RBNZ engineering our next recession

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Forums › Finance and wealth management › RBNZ engineering our next recession

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#3001086 25-Nov-2022 07:35

johno1234:

I agree. It just didn't need to be as bad is it is now. We as amateurs have the benefit of hindsight but I expect a lot better from the governor and the political policy he operates under.

I doubt that no amount of qualifications and experience could have foreseen the future of the pandemic and the Ukraine war. I vaguely recall that the pandemic will ease in time as the lockdowns do work. I don't recall anyone foreseeing a 3 year + timeframe. The war was to be 3 weeks according to the military experts, now its 9 months while Putin screws the poor Ukrainian people, and them and the rest of us bear economic and energy woes as we fight him. You can't predict this, if you were in a rough ballpark, that's luck, its just not possible to look ahead.

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gzt

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#3001087 25-Nov-2022 07:47

There are big big numbers of people living paycheque to paycheque, and a lot of belt-tightening will have been done already as everything started to spike over a year ago. For those people, spending less means moving closer to or under the poverty line.

Yes indeed. Nevertheless spending on all kinds of consumer and luxury goods is very very healthy due to confidence and in many cases as is usual in NZ funded by credit cards and other consumer finance providers.

tdgeek

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#3001091 25-Nov-2022 08:00

GV27:

Again, the fact that other places make mistakes is not a good enough reason to overlook the ways in which we made life harder for ourselves than it needs to be.

Who made mistakes? If you listed say, 30 first world countries, you wont see a list of solid performances and a few mistake countries. You will see a list where ALL made mistakes

So, are ALL Govts and ALL global RBNZ equivalents, useless? Either they all are, or all faced an unknown situation that was not forseeable. We are no different to anywhere else, no one is patting our backs, we just happen to be doing ok, better than most. The only mistake I can recall was the ultra short term UK PM

GV27

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#3001151 25-Nov-2022 08:22

tdgeek:

So, are ALL Govts and ALL global RBNZ equivalents, useless? Either they all are, or all faced an unknown situation that was not forseeable. We are no different to anywhere else, no one is patting our backs, we just happen to be doing ok, better than most. The only mistake I can recall was the ultra short term UK PM

There is plenty of valid criticism to be made of how RBNZ responded to Covid and in the stages after NZ opened up again.

For some reason people want to keep saying that other central banks were making mistakes too, like it somehow excuses the ones ours made. It does not.

We have this weird reflexive reaction to criticism of people who are extremely well paid who fail at their core roles yet never seem to resign or operate with a sense of accountability, possibly because it threatens our weird idea of Kiwi Exceptionalism. We aren't special and we aren't going to get better outcomes if we keep playing down the mistakes we do make.

GV27

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#3001152 25-Nov-2022 08:25

tdgeek:

You can't predict this, if you were in a rough ballpark, that's luck, its just not possible to look ahead.

Inflation was running hot in NZ before the war in Ukraine, despite what people keep saying.

https://croakingcassandra.com/2022/11/04/making-stuff-up-and-misleading-parliament/

tdgeek

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#3001156 25-Nov-2022 08:32

GV27:

There is plenty of valid criticism to be made of how RBNZ responded to Covid and in the stages after NZ opened up again.

For some reason people want to keep saying that other central banks were making mistakes too, like it somehow excuses the ones ours made. It does not.

We have this weird reflexive reaction to criticism of people who are extremely well paid who fail at their core roles yet never seem to resign or operate with a sense of accountability, possibly because it threatens our weird idea of Kiwi Exceptionalism. We aren't special and we aren't going to get better outcomes if we keep playing down the mistakes we do make.

So had RBNZ done what you suggest all would be sweet? No. Not even close. Perhaps they should resign? Every 6 months is what would happen, but if you feel its all entirely predictable, not much else to add

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#3001157 25-Nov-2022 08:32

An alternative tool for RNBZ to use would be income tax.
I have paid my mortgage off. So interest rates won’t impact me
If the RBNZ could add 5% tax then I and many other people would be impacted
Also people on fixed mortgages would also be impacted by a 5% income tax increase

tdgeek

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#3001159 25-Nov-2022 08:39

GV27:

Inflation was running hot in NZ before the war in Ukraine, despite what people keep saying.

https://croakingcassandra.com/2022/11/04/making-stuff-up-and-misleading-parliament/

The Governor of the Reserve Bank seems just not to care, treating Parliament’s Finance and Expenditure Committee with as much contempt, and disregard for basic standards of honesty and care as some juvenile delinquent.

ok...

