are not just a consequence of the Global supply chain shocks.

Our inflation has been a long time in the making.

Our RBNZ incompetence ( my view) has ignited the whole thing ... like a rocket.

Throw in Labours fiscal/environmental compliance policies. ( which seem to focus on spending/taxing and not at all on productivity).

Covid and The fiscal/monetary response  was the inflationary "light switch" coming on. ( productivity shock + demand stimulus).

Ukraine war accelerated it.

I have no confidence ,  in our RBNZ.    I see them as a bunch of reactive people guided by ideology, rather than first principle ideas.

( It makes me cringe when they talk about "least regrets policy".etc)

I like what David Mcleish says...and am just wanting to add to it. 

I think "cost inflation", manifesting as rising costs thruout the whole economy.... is not an easy beast to tame.

( I think inflation will be here for longer )

I agree with him that The RBNZ is being destructive with its incredibly rapid rises in interest rates.

(Bob Jones wrote a whole book in 1996 ( Prosperity denied) about the harm that the Reserve Bank can do, about the short comings of the inflation targeting policy framework)

Miss-management has been the name of the game for 5 years now.

We will continue to over-correct then under correct as has been the pattern of recent times. Orr's new 5 year term came as a shock to me. The man failed at his main mission (at both ends) then gets reappointed by a dozy FM. There's definite collusion on a plan that comes from afar, me thinks. If they don't kill it, they'll try to make it twice as expensive.

Which will then kill it.

Pre pandemic domestic inflation was running at 3.1. NZ consumers have been getting hit for ages. The pandemic only makes things worse. 

...because our RB follows the FED.... we are a small boat bouncing on the waves pulled by the Global Elite. 

Read James Rickards numerous books from the GFC onwards. 

Inflation, Currency wars, Energy , Putin, Ukraine... well documented a decade ago. 

I took FF up in March due to them saying Inflation was transitory. Formal email and voice coms.

I felt they were being naive given the macrofinancial forces since the GFC, MMT , M1 , M2 and fiscal stimulus from 2020.

I'll take their advice with a grain of salt.