Financial Armageddon!!

[Perry]

And inflation is implicated in
those things, how, exactly?

[eri]

inflation makes people buy things now

before they go up

going into debt, buy now - pay later, becomes a form of discount

so

the money in circulation is going round really fast

with lots of people and gov. getting their cut each time it goes round

0% inflation means there is no pressure to buy now

it'll be the same price next month so the purchase can be put off

so

the money in circulation slows right right down

with everyone only getting 1 cut

eg take AK land

if it's rising 10%pa

people buy and sell houses they don't need and millions race around between banks, agents, buyers and sellers

if land prices are falling

that money go round stops

people just wait and hoard money for possible bad times ahead

...

it's a shell-game, confidence trick, magic

everyone knows it

but as long as the smoke and mirrors of inflation and fast money are moving fast enough

people are happy to get swept along

.....

the problem for the economy

is like trying to stay a little drunk

just a little too brash and confident

without tripping over through over-confidence

[McDuck]

And inflation is implicated in
those things, how, exactly?

Eri, for your idea to work, people would have to be thinking about inflation while they were picking tins at the supermarket . Bet they’re not.

Perry, I can explain it so that you can’t be tricked by the fuzziness of words.
I’ll keep it all as just ” things”.
Could you please think of a “dollar” as a “glass” containing “water”? A “thing” INSIDE another” thing” (as it were).
There is no mention of how much water is in the glass.

Say you pay for things with glasses of water.
People don’t look inside the glass to see how full it is. They just take the glass of water as a payment.
(A glass can said to be ” inflated” when there is less water compared to the glass. Less essence, less bang for the buck- so the speak.)

Bill English is saying that he’s a good boy, and his friends are good boys because they took in more glasses of water than they gave out.
What if most of the glasses were full when they went out but half empty when they came in?
Obviously, the measure of success is not the sum of the number of glasses taken in, but the sum of the volume of water inside all the glasses taken in.

He’s counting the wrong thing.
Either he’s deliberately fibbing to try and fool us, or he was reading poetry at school rather than attending science class.

[Perry]

Well, Mrs Perry has another idea. Maybe Blenglish didn't really
mean inflation - widely & generally, as a noun? Maybe he meant
price increases were not as expected? Because a price increase
in electricity, butter, or petrol, etc., means more tax revenue.
(and more dividends, in some cases). But price stability for an
extended period means (more or less) the same tax revenue.

But price increases do not make the pollies look good.

[McDuck]

.. Because a price increase
means more tax revenue...

Sounds good to me.


Here’s a slightly out-dated breakdown of what the Govt takes in. (if we believe them.)
Thanks Lance.

http://lancewiggs.com/2010/10/04/where-does-the-nz-government-get-money/

[McDuck]

Well, Mrs Perry has another idea. Maybe Blenglish didn't really
mean inflation - widely & generally, as a noun? Maybe he meant
price increases were not as expected? Because a price increase
in electricity, butter, or petrol, etc., means more tax revenue.
(and more dividends, in some cases). But price stability for an
extended period means (more or less) the same tax revenue.

But price increases do not make the pollies look good.

I'm a bit unclear about the difference between " price increases" and "inflation".
They seem like the same idea to me.
Can you elucidate?

[Perry]

I suspect one has to consider the CPI 'basket'
that the Stats people use. If one increases just
a few items that are in said basket, and those
items give the gummint the best revenue boost,
but leave the price unchanged on enough other
items in the basket, such that the overall CPI
doesn't make a big jump, wouldn't that be the
best option for Blenglish et al?

[Damap]

Also Mcduck there is comparative analysis. Compared with many similar western democracies Big White Bill has done amazingly well. May be blind luck may be brilliance but the results are pretty good.

[Perry]

Be that as it may, Damap, does it go any way to explaining the statement in question?

Falling dairy prices and low inflation have made the Government's
goal of a surplus this year a challenge, Blenglish said.

By-the-by, anyone noticed a drop in dairy prices in NZ? After all, when export prices are
high, we're told that domestic prices have to match them. On that basis, if export prices
for dairy produce has dropped substantially, the domestic price for milk, cream, butter,
cheese, etc., in NZ would have to fall too, right?