No one said inflation wasn't there pre war. I recall you saying that our inflation is largely home grown, so Covid supply issues are not important, and that continues. And the subsequent war is probably not that important as the blame is NZ's poor management. Look at the rest of the world, and no, thats not a convenient excuse to let NZ off. Why is everywhere globally in the same situation? And in most cases, worse. Surely they can't all be useless? If a lot of countries had acceptable inflation and employment then yes, the rest and NZ are useless. But that's not the case

tdgeek

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#3001162 25-Nov-2022 08:45

Eitsop: An alternative tool for RNBZ to use would be income tax.
I have paid my mortgage off. So interest rates won’t impact me
If the RBNZ could add 5% tax then I and many other people would be impacted
Also people on fixed mortgages would also be impacted by a 5% income tax increase

Not allowed tax increases in NZ. (Yes, that would reduce spending) Just tax cuts.... (yes that would increase inflation)

What we seem to want here is higher wages, lower prices, low inflation, low unemployment, low house prices and so on. Any failures in any of those is todays news

Like everywhere else, we need to hunker down

Eitsop

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#3001164 25-Nov-2022 08:48

Reason I suggest income tax as an alternative tool for RBNZ
Is that it also impacts people without mortgages. And people with fixed mortgages

As interest rate increases disproportionately impact younger people with larger mortgages

wellygary

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#3001172 25-Nov-2022 09:07

Eitsop: An alternative tool for RNBZ to use would be income tax.
I have paid my mortgage off. So interest rates won’t impact me
If the RBNZ could add 5% tax then I and many other people would be impacted
Also people on fixed mortgages would also be impacted by a 5% income tax increase

What!!, and give the Government more money to spend,???

If the RBNZ were to use tax rates to cool and stimulate the economy it would also have to regulate how much government spending/saving there was....

No politician on the planet is going to let an independent central banker control what spending they do... ever...

Next idea please :)

Eitsop

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#3001176 25-Nov-2022 09:15

wellygary:
Eitsop: An alternative tool for RNBZ to use would be income tax.
I have paid my mortgage off. So interest rates won’t impact me
If the RBNZ could add 5% tax then I and many other people would be impacted
Also people on fixed mortgages would also be impacted by a 5% income tax increase

What!!, and give the Government more money to spend,???

If the RBNZ were to use tax rates to cool and stimulate the economy it would also have to regulate how much government spending/saving there was....

No politician on the planet is going to let an independent central banker control what spending they do... ever...

Next idea please :)

The increase tax take could be paid to RBNZ
Or mandated to pay debt

But what is wrong with using extra cash to pay more for nurses. Or pay trainee nurses minimum wage while doing on the job training

GV27

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#3001191 25-Nov-2022 09:47

tdgeek:

No one said inflation wasn't there pre war. I recall you saying that our inflation is largely home grown, so Covid supply issues are not important, and that continues. And the subsequent war is probably not that important as the blame is NZ's poor management. Look at the rest of the world, and no, thats not a convenient excuse to let NZ off. Why is everywhere globally in the same situation? And in most cases, worse. Surely they can't all be useless? If a lot of countries had acceptable inflation and employment then yes, the rest and NZ are useless. But that's not the case

I did not say they were home grown. I'm saying we made them worse by being slow to lift the OCR and as a result, the dollar has slid much more than it might otherwise have been expected to.

Like I say, if inflation going on around the world is going to effect us, then it's even more important we get the bits we can control right. We have not. It's that simple. And despite the huge issues we now face, we have a central bank now needing to engineer a recession to right the ship.

The fact central banks around the world have gotten this wrong is also reflected in the huge drop in credibility that central banks are facing. Actions have consequences, but not in NZ. Here's it's 'five more years'.

GV27

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#3001194 25-Nov-2022 09:50

tdgeek:

So had RBNZ done what you suggest all would be sweet? No. Not even close. Perhaps they should resign? Every 6 months is what would happen, but if you feel its all entirely predictable, not much else to add

I didn't realise we had no middle ground between just sticking our head in the sand and executing poorly performing civil servants in the street.

I'll gladly settle for 'basic accountability' when we actually get it.

johno1234

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#3001197 25-Nov-2022 09:51

tdgeek:

GV27:

There is plenty of valid criticism to be made of how RBNZ responded to Covid and in the stages after NZ opened up again.

For some reason people want to keep saying that other central banks were making mistakes too, like it somehow excuses the ones ours made. It does not.

We have this weird reflexive reaction to criticism of people who are extremely well paid who fail at their core roles yet never seem to resign or operate with a sense of accountability, possibly because it threatens our weird idea of Kiwi Exceptionalism. We aren't special and we aren't going to get better outcomes if we keep playing down the mistakes we do make.

So had RBNZ done what you suggest all would be sweet? No. Not even close. Perhaps they should resign? Every 6 months is what would happen, but if you feel its all entirely predictable, not much else to add

It might not be "sweet" but it would he a great deal better. Perhaps "bad" instead of "appalling". There would be less people losing their houses because they can't afford the extra mortgage interest for example.

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