RBNZ's Conway wary of 2024's surge in administered prices, including council fees, charges and fines, plus higher Government fees & charges, turning into generalised inflation
Where do you even start on that lot, that is essentially an explanation of the absolute failure of the Interest Rate Inflation Targetting System.
A system that has failed because the price of land and housing not being included in the measure of inflation for money supply adjustment saw an alarm system with the alarm bells removed.
The removal of the alarm bells has allowed the multilayered private banking network that provides our money supply as their debt to rack up foreign debt liabilities in housing many times the ability of the productive sector capacity of our nation, present or future, to ever afford, we are trading insolvent.
A lack of monitoring of imported goods versus the long-term ability of the national income to cover (All the non-productive toys), along with thoughtless false economics of mass immigration has added to the insolvency.
A result of that is a population being drained by foreign debt repayment demands, that as our income producing assets have been sold to foreign corporations because of the systemic insolvency, the Government unable to carry the burden is dispersing it to every corner of the economy to hide the fact.
Nothing short of a recognition of this systemic insolvency, the role of the private banking network, and its regulators, then the private banks being told to share the pain and return what has been the proceeds of crime back to its victims in real debt relief, not just lower interest rates, or worse the victim allowed to go interest only on their loans, will rebalance the economic playing field in way that does not revictimise the victims, and increase the proceeds of crime of the criminals, because I'm sorry but I don't believe it has all been simply a bumbling mess.
Please read this below and then convince me Paul Conway and his cohorts at the Council of Financial Regulators are not turning a blind eye to something they know is contributing greatly to the financial instability of New Zealand:
An email trail released in an official information request reply from the New Zealand Treasury makes it very clear to anyone with a half a brain exactly what is the greatest cause of the economic instability New Zealand is suffering.
That being due to the price of land, price of sales of existing housing and the cost of mortgage interest not being included in the measure of inflation for monetary policy adjustments, has allowed the foreign privately owned investment banks that provide our money supply as loans owed to them, to loan much more of their computer typed money creating credit into the non export producing residential housing sector than than the productive sectors or the people of our economy could ever afford.
In the emails a bunch of young Treasury policy wonks are conversing about how they have just realised the fact that the price of land or the sale of existing houses has not been accurately accounted for in the measure of inflation for decades and the detrimental impact of this upon New Zealand society given how the banking sector has taken advantage in lending more into housing than should ever have been allowed.
Back in 1999, the price of land and sales of existing houses was removed from the equation for measuring the level of inflation for monetary policy adjustment.
Many argued at the time and many since that this would be a great moral hazard essentially removing the bells from the Interest Rate Inflation Targeting alarm system, which would allow the banking sector to lend unsustainable amounts of written credit for the destructive unproductive trading of already existing houses for capital gains on the land price.
Former Minister of Finance Grant Robertson has written of his concerns about house pricing not being adequately accounted for in the measure of overall price inflation.
Many impeccably credentialed people among international regulatory agencies condemned Interest Rate Inflation targeting as an outright failed system after the 2008 fraud-induced global financial crisis.
Yet to read these young policy wonks having these "quiet" discussions, asking such questions as "why, is there interest being shown from the parliament" reminds me of looking at a picture of young boys running onto an old battlefield and playing with unexploded artillery shells not having a clue of the danger, as some more senior people are quietly trying to encourage them to put them down and move away.
Subject: FW: Media Release: Reserve Bank's response to Minister of Finance
Hey Bastiaan, Chris and Gabbi,
I’ve been further pondering how housing enters the CPI and increasingly coming to the view that urban land is significantly underrepresented. The home ownership component only includes construction costs because the land is treated as an asset. To me, this unreasonably overlooks the significant consumption cost of urban land (whether measured as the direct land price, imputed rents, or mortgage costs), and inflation of urban land costs has been, if anything, the rising price of greatest social concern over the last decade. Urban land is included to a minor extent –
it’ll be indirectly captured in market rentals and real estate fees (to the extent that these are correlated with house prices), but owner-occupied urban land costs are otherwise omitted. I’ve outlined my thoughts in a bit more detail in the email below from December.
