CONVENTIONAL ECONOMIC WISDOM insists that the only effective cure for rising inflationary expectations is a short, sharp recession. Easy to say, but much, much harder to accomplish – especially if you are at least nominally a party of the Left. The ghost of John Maynard Keynes is forever whispering in the ears of Labour parties – even those which long ago embraced the precepts of Neoliberalism – and his message is always the same: Spend, spend, spend.
The problem with spending in an inflationary environment is that it does nothing to discourage the notion that the price of basic items in six months’ time will be appreciably higher than they are now. In such circumstances, simple logic dictates that it is better to make a substantial purchase today, than tomorrow. They also encourage the idee fixe that one’s income must be increased to match, at the very least, the rate of inflation. Understanding this expectation, employers budget to recover the cost of increased wages and salaries by increasing the price of their goods and services.
Once stimulated, inflationary expectations, and the upward spiral in wages and prices they set in motion, are very difficult to supress.
Essentially, a government is required to make it a lot more expensive for people to borrow money. At the macro level, sharply rising interest rates have the effect of slowing economic growth. At the micro level, employers stop hiring and start firing. Those forced onto the dole face a dramatic loss of income and all discretionary spending ceases abruptly. The rest of the workforce, fearful of losing their jobs, stop demanding wage and salary increases. They also stop spending on non-essentials and start saving. Retailers now have the strongest of incentives to keep their prices stable.
Pretty soon, economic growth stalls, and then shifts into reverse. Pessimism reigns supreme. Inflationary expectations, along with inflation itself, comes to a shuddering halt.
The trick, of course, is in knowing how long to keep the interest rates going up, when to hold them steady, and when to let them drop. Keep them high for too long and the economy risks transitioning from recession to depression. Those with money, ill disposed to risk it, satisfy themselves with government-guaranteed returns. Unable to borrow, or meet their higher interest payments, businesspeople go bust, and property-owners with mortgages lose their homes. Unemployment rises, spending decreases still further, and retailers are forced to contemplate lowering their prices.
What the economists most fear now is not of inflation but deflation. The prospect of the economy simply grinding to a halt.
At this point, all eyes turn to the government. Something must be done! But governments also suffer in recessions and depressions – just like their citizens. Slowing economic activity means fewer companies making profits, fewer people in paid employment, fewer dollars being spent, and much less revenue being collected. With its own “income” shrinking, the instinct of most government’s is to sharply reduce spending. Now it is the turn of those businesses, organisations and institutions dependent on government money to feel the pinch. Exactly the same contractionary spiral that wound down the private sector, now grips the state and its hangers-on.
But the trials and tribulations of the state do not stop there. The huge number of unemployed and otherwise impoverished people have nowhere else to turn for assistance but their government. Meeting that need from a dwindling treasury, however, is the stuff of political nightmares. Just keeping the education, health and transportation systems functioning is a huge drain on the state’s resources, feeding and housing the hungry and homeless threatens to render it insolvent.
But you can’t just let people starve – can you? The hungry and the homeless themselves are likely to answer that question, as they did in New Zealand’s hungry winter of 1932, when riots tore the main streets of Auckland, Wellington and Dunedin apart. Terrified, the conservative coalition government postponed the 1934 general election by 12 months and passed the draconian Public Safety Conservation Act. Not that it did them much good. On Tuesday, 26 November 1935, New Zealanders elected their first Labour Government.
And what did that government do? It spent, spent, spent.
So, what should Jacinda and Grant do? Continue to spend, spend, spend? Or allow Reserve bank Governor, Adrian Orr, to push up the Official Cash Rate (OCR) to 5 percent and watch economic activity nosedive?
From a left-social-democratic perspective, at least part of the answer would be to embark on a massive political education campaign. Explain to Labour’s voters the havoc inflation wreaks upon the lives of ordinary people, and why it must be driven out of the New Zealand economy. Tell them defeating inflationary expectations will require the full co-operation of the whole population. Then announce a two-year wage, price and rent freeze. Further announce the state subsidisation of basic foodstuffs and energy supplies, to be paid for by higher taxes on the wealthy, the restoration of Death Duties and a Capital Gains Tax.
