US inflation slows to 8.5% from a year ago in July from 9.1% in June, with no inflation during the month of July; Data better than expected; Investors celebrate on hopes for soft landings
Bernard. I was seriously informed and grew my knowledge of NZ and world economies by your fantastic piece on inflation, the stashing of cash, and startling caveats. Keep going Bernard. You are seriously needed in NZ and are making a valuable contribution to critical social, economic and climate issues.
How much confidence can be placed in statistics provided by China? I recall the CCP back in the 90's predicted GDP growth would be in the vicinity of 10% and lo and behold it came in near that figure and was also a higher rate than the previous year.
So is their inflation reporting more of the same. "Oh, yes. We have inflation of 2.7% (which is well below the West's inflation. Why can't they do better?).
Of your caveats surely the Warmageddon is the least likely? I find it hard to believe the CCP would be that stupid and self destructive. The other two I’d say all bets are off
There is a lot going on here, but it appears the core of your argument for being in 'team transitory' is that: so long as there are no major geopolitical events, or disruptions to the global economy, the course of history will always revert back to the new normal of the last 30 years.
I think it would be beneficial if, at some point, if you could really dive into this idea. The assumptions you put forward are a good starting point. At the moment, they lack detail and finesse to convincingly demonstrate why this is true. There is also a significant gap in your counter-factual to these.
It may also be worthwhile if you could elaborate on the limitations of inflation as a tool. I think you did this a year or so ago(?).. The way it is calculated varies between central banks, but also, it mostly accounts for the outputs of a supply chain.
Thanks, Bernard. Excellent commentary, as usual. I was on Team Transitory with you (and just wish many of today’s commentators had lived through the 1970s and could respond with equanimity to events rather than shrieking about the sky falling). Of course, things could change; and will. How about inviting someone along to the Hoon tomorrow who is capable of a spot of forecasting? What would be the effect on the global economy (and ours) of a problem in the Taiwan Strait, given its geographical eminence. How about a spat in the Spratlys?
It’s hoarded in banks and they invest it in themselves and a lot of unethical things. Like Corporations do. When we pay them to destroy people and planet and allow this type of unaccountable price gouging particularly effecting women, children and the poorest who can’t be in more than one place at once then at some point people have to say enough. It is not a good quality of character to rob from the poorest for self interest. I’m not surprised no one wants to stand for election being mainly decent people and collude and be complicit in all the sexism, racism and outright violence, lies and abuse we are all subjected to. What we’ve paid for is not ours our shared values are flogged off to the highest bidder, our contributions mean nothing and go unpaid and unsupported. It is simply take take take and could now escalate to kill, kill, kill. Because there is money saved and the very worst make money from it. All of which comes from our Central Bank. I am absolutely outraged that this Labour Government hasn’t acted to protect and enforce the rights of women and children, our future and the most vulnerable and enforce our human and legal rights here. I’d expect it from the Nats but not supposedly progressive Governments. As for immigration…culturally we have quite enough ignorant violent exploitative misogynists of our own here already to neutralise and mitigate for just look at our abuse stats. So if the most vulnerable are not supported and safe as per various acts and laws and do not have their rights upheld why should we import more ignorant bigots? Because our migrants are largely relatively unskilled or come from countries traumatised and still living in cultures still resembling the Middle Ages or just moving here to exploit (and trash) our National shared resources. It’s a bit of a shit show everywhere really but at least in NZ we have a better chance than most to “fix” the broken systems which are destructive and oppressive and not based on science or evidence but literally “made up” by really NASTY privileged and entitled rich people and their lackeys and enablers we don’t have to listen to or obey at all. Nice analysis today Bernard although the narrative is very male it would be nice to have some reporting on what happened to the women and children over time as really when you say “people” in these narratives you are really referring to men so it’s the political version of the “male gaze”. Some digging into whether women’s rights economics, freedoms and QOL issues have “progressed” much with all this historical narrative may look quite a different experience than the male one. Not progress at all just bloke stuff as told by blokes. 😀 No offence it is the dominant narrative. I wish the media would expand their “news” from the over allocation of time we have to tolerate sport too which is just a time wasting distraction from what’s really going on. Ie bread and circus’ to keep the plebs busy as has always been the way. Cynical on Governments part. Sport is not really their business when kids are living in cars and child poverty and homelessness plus people dying at home of Covid or waiting for treatment (which has relatively easy fixes)and our climate is disintegrating ,really is it? Just bizarre that they can’t or at least seem unable to do their job with the basics.
Bernard, great commentary. I was encouraged that you referred to the strong economic growth in the West from the 1940's - 1980's due to massive government investment in infrastructure & productivity. Your graph comparing China with NZ's infrastructure investment says it all & explains why NZ has a $1T infrastructure deficit. Put simply, if the State doesn't invest in infrastructure, then nothing happens. The low tax, low State investment that has characterised NZ since the 1980's (your 30:30 governmental mantra) will only accelerate if there's a National/Act government next year. National plans to cut government revenue by $2M each year to finance tax cuts & Act's proposed cuts are $7M - God help us.
As with many things, I think there's an element of transitory inflation, but also some structural shifts which may keep it elevated above the recent norms.
Cheaper energy in the long-term, but not without trillion$ of infra investment in the short/medium.
Increasing losses from and investment against physical climate risks.
Inheritance from dying Boomers will likely be invested in housing/assets, rather than saved by their struggling offspring (any studies on this?).
Reading your thoughts on where globalization could lead reminded me of "The Inevitable: Understanding the 12 Technological Forces that will Shape your Future" by Kevin Kelly (Founding executive editor of Wired magazine). Everything solid is becoming a verb. Products become services. So yes, I agree with you - there is still a long way to go with globalization and every new invention will end up going through the same process.