I’m wondering what the CPI would look like if it had, say, 5% weight on urban land (whether measured as direct land price, imputed rents, or mortgage costs). Do you know what the best long term nationwide time series of urban land prices would be? Would it be REINZ median section prices?
Here in New Zealand during the Five Yearly Monetary Policy Committee Review process the topic of if Real Estate is measured accurately enough in the CPI measure of inflation used for monetary policy adjustments, the private banking sector won the day over those that raised concerns, with basically been judged it should remain the same because the public now trust it:
Treasury Advice on the Reserve Bank's Proposed Scope of Remit Advice Information Release
This will include a discussion of alternative price measures and how housing costs are incorporated into the CPI in New Zealand
34.
One area of concern raised in public submissions was the role of housing costs and house prices in the measurement of inflation. One submission also raised concerns around the inflationary outcomes over time for working class communities. However, most public submissions generally supported retaining the Consumer Price Index (CPI) as the price measure targeted by the MPC.
35.
While the current position of the RBNZ is that the CPI remains fit-for-purpose, given the public interest in this issue we believe there is value in including the definition, or measurement, of prices in the second consultation."
My house insurance increased by 35% this year after a 25% increase last year. Getting up there!
Same. Even after increasing the excess so we basically only claim for catastrophic loss.
Wow, good work Bernard.
Where do you even start on that lot, that is essentially an explanation of the absolute failure of the Interest Rate Inflation Targetting System.
A system that has failed because the price of land and housing not being included in the measure of inflation for money supply adjustment saw an alarm system with the alarm bells removed.
The removal of the alarm bells has allowed the multilayered private banking network that provides our money supply as their debt to rack up foreign debt liabilities in housing many times the ability of the productive sector capacity of our nation, present or future, to ever afford, we are trading insolvent.
A lack of monitoring of imported goods versus the long-term ability of the national income to cover (All the non-productive toys), along with thoughtless false economics of mass immigration has added to the insolvency.
A result of that is a population being drained by foreign debt repayment demands, that as our income producing assets have been sold to foreign corporations because of the systemic insolvency, the Government unable to carry the burden is dispersing it to every corner of the economy to hide the fact.
Nothing short of a recognition of this systemic insolvency, the role of the private banking network, and its regulators, then the private banks being told to share the pain and return what has been the proceeds of crime back to its victims in real debt relief, not just lower interest rates, or worse the victim allowed to go interest only on their loans, will rebalance the economic playing field in way that does not revictimise the victims, and increase the proceeds of crime of the criminals, because I'm sorry but I don't believe it has all been simply a bumbling mess.
Please read this below and then convince me Paul Conway and his cohorts at the Council of Financial Regulators are not turning a blind eye to something they know is contributing greatly to the financial instability of New Zealand:
An email trail released in an official information request reply from the New Zealand Treasury makes it very clear to anyone with a half a brain exactly what is the greatest cause of the economic instability New Zealand is suffering.
That being due to the price of land, price of sales of existing housing and the cost of mortgage interest not being included in the measure of inflation for monetary policy adjustments, has allowed the foreign privately owned investment banks that provide our money supply as loans owed to them, to loan much more of their computer typed money creating credit into the non export producing residential housing sector than than the productive sectors or the people of our economy could ever afford.
In the emails a bunch of young Treasury policy wonks are conversing about how they have just realised the fact that the price of land or the sale of existing houses has not been accurately accounted for in the measure of inflation for decades and the detrimental impact of this upon New Zealand society given how the banking sector has taken advantage in lending more into housing than should ever have been allowed.
Back in 1999, the price of land and sales of existing houses was removed from the equation for measuring the level of inflation for monetary policy adjustment.
Many argued at the time and many since that this would be a great moral hazard essentially removing the bells from the Interest Rate Inflation Targeting alarm system, which would allow the banking sector to lend unsustainable amounts of written credit for the destructive unproductive trading of already existing houses for capital gains on the land price.
Former Minister of Finance Grant Robertson has written of his concerns about house pricing not being adequately accounted for in the measure of overall price inflation.