A return to the bad old days of Muldoonism? Damn straight! It certainly beats asking the poorest and most vulnerable New Zealanders to carry the full burden of eliminating inflation. Few people appreciate that the whole purpose of destroying Muldoonism – which was simply an eccentric form of Keynesianism – was to free the wealthy from their obligation to contribute their fair share towards the maintenance of a decent society. That was all Rogernomics and Ruthanasia were ever about: making the poor pay more so the rich didn’t have to.
Not that Jacinda and Grant are at all likely to adopt a left-social-democratic economic agenda to deal with the impending crisis. They will make the poor pay, pretend they’re not, fool nobody, and be bundled out of office in 2023.
Ironically, their policy choices may end up decisively reducing inflationary expectations. To the limited degree permitted by Neoliberal economics, the economy will recover, and the National Party will kick-off another nine year term on a thoroughly sunny note. Who knows, by the time the next election rolls around in 2026 they might even be in the mood to: Spend, spend, spend.
“Head for the hills” (or coast etc.) as Country Boy says here–if you are not already there of course!
Tom Scott cartoon for cover of Alf Kirk and Rob Campbell’s “After the Freeze” book on Muldoonism.
https://teara.govt.nz/en/cartoon/41747/tom-scott-on-the-freeze-1983
Unless new gen voters get active we are in for very stormy weather in all senses.
I think the US Federal Reserve will hike rates to make oil prices go down, and keep hiking to keep demand/oil down. Combined with current sanctions, this will make Russia weaker so the Kremlin can’t afford to invade countries. But they probably won’t want the Kremlin to fall before China does, otherwise China will think of invading Russia (they’ve already done military drills on the China/Russia border). So a very long recession seems possible
“Few people appreciate that the whole purpose of destroying Muldoonism – which was simply an eccentric form of Keynesianism – was to free the wealthy from their obligation to contribute their fair share towards the maintenance of a decent society. That was all Rogernomics and Ruthanasia were ever about: making the poor pay more so the rich didn’t have to.”
We were both born in the same year & there at the time so we both know that this is an inadequate summary of a country driven to international bankruptcy by years Muldoons blinkered domestic policies.
While it can be argued that the Douglas reforms didn’t adequately consider the social support required for the transition (a Labour Govt mind), this in no way made the economic change avoidable.
Those made redundant by Roger and Richard’s restructuring were looked after with generous redundancy payments. There were also huge expansions in welfare and state housing during that time. The Rogernomes didnt all have it their way.
The real damage was done by Ruth’s 1990/91 austerity package.
My memory of this era is that Muldoon was vilified for borrowing money to establish a security against manipulations o and availability of oil products, incurring a debt in that endeavour of $14 Billion or so. After the sale of most of these assets created for that purpose, together with many state assets that had been built over the history of NZ; that debt had been “reduced ” to about $83 Billion dollars. From where it has continued to grow.
It’s time to put Muldoon’s debt into perspective.
D J S
I suspect that the Rogernomes grossly overstated the harmful effects of Muldoon’s policies, and conspired in the deliberate sabotage of the value of the NZ$, which turned John Key into a rich man. Tragic for most of us..
My broker anticipates an 18% drop in property prices in the coming year. That’s a slap in the face for all those luvvies in Grey Lynn who voted these clowns into office.
Perfect timing for the election!
But not to those entering the market now. Cheaper housing has to be a winner for EVERYONE not you nor your appointed broker.
I think that figure come from an economist at a bank somewhere.
Hooton or Hickey -can’t remember who -on the Working Group pointed out an 18% fall just takes us back to values last year!
So you have a broker? You deserve any and every fall that is coming.
How else would I build a share portfolio?
