2020 Predictions

[Jeffa]

Of course, almost next-to-no currency is 'printed.'
As I see it, it's a digital expansion of credit 'money.'
And - as Spaceman has observed - when that is not equivalent to (backed by) an expansion of products and services in the economy, it's inflationary.
Excessive amounts = New Zimbabwe.

I like my pay wave app on my iPhone...I wasn't really looking forward to pushing a wheelbarrow full of cash to buy my one big Ben pie in 2030.

[Learning]

I wasn't really looking forward to pushing a wheelbarrow full of cash to buy my one big Ben pie in 2030.

The value of the pie will remain relative to the value of the currency. Minimum wage will be $100/hr. The $1 coin will be the lowest denomination currency with the size and weight of the current 10c piece. The important question is will Adern's picture be on the $1,000 dollar note?

[McDuck]

So no money should be printed ever because it's always theft???...….come now ….don't descend into complete dribble,

Money must be created to cope with an expanding economy........quantitative easing isn't printing money as such, it is the buying up of large amount of securities to inject liquidity into the market. Yes it can be done with freshly "printed" money but it isn't the same thing as merely printing fresh money.

Cheers
Spaceman

Ha. You might just get banned for being too lippy.

I've been thinking about this problem.

It actually uncovers an intrinsic problem at the heart of mathematics that no one has figured out yet.

A possible solution, to this problem of quantitative easing, would lay in the serial numbers on the bottom of each five dollar bill.

I think that computers have given us a new solution.

Each new dollar issued should have a slightly lower value than all the preceding dollars.

And the serial number gives you the actual value, date locked, to the quantity in circulation at the time of issue.

[PC]

Just bring back gold coins! (No clipping or sweating them allowed).

[Jeffa]

In regards to quantitative easing..

"The Bank remains prepared in its business continuity role to ensure a well-functioning financial system, including ongoing consumer and business access to credit and cash, liquidity to the banking system and a stable payments and settlements system," the Reserve Bank says.

Its Governor speak for...everybody please line up for your mortgages in an orderly fashion....

[Bluekiwi]

I wouldn't worry about what Shamubeel says - he is wrong on most things.
If he make a call and is wrong he just shrugs his sholders - if Adrian make a call and gets it wrong he can stuff up the country.

The Sham is the worst so called Economist I have ever seen, don't know why he gets so much public attention.

So if OCR goes down .5% how much can they really drop interest rates.
There is a point when depositors wont keep depositing, is it 2% ???

Where do you put money if you cant put it in shares or deposits.

[Wayne]

The Sham is the worst so called Economist I have ever seen, don't know why he gets so much public attention.

So if OCR goes down .5% how much can they really drop interest rates.
There is a point when depositors wont keep depositing, is it 2% ???

Where do you put money if you cant put it in shares or deposits.

And the deposit bit is the conumdrum that the banks have.
Banks don't use the OCR for long rates. Under the rules they have to more closely match borrowing and lending terms (rules since the GFC caught them out when they borrowed short and lent long). The OCR is a daily rate so you can't use that for 1yr terms.
Long terms are driven but what it costs them to borrow for the same terms - so term deposits and overseas.

[Bluekiwi]

Yep, got that, but they change rates and consumers expect rate changes, using OCR change as the trigger point for that.
Of course in reality its really what longer term funding costs are for them related to the Fed and international money markets, for those longer rates.

I see a point where a global slow down sends longer funding costs lower for longer, but their also comes a point like the GFC where risk aversion affects supply of funds to NZ and the cost of that funding rises substantially.



I am just coming up for renewal in early May for 1.7m so considering very hard whether to go 3.35 18 months, or lock in a 5 year rate, in case things get bad.

[Jeffa]

CHRISTMAS ARRIVES EARLY IN THE U.S, 2020
The fed cut interest rates by 50 basis points (0.5%)in an unprecedented move .

*WHAT WE KNEW:A cut was expected at the March Fed meeting .Would it be 25 or 50 basis points was the question.

*THE CURVEBALL: It arrived early

They are now at the 1% lower bound for the Fed Fund rates .The actions that have been taken here are historic .This was a desperate move.

UNDERSTAND VERY CLEARLY WHAT THIS MEANS
When the derivatives start to unravel
Once the upside down pyramid begins to tumble
Once the cascade occurs
We can expect even more money printing because interest rates will already likely be at 0%

The perfect storm.....

[Bluekiwi]

CHRISTMAS ARRIVES EARLY IN THE U.S, 2020
The fed cut interest rates by 50 basis points (0.5%)in an unprecedented move .

*WHAT WE KNEW:A cut was expected at the March Fed meeting .Would it be 25 or 50 basis points was the question.

*THE CURVEBALL: It arrived early

They are now at the 1% lower bound for the Fed Fund rates .The actions that have been taken here are historic .This was a desperate move.

UNDERSTAND VERY CLEARLY WHAT THIS MEANS
When the derivatives start to unravel
Once the upside down pyramid begins to tumble
Once the cascade occurs
We can expect even more money printing because interest rates will already likely be at 0%

The perfect storm.....

Does this affect the cost for NZ banks to borrow long term, will this mean lower rates for us at the 5 year end ??????????????

[Jeffa]

Does this affect the cost for NZ banks to borrow long term, will this mean lower rates for us at the 5 year end ??????????????

You shouldn't be taking financial advice from a dodgy guy named Jeffa on a open forum...but from my opinion...ARE YOU SERIOUS? Inflation is about to wipe out a good chunk of your debt and you want to fix for 5 years???..Why do you think the government borrowed 12 billion for infrastructure??

[Jeffa]

Fed Chair Powell says he would want to see persistent rise in inflation before hiking rates again
PUBLISHED WED, DEC 11 2019 2:54 PM EST
UPDATED WED, DEC 11 2019 6:59 PM EST

https://www.cnbc.com/2019/12/11/fed-chair-powell-says-he-would-want-to-see-persistent-rise-in-inflation-before-hiking-rates-again.html

The study analyzed the first 41 confirmed cases of new coronavirus admitted to Wuhan between December 16, 2019 and January 2, 2020. The results showed that of the first 41 confirmed cases,

https://web.archive.org/web/20200130090050/http://www.bjnews.com.cn/news/2020/01/27/680493.html

[Bob Kane]

Inflation is about to wipe out a good chunk of your debt and you want to fix for 5 years???..

Are you expecting inflation to increase soon?

[Jeffa]

I'm going off line for an unspecified time...Im going to get pinched...

[Jeffa]

Here's a prediction, interest rates for mortgage borrowers will be advertised @2.89 %in the next 12 to 18 months....

https://i.stuff.co.nz/business/119943044/heartland-jumps-back-into-home-loan-market-with-289-interest-rate