Many impeccably credentialed people among international regulatory agencies condemned Interest Rate Inflation targeting as an outright failed system after the 2008 fraud-induced global financial crisis.
Yet to read these young policy wonks having these "quiet" discussions, asking such questions as "why, is there interest being shown from the parliament" reminds me of looking at a picture of young boys running onto an old battlefield and playing with unexploded artillery shells not having a clue of the danger, as some more senior people are quietly trying to encourage them to put them down and move away.
A sample here:
From: Matthew Galt [TSY] <Matthew.Galt@treasury.govt.nz>
Sent: Wednesday, 13 January 2021 10:44 am
To: Bastiaan van der Scheer [TSY] <Bastiaan.vanderScheer@treasury.govt.nz>; Chris Parker [TSY]
<Chris.Parker@treasury.govt.nz>; Gabrielle Groube <Gabrielle.Groube@treasury.govt.nz>
Subject: FW: Media Release: Reserve Bank's response to Minister of Finance
Hey Bastiaan, Chris and Gabbi,
I’ve been further pondering how housing enters the CPI and increasingly coming to the view that urban land is significantly underrepresented. The home ownership component only includes construction costs because the land is treated as an asset. To me, this unreasonably overlooks the significant consumption cost of urban land (whether measured as the direct land price, imputed rents, or mortgage costs), and inflation of urban land costs has been, if anything, the rising price of greatest social concern over the last decade. Urban land is included to a minor extent –
it’ll be indirectly captured in market rentals and real estate fees (to the extent that these are correlated with house prices), but owner-occupied urban land costs are otherwise omitted. I’ve outlined my thoughts in a bit more detail in the email below from December.
I’m wondering what the CPI would look like if it had, say, 5% weight on urban land (whether measured as direct land price, imputed rents, or mortgage costs). Do you know what the best long term nationwide time series of urban land prices would be? Would it be REINZ median section prices?
Cheers, Matt
From: Matthew Galt [TSY]
Sent: Friday, 11 December 2020 11:44 am
To: @Macroeconomic and Fiscal Policy <MacroeconomicAndFiscalPolicy@treasury.govt.nz>; Bastiaan van der
Scheer [TSY] <Bastiaan.vanderScheer@treasury.govt.nz>; Chris Parker [TSY] <Chris.Parker@treasury.govt.nz>; VictorKuipers [TSY] <Victor.Kuipers@treasury.govt.nz>; Stephen Revill [TSY] <Stephen.Revill@treasury.govt.nz>; Siobhan
Duncan [TSY] <Siobhan.Duncan@treasury.govt.nz>; Leona Feng [TSY] <Leona.Feng@treasury.govt.nz>
Subject: RE: Media Release: Reserve Bank's response to Minister of Finance
In full here:
[https://www.treasury.govt.nz/sites/default/files/2022-04/oia-20210332.pdf]
Here in New Zealand during the Five Yearly Monetary Policy Committee Review process the topic of if Real Estate is measured accurately enough in the CPI measure of inflation used for monetary policy adjustments, the private banking sector won the day over those that raised concerns, with basically been judged it should remain the same because the public now trust it:
Treasury Advice on the Reserve Bank's Proposed Scope of Remit Advice Information Release
https://www.treasury.govt.nz/sites/default/files/2022-10/rbnz-info-release-tr-1724_2.pdf
"The measure of prices and housing costs
8
This will include a discussion of alternative price measures and how housing costs are incorporated into the CPI in New Zealand
34.
One area of concern raised in public submissions was the role of housing costs and house prices in the measurement of inflation. One submission also raised concerns around the inflationary outcomes over time for working class communities. However, most public submissions generally supported retaining the Consumer Price Index (CPI) as the price measure targeted by the MPC.
35.
While the current position of the RBNZ is that the CPI remains fit-for-purpose, given the public interest in this issue we believe there is value in including the definition, or measurement, of prices in the second consultation."
Sort of, sort of, sort of !?!?!?
I do like this economist bloke, who would have thought I'd ever find this stuff interesting!
Thank you Bernard.