Everyone knows the housing bubble had to end. If nothing else history tells us that. People who bought their houses as a business commodity no doubt will lose money, however if you buy a house to actually live in it will sort itself out over time. We all know interest rates normally go up not down.
This time I think you are way off the mark Chris. The big assumption underlying the economic levers and responses you’ve spelled out here, is control and influence in the single New Zealand market. The majority of Prices won’t change however, based on anything our government will do or not do, simply because we are mostly dealing with imports and exports in the global market place. Our food prices are set by global market influences, whether imported or exported. Fuel, building products, the list is pretty extensive. None of which will be impacted to any meaningful extent by anything our government or reserve bank does.
we could fix things a bit if the CC was in anyway on the ball, one company controlling 90percent of the GIB market, they shouldn’t need to be told/asked they should just do the job or pack it in.
Maybe it’s time for the Dr to retire?
You never know, she might discover a new career in medicine or philosophy or something useful like that?
Anything but politics because she kinda sucks at it.
Medicine I reckon would be good.
She could become one of those clown Dr’s. You know, the ones that visits sick people in hospitals to make them laugh.
She’d be good at that.
She could probably get her decks out and bang out some tunes to for them!
I’m sure she’ll enjoy that more and will be a lot more successful at that than she is now pretending to be a leader of a country ay.
When he nails it – Chris Trotter is the single best political writer in NZ.
Agree.
Gosh
Indeed. To bastardize the words of C.H. Douglas, “Systems were made for [people], and not [people] for systems, and the interest of man which is self-development, is above all systems”.
I would prefer we move beyond the weak remedy for the dying [person] that is Keynesianism, to a system that works for the people. But the first order of business is to destroy neoliberalism, and save the lives that will continue to be lost to this demonic system if it remains unchecked.
“Few people appreciate that the whole purpose of destroying Muldoonism – which was simply an eccentric form of Keynesianism – was to free the wealthy from their obligation to contribute their fair share towards the maintenance of a decent society.”
An oversimplification. But still a wonderful sentence.
The system is a lot different than the days of Muldoonism. For a start isn’t the GST take over 30% of government revenue? That didn’t come in until two years after he was voted out.
The frightening thing is how much of high inflation or any adverse economic event for that matter is built purely on what people are thinking or what they perceive. Things like ‘I will borrow shit loads because of course property won’t go down’. Then it does and we are supposed to all suffer because people ignored what happens time and again, and got sucked in by the likes of the NZ Herald which was a property mag masquerading as a newspaper.
I guess negative headline after negative headline could also help because everything is so doom and gloom I can’t imagine how people (that can) are not tightening their belts big time, or simply driving only when they have to.
Given this list of columnists, there will always be negative daily comments with a Labour gvt…
Steven Joyce ..Herald
Paula Bennett.. Herald
Mathew Hooten.. Herald
Richard Prebble..Herald
Audrey Yong..Herald
Mike Hosking.. Herald
John Bishop( father of Chris).. Stuff
Alex Penk( brother of Chris).. Stuff
Ben Thomas.. Stuff
Tell me again that the media isn’t bias and the media not in the hip pocket of the National party?
Good positive headline from the Herald this morning…
Steven Joyce: Don’t expect too many favours from Albo
Adrian Orr made the rich richer and is now destroying the poor.
The trouble with policies derived from economist’s theories is that economists are reductionist and look at one thing at a time (ceteris paribus) and isolate influences. The ‘economy’ is a complex system with multiple agents all interacting so economists cannot understand system dynamics. The “Limits to Growth” of 1972 introduced system dynamics to all and the economists rejected the results which informed us of needed to change to sustainable policies.Now we are in an unsustainable chaotic dead end. Rejected in ignorance economists went for business as usual and that has been confirmed by experience. There are no silver bullets. We could send economists to education camps and give the modelling of the economy to genuine scientists such as meteorologists who know how to model the complex system of the weather.
there’s no such thing as ‘economics’ they are all adherents to various ideologies and deliver advice predicated by those ideologies which rarely have anything to do with the consequences in the actual real economy.