[McDuck]

Be that as it may,

Perry, how many wooden heads in this picture? Todays NZ Herald

[Perry]

One literal, one figurative.

[Perry]

Migration Boom Continues
November 24 2014

Migration is hitting new record highs with economists saying the
influx could hit 55,000 next year, potentially giving the housing
market a second wind. New Zealand had a net gain of 47,700 people in
the year to the end of October. Migration has boomed in the past two
years as more people arrived in New Zealand and fewer left, especially
for Australia. That reflects the improving job market in New Zealand,
with tens of thousands of new jobs, and a cooling labour market in Australia.

Those leaving for Australia are down to a 20-year low, and more New
Zealanders are returning from across the Tasman. There is also a flood
of overseas students coming here, many from India. Migration has been
stronger than expected and a surprise for the Reserve Bank, economists
said, adding to demand for goods and services and adding to the supply
of workers, as well, which is keeping a lid on wages.

[eri]

labour's new shift to the left

blast from the past?

The paradox is that Mr Valls’s team contains some genuine centre-left reformists who understand that the private sector needs to be freed from heavy taxes and red tape if investment is to be revived and growth to pick up.

This year will be the third year of near-zero growth in France, the first time that has happened in the post-war era.

And the French government has a good economic case for not increasing fiscal consolidation at this point.

Yet, as Jean Pisani-Ferry, head of the government’s long-term economic-strategy unit, put it recently, there is a good reason others do not trust France:

“For 15 years it has not stopped making promises that it has not kept.”

http://www.economist.com/news/europe...ficit-not-such

[Perry]

Some Stuff Snippets

New Zealand could be heading for a moderate recession in the next two
years, according to BNZ's head of research. Speaking at a Rural
Seminar Update in Hamilton, Stephen Toplis said economic indicators
showed New Zealand was at the peak of the economic cycle. He said
Kiwis were enjoying 4 per cent economic growth that had created about
72,000 jobs in the last year. Inflation was at 1 per cent while
spending power was growing by "three and a bit per cent". "At the
moment things couldn't be better from an economic perspective," he said.

---

Australia's big four banks are tipped to raise A$134 billion (NZ$151b)
from wholesale markets this financial year, the most since 2009-10, as
lenders use cheaper global funds to fuel domestic competition. New
research from NAB credit analysts forecasts that Commonwealth Bank,
Westpac, National Australia Bank and ANZ will raise A$134b (NZ$151b)
in wholesale funds in 2014-15, up from A$125b (NZ$141b) last year.

The last time banks raised this much wholesale money was in 2009-10,
when the Australian government was guaranteeing bank borrowings in
response to the global financial crisis. The trend helps to lower
banks costs, as most of the wholesale money being raised is replacing
more-expensive funding that was secured during the global financial crisis.

---

Australia has taken its engineers, its builders, its IT professionals
and its healthcare workers. Now New Zealand wants them back. In fact,
so severe has the brain drain been in recent years, that the
government is recruiting Australians to fill job market shortages
that, if left unattended, could hold back the country's growth. Prime
Minister John Key expects the economy to generate 50,000 new jobs in
the next two years, according to the country's tertiary education,
skills and employment minister Steven Joyce.

"We've had a good post-GFC period," Joyce said. "Unemployment is
dropping - we're already at 5.4 per cent and heading down quite
significantly. "Where there are risks in terms of shortages appearing,
we're taking a proactive stance and saying, 'well, we've donated a lot
of skilled people to Australia over the years and now we'd like some
back'," he said.

[Perry]

Lighter Traffic Points to Slower GDP

The economy's pedal is no longer pushed to the floor, with less
traffic on the roads in November than normal. The ANZ Truckometer
heavy traffic index fell 2.9 per cent last month, offsetting most of
the lifts of the previous two months.

ANZ said the trend remained upward but November's fall showed "early
signs of flattening out". The heavy traffic index tends to move in
line with growth in GDP, suggesting economic activity during the third
quarter slowed.