Bernard Hickey interviews RBNZ Chief Economist Paul Conway about why the RBNZ is cracking down even harder on inflation, and which types of our inflation are stickiest, and trickiest, to slow
I’m not buying it citizens shouldn’t have to pay more or be controlled and punished for poor systems and decisions and lack of direct investment. These bankers didn’t have to offer banks cheap money but citizens couldn’t access it from their own bank. That pushed housing prices up and interest rates need to be frozen to a reasonable stable long term rate. Govt and the bank didn’t have to subsidise oil or other destructive price gougers which we pay for and were not informed. Government should not be tax price gouging either. Investing in the public good is all they should do. So irritating regarding announcements on the never never like hospitals (which should be done by now) I would just dial up the Chinese contractors to come and build them and it would probably done within 6 Months.
We are a third world country and these people will ensure we never get the income, services, housing and health and transport services we need to function or increase productivity.
They’re off the planet😱 and think people can or would flourish on the sniff of an oily rag particularly for those with dependents who need to meet others needs adequately and have a duty of care and obligations to ensure progress is made and no one stays stuck under these guys oppression.
"...surprised a generation that became inured to low and stable inflation and interest rates."
Realistically inflation has been running hot for ~2 decades. Housing inflation. My entire adult life has seen housing costs balloon year on year. Realistically it should be categorised as 'hyper-inflation'. The results are the same, if not worse than product inflation with the exception of maybe food. The only reason you can say that a 'generation' hasn't experience inflation is because they don't count housing.
Good interview, Bernard. One thing worth thinking about is which is worse for individuals: inflation or unemployment? For almost everyone, unemployment is worse from a psychological and physical health perspective (self-esteem, social roles, etc.) and from a personal productivity viewpoint (skill development, maintaining professional/occupational networks, etc.) The "job-rich slowdown" Orr and Conway are talking about may not come to fruition.
I find this part incredible in light of Orr assertion that we have a competitive market:
"Unfortunately, we don't have great data on profits. It’s a real blind spot in how we measure our economy. So I can only answer in an in-principle sort of way".
They don't have the data! So they make unsubstantiated assumptions as to what is causing inflation and all the pain they are inflicting on people right now could be in vain because perhaps the cause of inflation is actually profit gouging.
How much are we paying these people to not actually know?
Bernard you've done us an enormous good service with these interviews. Its like you've lifted the carpet and what is underneath is a staggering ignorance of, and lack of interest in, real people. Help.
doesn't anyone see the paradox in all of this - so we have a war and plague and chaos in our supply lines all of which push prices up - scarcity in action - this is not inflation - this is the market working. So these geniuses decide that the best medicine is to impose a punitive interest rate (alternatively known as a vast subsidy to Australian bank profits) to stop people spending so much - what!! - I thought increased petrol prices, increased food prices and the other cost effects and supply constraints would have done this without any help from our all seeing all knowing central banker.
He has made one vast stuff up this past year that created the mess - he is about to make another one to fix it - he hopes! These guys have the same level of understanding of the laws workings of an economy as the medieval phlebotomist had of the human body - with the same outcome - kill the patient to drive the evil humours from the body.
Surely if you wanted to damp down spending on anything you impose a tax not an increase in interest rates - that merely move money from those that cant afford to pay it to those who don't really need it. Taxes work on reducing alcohol tobacco and petrol consumption. You don't go forcing petrol tobacco or brewing companies to raise prices and gain windfall profits - why do it to the banks.
Even worse - by increasing the cost of debt both existing and new we then have to pay more to our banks' offshore owners - so we have to export more just to pay these windfall profits to the the banks foreign funders. The reserve bank has condemned this country to go nowhere but backwards over the past three decades!!!
I was glad to hear our economy referred to as a collection of people for once. All of this economic talk (inflation, interest rates, etc.) is supposed to be about making sure that every person in NZ can live a decent life. It’s about time government and RBNZ policies better reflected this purpose.
Interest rates go up and down, often due to overseas conditions, creating winners and losers in our economy. There is no catastrophe if the mechanisms within our economy are working properly, including the winners being taxed for a large proportion of their “winnings” from government and RBNZ policies and the losers generously compensated for the “damage” suffered from the same.
If capital income (profits, capital gains, etc.) were properly taxed and people with lower incomes had more money in their pockets, demand inflation would merely be reflecting true needs of society (food, housing, etc). The answer would be obvious - to increase supply, using government money when necessary. When the supply cannot be increased either domestically or from overseas sources, targeted policies are required depending on the situation. Isn’t this the job of government?
We also need to measure inflation correctly to reflect costs for the necessities of life. Naturally, the average household’s largest expense (housing) would make up the biggest part of that. And because we’re talking about people, not money, we must first meet basic human needs. So, renting costs must be prioritised over the costs of owning a home. People must have a place to live. NZ has messed this up on a grand scale.
Yet, as rents soared, the RBNZ and the government (people who are being paid big money to serve society’s best interests!) made rents even more expensive. Apparently that inflation didn’t count. Yet inflation that hits the richer members of society gets a massive response. Who are the Reserve Bank and government really serving?