Economists are fucking witch doctors trying to read animal entrails.
“return to the bad old days of Muldoonism”. I remember those days but maybe you don’t. The wage freeze was only for the workers. In my IT job at the time they simply changed my job title along with a hefty pay raise.
Carless days. No problem we had two.
I think the problem is that we need to get it into our heads that 2 percent interest rates are not the norm and they are not beneficial. Look at history. HIgher rates are lowering house prices and they make it a lot easier for people saving for a deposit.
I think this inflation is temporary and will reverse once we are over the shock of covid.
Labour Government made the rich richer and is now destroying the poor.
Then vote for Nation/ACT next year because they are going to tax the rich and give to the poor.
Agree.
Good heavens
This isn’t unique to NZ and is happening world wide.
Prices for everything from gas to food to electricity going up because companies say they are having hard times…then months later they all announce record profits
how much more of this BS will people take before they just say fuck it ?
Well Bob unless the rich ( which might be you if you own a house/property) sold up and realised all those gains on paper, I doubt they are feeling as rich. Just asked Andrew’s broker
That’s a lie wee Bob.
This Government operates best in a crisis. If they want to win the 2023 election they need to declare a “cost of living crisis” and use the urgency this creates/ and their historic majority to restructure the economy to fight devastating inflation. This is a once in a lifetime opportunity to throw the Rogernomics economic structure away and create something new, fairer for all. If Ardern and Robertson can articulate the changes they say are required and implement them with urgency, New Zealanders will relay behind them and odds would be on for a 3rd term with Ardern at the helm. Labour simply can’t miss this opportunity in front of us to undo the mistakes of the 4th Labour Govt and put us on a better path.
If Labour does nothing, then a crashing housing market, soaring inflation, and rising unemployment will see National and Act rise to power. And a National/ACT coalition would be a total disaster.
I think the health and water reforms will have them stretched as it is – ushering in some form of crypto based financial democracy will be beyond them.
There wont be anything left by 2026. Expect about 500,000 to have voted with their feet. More if Labour happens to win next year.
Good, we’re overpopulated per infrastructure and investment as it is, 500,000 wouldn’t go astray no matter who’s in govt.
What people like Berto don’t realize is it is Labour supporters leaving because they were duped by the liar. Nasty Natzos will stay because they have been made rich by the liar and will be made even richer by the turnip head.
What Slobbery Danny doesn’t realise is he’s no good with math and look no further than this liar.
“As an olive branch, Key took the young girl to celebrations at Waitangi that year and got Nathan a job at MP Jackie Blue’s office. Things briefly looked up for the family. But after the first term of Key’s government, Aroha moved to Australia and her mother was back on the benefit after being made redundant from her job with Blue.
Three years later Aroha, now 20, feels she was used by Key – and the Prime Minister won’t be getting her vote.
“The last time I spoke to him was when he took me to Waitangi Day. After that I have never heard from him again. I absolutely believe that I was used as a publicity stunt,” she says. “I wouldn’t vote for National.”
In the past year, New Zealand had a net loss of 15,000 migrants to Australia, well down from 36,700 a year earlier, as job prospects worsened in Australia and improved in New Zealand.
In the One News leaders’ debate, Key said only 80 New Zealanders left for Australia, 50 the month before.
“I know their names,” he quipped.
Well, he certainly knows Aroha’s name – since he last saw her in 2008, she has haunted him from afar.
Now, she says, the opportunities she has in Australia just aren’t available here.
“I have a full time job that pays good, $38 an hour,” she says. “I have a house, rent is cheap, about $265 a week for 3 bedrooms, 2 bathrooms, double garage, me and my husband are close to buying our own house. Life couldn’t be any better. There was nothing left in New Zealand.
“All this from someone who came from a ‘dead end’ street, right?”
She recently returned home to visit her mother. She couldn’t believe how expensive the price of living in New Zealand was compared to Australia.
