If this is your first visit, be sure to
check out the FAQ by clicking the
link above. You may have to register
before you can post: click the register link above to proceed. To start viewing messages,
select the forum that you want to visit from the selection below.
So banks don't borrow off-shore at all?
It is odd that when the GFC hit banks stopped lending to one another and the money dried up - this wouldn't happen if banks just created all they wanted.
I think you are over simplifying things for effect.
I though the OCR is used to control inflation?
With inflation around 0%, the OCR will stay around 2-3%.
I'm picking inflation will stay <2% for ages - 5-10 years or so.
So I'd expect the OCR to stay < 4% for the next 5-10 years as well.
I don't understand how anyone could predict mortgage rates of 7-8% - I presume they see high inflation is coming.
I wish they would explain why they think that.
The OCR is a means of controlling liquidity.
Theory is if rates is low people will spend (as cost of money is low).
Consumption goes up till it hits capacity limits so prises rise (supply and demand) and we have inflation.
Not working at the moment and central banks are a bit buggered - so we get -ve OCR etc.
It seems to me that all the financial connections are broken and it will be a long time before they are fixed.
I suspect the issue is all the intevention that happens - if left to the market there would be a big bout of pain and then it would sort itself out.
The OCR is a means of controlling liquidity.
Theory is if rates is low people will spend (as cost of money is low).
Consumption goes up till it hits capacity limits so prises rise (supply and demand) and we have inflation.
Not working at the moment and central banks are a bit buggered - so we get -ve OCR etc.
It seems to me that all the financial connections are broken and it will be a long time before they are fixed.
I suspect the issue is all the intevention that happens - if left to the market there would be a big bout of pain and then it would sort itself out.
I agree with the last sentence there. If we had an actual housing market, prices would go up, then drop, some would get caught out and it would all start again. But this is not allowed to happen.
It's been said many times before, the cure for high prices is high prices.
But this assumes things are allowed to behave in a normal capitalist market way.
A big bout of pain is what is happening in Greece right now. People getting their just desserts sounds great in theory but be careful what you wish for.
I honestly don't know why the government doesn't just implement a CGT. 33% for 5 years, 20% thereafter. It wouldn't fix all of the housing market issues sure, but the money could be put to decent use in our society. The investment market would absorb it and keep trucking along just like they do in every single other society that has had CGT for years.
I honestly don't know why the government doesn't just implement a CGT . . . the money could be put to decent use in our society.
Optimist! Very strong emphasis on could be.
If they can get the electorate to swallow the sophistries and lies which need to be spun, any NZ gummint would love a CGT, because their inflationary policies reward them with more tax to spend on their spouses subsidised air travel, post-MP perks, W'gton accommodation supplements, and so on.
Can some one please tell me about anything that has reduced in price due to increasing the taxes on it?
Anything? One little real world example please!
The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.
The OCR is a means of controlling liquidity.
Theory is if rates is low people will spend (as cost of money is low).
Consumption goes up till it hits capacity limits so prises rise (supply and demand) and we have inflation.
Not working at the moment and central banks are a bit buggered - so we get -ve OCR etc.
It seems to me that all the financial connections are broken and it will be a long time before they are fixed.
I suspect the issue is all the intevention that happens - if left to the market there would be a big bout of pain and then it would sort itself out.
we now have a global market place - more and more open to cross border trade (including property). Once we had more closed markets and the impact of the local central reserve bank on the local market was more direct...
Are the connections broken or is the local regulator unable to influence the now global market place?
Just look what happened when the GFC hit. The RBNZ lowered rates from 8.5% to 2.5% and mortgages got cheaper overnight. They didn't have to wait for new cheaper borrowing opportunities to open up or anything.
That is a misunderstanding of double entry accounting.
Deposit is part of the reserve/capital requirements. This is why it's called fractional reserve system, banks don't have to hold $1 for each $1 of lending.
Comment