I’m not buying it citizens shouldn’t have to pay more or be controlled and punished for poor systems and decisions and lack of direct investment. These bankers didn’t have to offer banks cheap money but citizens couldn’t access it from their own bank. That pushed housing prices up and interest rates need to be frozen to a reasonable stable long term rate. Govt and the bank didn’t have to subsidise oil or other destructive price gougers which we pay for and were not informed. Government should not be tax price gouging either. Investing in the public good is all they should do. So irritating regarding announcements on the never never like hospitals (which should be done by now) I would just dial up the Chinese contractors to come and build them and it would probably done within 6 Months.
We are a third world country and these people will ensure we never get the income, services, housing and health and transport services we need to function or increase productivity.
They’re off the planet😱 and think people can or would flourish on the sniff of an oily rag particularly for those with dependents who need to meet others needs adequately and have a duty of care and obligations to ensure progress is made and no one stays stuck under these guys oppression.
"...surprised a generation that became inured to low and stable inflation and interest rates."
Realistically inflation has been running hot for ~2 decades. Housing inflation. My entire adult life has seen housing costs balloon year on year. Realistically it should be categorised as 'hyper-inflation'. The results are the same, if not worse than product inflation with the exception of maybe food. The only reason you can say that a 'generation' hasn't experience inflation is because they don't count housing.
Good interview, Bernard. One thing worth thinking about is which is worse for individuals: inflation or unemployment? For almost everyone, unemployment is worse from a psychological and physical health perspective (self-esteem, social roles, etc.) and from a personal productivity viewpoint (skill development, maintaining professional/occupational networks, etc.) The "job-rich slowdown" Orr and Conway are talking about may not come to fruition.
Is it workers or the wealthy asset owners who suffer most from the moderate transitional inflation we have now?
I find this part incredible in light of Orr assertion that we have a competitive market:
"Unfortunately, we don't have great data on profits. It’s a real blind spot in how we measure our economy. So I can only answer in an in-principle sort of way".
They don't have the data! So they make unsubstantiated assumptions as to what is causing inflation and all the pain they are inflicting on people right now could be in vain because perhaps the cause of inflation is actually profit gouging.
How much are we paying these people to not actually know?
Bernard you've done us an enormous good service with these interviews. Its like you've lifted the carpet and what is underneath is a staggering ignorance of, and lack of interest in, real people. Help.
Have a great holiday! I'm afraid all the same messes will still be here when you get back.
doesn't anyone see the paradox in all of this - so we have a war and plague and chaos in our supply lines all of which push prices up - scarcity in action - this is not inflation - this is the market working. So these geniuses decide that the best medicine is to impose a punitive interest rate (alternatively known as a vast subsidy to Australian bank profits) to stop people spending so much - what!! - I thought increased petrol prices, increased food prices and the other cost effects and supply constraints would have done this without any help from our all seeing all knowing central banker.
He has made one vast stuff up this past year that created the mess - he is about to make another one to fix it - he hopes! These guys have the same level of understanding of the laws workings of an economy as the medieval phlebotomist had of the human body - with the same outcome - kill the patient to drive the evil humours from the body.
Surely if you wanted to damp down spending on anything you impose a tax not an increase in interest rates - that merely move money from those that cant afford to pay it to those who don't really need it. Taxes work on reducing alcohol tobacco and petrol consumption. You don't go forcing petrol tobacco or brewing companies to raise prices and gain windfall profits - why do it to the banks.
Even worse - by increasing the cost of debt both existing and new we then have to pay more to our banks' offshore owners - so we have to export more just to pay these windfall profits to the the banks foreign funders. The reserve bank has condemned this country to go nowhere but backwards over the past three decades!!!
Rest up and enjoy your holiday Bernard!
I was glad to hear our economy referred to as a collection of people for once. All of this economic talk (inflation, interest rates, etc.) is supposed to be about making sure that every person in NZ can live a decent life. It’s about time government and RBNZ policies better reflected this purpose.
Interest rates go up and down, often due to overseas conditions, creating winners and losers in our economy. There is no catastrophe if the mechanisms within our economy are working properly, including the winners being taxed for a large proportion of their “winnings” from government and RBNZ policies and the losers generously compensated for the “damage” suffered from the same.
If capital income (profits, capital gains, etc.) were properly taxed and people with lower incomes had more money in their pockets, demand inflation would merely be reflecting true needs of society (food, housing, etc). The answer would be obvious - to increase supply, using government money when necessary. When the supply cannot be increased either domestically or from overseas sources, targeted policies are required depending on the situation. Isn’t this the job of government?
We also need to measure inflation correctly to reflect costs for the necessities of life. Naturally, the average household’s largest expense (housing) would make up the biggest part of that. And because we’re talking about people, not money, we must first meet basic human needs. So, renting costs must be prioritised over the costs of owning a home. People must have a place to live. NZ has messed this up on a grand scale.
Yet, as rents soared, the RBNZ and the government (people who are being paid big money to serve society’s best interests!) made rents even more expensive. Apparently that inflation didn’t count. Yet inflation that hits the richer members of society gets a massive response. Who are the Reserve Bank and government really serving?