“Petrol has shot up – $2 for petrol, really? I also brought about seven or eight items from one of the supermarkets and it came to a total of $78. No wonder people can’t fill their fridges. I’m glad I got out of New Zealand when I did.”
Over the past four years she has seen her mother’s financial situation worsen. “My mum works full time and she is still struggling really bad,” she says. “It is like she is worse off.”
“I have everything that I would never ever have in New Zealand. I would probably still be on the benefit if I lived in NZ right now.”
yeah of course you’re right bert.(sarc) any casual observer would know it is the best and the brightest who leave . The skilled, the innovators the thinkers and the creators. ( so you’re safe bert) and the drongos stay and breed. No stats on the Kiwi diaspora of course too few ( at over 1.5million and growing) who have NEVER returned.
You are right Shona.(sarc)
http://www.stuff.co.nz/national/10468960/Aroha-of-McGehan-Close-flees-NZ
Still breeding then Shona.
That’s just low level disgusting.
Come on Bert I think you should be better than that even if you don’t share their view point.
Say’s the self proclaimed drongo.
Good heavens.
Yes, you didn’t know that did you, good heavens indeed.
I would even say:
Golly gosh!
That’s got to be the most outlandish statement of all times
Not know for your intelligence are you we Bob.
Passed most every exam at school and university in the days you weren’t internally assessed.
Utter nonsense.
The rich pricks will be laughing all the way to the bank in their Ford Rangers, while the rest of us will be wiped out finanically when the mortage rates are hiked and the bosses start laying workers off.
To bad, this was the best in in over 40 years to be able to find a job, People were getting payrises of a decent about since the ECA was brought in.
Rich pricks as you describe some people don’t drive Ford Rangers they drive Range Rovers.
Well, I think that if the government were to curtail their spending, then it wouldn’t necessarily result in a period of recession especially because of the fact we’re currently in the process of reopening our borders to the world.
If savings were to be encouraged as well as putting a sensible cap on government spending and if the government were to both repay debt and invest in infrastructure where possible all in the same, or reasonably similar, time period, then our economy would get back on the right track quite quickly.
SO what cuts would you make then, bearing in mind that our health and education systems are on the verge of collapse, thousands of people are living in motels, and our infratructure is falling apart.
If you are an enemy of public services, you are an enemy of humanity.
Cut every single PR person from Waka Kotahi. Cut all 900 PR people in the Beehive. Cut most of the extravagant consulting contracts dished out. All the above can be done by lazy backbench MPs on big salaries. Then cut every every ministry that is not essential. Then cut all the fat out of every layer in that massive bureaucracy we now have. Cutting govt spending has to start right at the top. A country with 5 million people could be run with half the people if they used their day properly.
All about cut, cut cut. That is the problem with people like you. You just want to tear things down. The left want to build things up. School, hospitals, state housing you name it. Rich pricks like you have had to too good for too long.
Correct, but they never see the carnage they leave behind. Eh drongo Shona.
Millsy
You need to realise that every employee in the Wellington bureaucracy represents zero productivity: the nation’s treasure and human capital deployed in roles that produce no products or services of any worth by any measure you care to mention.
Ask yourself: Has the Women’s Affairs ministry improved the lives of any women in NZ? Ditto Maori Affairs and Pacifika Affairs. How’s about the Ministry of horse racing? FFS
All that taxpayers money consumed by these organisations could have paid for thousands of elective surgeries or school buildings, or whatever.
“You need to realise that every employee in the Wellington bureaucracy represents zero productivity:”
This is a statement, not an opinion( see the difference wee Bob)so provide evidence Andrew.
Dan. How does the government build infrastructure and curtail spending at the same time? We are so far behind with infrastructure in New Zealand we can’t afford to not spend money. Just look at the health system. Middlemore Hospital can’t cope with demand and Whangarei Hospital has sewerage running down the inside walls and windows fall out of the building when the rescue helicopter lands on the roof. Years of under investment are starting to really show.
So the right wingers are right about inflation then?
no – it’s just their latest meme
Freda – this website does not make it clear who you are replying to, and your comment is often held back for approval, so that it comes out way down the line, apparently out of context. So I am replying without knowing your original intent.
Right wingers push theories that make them richer. They will claim privacy for profits, but as soon as there is a disaster like Covid, they will all jump in and claim socialist support from a Govt trying to avert instant financial collapse.
Right wingers are, by and large, amoral profit-gouging bastards.
When it suits them, they will profit from inflation while blaming a left-wing Govt for that inflation.
They are a nasty, anti-social lot. OK?
That’s a huge generalisation.
No wee Bob, that’s realism.
” was to free the wealthy from their obligation to contribute their fair share towards the maintenance of a decent society ”
And yet I remember Douglas quite clearly saying that his main focus was to remove privilege. And then redistribute that state support into the top twenty per cent and enriching them beyond their wildest dreams as was done with as in 1990 with the BNZ conveniently gifted to the incoming National government a climate of crisis as in 1984 and there is no alternative narrative was used to terrify the population of impending bankruptcy to justify these reforms.
” Not that Jacinda and Grant are at all likely to adopt a left-social-democratic economic agenda to deal with the impending crisis. They will make the poor pay, pretend they’re not, fool nobody, and be bundled out of office in 2023 ”
Which begs the question of the continued existence of the NZLP which is only a feel good vote for neo liberalism that is just a little center of the National party.
The LINO party will never and can never do anything to assist the people it claims to care about which is a fraudulent position put up every three years like the Liberals in Canada , Labour in the UK , Labor in Australia and the Democrats in the U.S because they represent corporate , capitalist forces under the guise of pretend social democrat presenting non threatening friendly market policies .
Genuine left wing causes still exist and are supported by many unmolested by the corporate media like Jeremy Corbyn and Bernard Sanders.
But you can’t just let people starve – can you? The hungry and the homeless themselves are likely to answer that question, as they did in New Zealand’s hungry winter of 1932, when riots tore the main streets of Auckland, Wellington and Dunedin apart. Terrified, the conservative coalition government postponed the 1934 general election by 12 months and passed the draconian Public Safety Conservation Act. Not that it did them much good. On Tuesday, 26 November 1935, New Zealanders elected their first Labour Government.
Interesting reading these comments but there is a huge piece of context missing – ‘The system’ of economics, is actually nested in society (as above) and that just happens to be nested in a rather critical partner – nature. Everything above is true (to some degree) – but repeating it (and the old medicine) doesn’t get us out of this existential and political mess, local or global.
We could try re-sourcing ourselves here, as Aotearoa NZ is something of a goldilocks country, the climate and abundance of volcanic fertilised islands with a living indigenous culture of some 800 years experience of sustaining itself, (a valuable playbook for us beginners and to get going with) and energy, food, water, shelter shouldn’t be / isn’t a big ask – then we could reimagine doing something useful with our time, something that looks after each other and our amazing land – something useful that will sustain us. I know this is a simplification – but the opportunity is real.
The “living indigenous culture with some 800 yrs of sustaining itself” is a fanciful noble savage idea. Contemporary Maaori culture is – inevitably – a very different beast from what is was 200 yrs ago. And what works for a couple of hundred thousand hunter-gatherers and subsistence farmers is one thing; sustaining 5 million people is another challenge altogether.
Interesting reading these comments but there is a huge piece of context missing – ‘The system’ of economics, is actually nested in society (as above) and that just happens to be nested in a rather critical partner – nature. Everything above is true (to some degree) – but repeating it (and the old medicine) doesn’t get us out of this existential and political mess, local or global.
We could try re-sourcing ourselves here, as Aotearoa NZ is something of a goldilocks country, the climate and abundance of volcanic fertilised islands with a living indigenous culture of some 800 years experience of sustaining itself, (a valuable playbook for us beginners and to get going with) and energy, food, water, shelter shouldn’t be / isn’t a big ask – then we could reimagine doing something useful with our time, something that looks after each other and our amazing land – something useful that will sustain us. I know this is a simplification – but the opportunity is real.
I like this then we could reimagine doing something useful with our time, something that looks after each other and our amazing land – something useful that will sustain us. I know this is a simplification – but the opportunity is real.
We should do this Jeromeco. But will we, who will, and will it turn out to be the right things as we might have no time to try a different way?
Have you noticed some groups that are going in the right direction combining important drivers – thinking hard and learning about different levels of economics, not just coming up with wish lists about ‘right’ behaviour, thinking about what people need and also what they say they want, knowing human psychology means that sometimes people don’t like it when they get it, thinking further on psychology and ways to declare our mindsets and deal with the problems constructively and in a reasonably open way, and absorbing trained people into a group so we can make designs, plans for everything we need, bring town and country together. Needed are those who aren’t concreted in and chained to their belief about their beliefs like slaves (could be mistaken). Could get started with say, trusts to carry out the work needed to be done but which government can’t do itself because of invisible chains to moneyed and powerful interests that have them by the short and curlies.
And finally are these people with a sense of humour, who can laugh at themselves and their own pretensions, then reassess them for worth and turn around and recommit themselves to do their bit with like others who can stay true to the goals, be loyal to their mates, and last the pace. Being rational, being sympathetic, being strong, able to be objective, planning around obstacles, being perceptive, having real goals, not desiring total purity, not denying human needs, studying philosophy and debating it, being careful about using mind-altering things with self-imposed limits etc.
This is a big list but after having seen the collapse of the Green Party to the excitement of a vision, finding the way to exert power but choosing a divisive authoritarian stance. Wanting to enforce purity punitively on the unruly human spirit shows the above recipe for good people wanting to go forward is necessary. Pick your compatriots carefully from those who haven’t closed down thought, decided they are right and know all, and want everything by others, done and thought their way.
Think – that’s what we’ve got to do. Aretha Franklin says so and belts it out beautifully in The Blues Brothers. https://www.youtube.com/watch?v=Vet6AHmq3_s
The complexity of our modern economy, massively exacerbated by the degree of influence of import/export through a floating floating exchange rate that has $800 exchanged for speculation for every dollar exchanged for trade.makes it hard to see the forrest for the trees.
Focus is always on the money when instability occurs because as it is the meat in the transactional sandwich it is where the imbalances in society’s operations show up.
But if in net, there is not enough of what people need or want in essential goods and services to supply the needs or demands, that imbalance cannot be remedied by manipulating the money supply or the cost of accessing that supply.
Economists all over a r talking about the fuel sanctions imposed on Russia causing the prices to rise dramatically. What is more relevant is that there won’t be enough fuel; not the price. The extra money does not make extra petrol. And increasing the cost of borrowing money to remedy the problem of too few people involved in growing and making the things we all need , and far too many in pseudo governmental positions, and the huge salaries of managers in the public and private sector, and positions of employment everywhere where the employee does not contribute to anything that anyone needs , but have their own needs handsomely remunerated , to say nothing of the many who get no opportunity of any employment but must be provided for, is never going to work. It’s like trying to lift yourself out of a swamp by pulling up on your own
hair.
D J S
All the cream is leaving and only the bitter dregs will be left behind.
“making the poor pay more so the rich didn’t have to.”
Everyone should just pay for themselves. No one should pay for anyone else. Socialism always fails.
the middle class needs to understand ‘poverty is expensive’
Recession – what rich people use to shake the last pennies out of the poor.
The increasing frequency of recessions should be disturbing, its clear lack of taxation, too much focus on the rich has created instability in global economy and greed is the driver.
The great depression stimulus in America in the 30s worked because the money was mainly spent in America. On everything from wire to tractors. The problem for many countries, New Zealand included, is that the money will be spent overseas – on everything from wire to tractors. Hell we don’t even refine our own oil now – the most basic ingredient of industrial activity.
This is not an accident. There are no sovereign countries anymore.