The case for 10% inflation before December

By
Martyn Bradbury
-
49
2306

Inflation hits 30-year high of 5.9 per cent

National Party leader Christopher Luxon took aim at the Government’s “wasteful spending” after inflation hit a 30-year high of 5.9 per cent.

Consumer prices rose at the fastest pace since 1990, with inflation hitting 5.9 per cent at the end of 2021.

Figures from Statistics New Zealand released today show a further sharp lift in the cost of construction, petrol and rents pushed the consumer price index up 1.4 per cent in the final three months of the year.

The figures were roughly in line with expectations; a survey of economists forecasted inflation for 2022 would be 5.8 per cent.

If we break down the real momentum for this spike in inflation we see petrol and supply side issues for it.

Here is my case for why inflation will top 10% before December.

Russia launches an invasion of the Ukraine after the Winter Olympics while China simultaneously cracks down symbolically in Hong Kong or on Taiwan.

TDB Recommends NewzEngine.com

Biden responds with enormous economic sanctions.

Russia responds by giving Iran the last pieces they need for nuclear capability.

Israel responds with a massive never before seen military strike on all Iranian nuclear assets which causes oil prices to explode and supply chains to freeze to a stand still.

Inflation jumps to 10% in NZ.

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49 COMMENTS

    • you’re right but as all the neo-lib so-called democracies need a diversion, boris face covered in cake, biden no action on anything etc etc..and war is a good distraction and good for business, he;; if we don’t mind sacrificing kiwis for the tourist and drink(hospitality) industry what’s a few hundred dead kiwi soldiers, cos if it kicks off it will come to that make no mistake

      • War is good for business. Lots of repeat orders as resources used up.
        And prices can be hoisted up, and the people hoisted up to, on their own petard. Shouldn’t have watched all those war movies, its not so good in real life,. Kills off people, economies, food crops, civilian and combatant souls even when directed from computers.
        Watch the kidult movie while you can still laugh. Short Circuit featured Robot No.5.
        https://www.youtube.com/watch?v=9rlI3Xg9g_A

    • Alot of governments in the toilet right now looking for a diversion but they are really playing with fire this time. Russia isn’t Iraq, they can blast every airbase in Western Europe with their short range Nukes and have demonstrated that their nuke subs can launch from the Equator and the very top of the North Pole.
      The public should be ropable that they are being put in the firing line by venal politicians looking to improve their election prospects.

    • The US dollar is devaluing at a faster rate. The Fed will tighten on QE and will halt buying treasury bonds. The global markets will shudder and crash. World currencies will become worthless. Bitcoin will emerge as the global store of wealth and the network will take over as the global financial system.

  2. Christ, there would be mortgagees sales everywhere, especially Auckland, with a lot of $500,000 to $800,000 mortgages, while there incomes are less than $80,000.

  3. In the mid-80s mortgage rates went from 11% to 12% to 14% to 16% to 18% to 22%, and the interest on personal loans was around 28%.

    After the speculative bubbles crashed in ’87 some sanity began to prevail

    That was all under a LINO government.

    This time there is no controlling the devaluation of money monster because the primary energy system (oil) is in terminal decline and the environmental is in accelerating decline.

    Two Shortages That Threaten To Absolutely Eviscerate The Global Economy In 2022

    https://www.zerohedge.com/markets/two-shortages-threaten-absolutely-eviscerate-global-economy-2022

    Brent crude is up over 60% ($56 to 90 US)

    https://oilprice.com/oil-price-charts/46

    and the Kiwi is well down ( 72is to 65ish ).

    Expect shortages of everything from energy to fertiliser to food and clothing, accompanied by collapse of the numerous speculative bubbles that central banks have fostered sine the major fraud commenced in 2007-2008.

    And if you think the current LINO government is going to do ANYTHING other than shaft the general populace you are demented/deranged/braindead.

    (That is not an endorsement of any other mainstream political party.)

  4. Petrol at $3.04.9 for 98. Jeezus. It’s crippling.

    Can we at least get Auckland Transport’s judder bar tax off fuel in Auckland? Seriously Labour, that was a very stupid idea as it transpired.

      • We might be but most of us who work for a living can’t afford an electric car, at least not one without a dud battery like most used Leafs. So we have to buy petrol or diesel.

      • It’s becoming increasingly clear that fossil fuels have nothing to do with “climate change”. A lot of climate scientists are coming round on this too (of course I infamously never bought into it here to much criticism here) – look up the rapidly depleting magnetic field of the planet (the one that protects the Earth from the Sun). A number of climate scientists I interact with say they already know they were wrong but CO2 being a primary driver, but it will take a while before they can feasibly dial back the “man-made” rhetoric given the amount of money (and resulting funding and industries) that has been thrown at an incorrect hypothesis.

    • @ xray.
      Firstly, labour and national and act and @ Maori party and wee jimmy shaws green party are all the same thing. They’re all saddled up and being ridden into the ground by the parasite that’s known as capitalism and that’s a beast who’ll enthusiastically resist being beheaded.
      And what happened between todd group and shell oil back in the day when LPG was all the go? I owned a ’62 Dodge Dart converted to LPG which I returned a cost equivalent to petrol of 45 mpg . Remember? AO/NZ’ers could get subsidies to fit lpg units to their cars? Then dirty shell go involved in a thing that was too good for the many who let their greed fuck it for everyone. LPG should be cents a litre, it’s our very own resource after all and I read we AO/NZ’ers have the largest LPG fields in the world per head of population. (The fact that lpg produces green house gasses is beside the point.)
      Finally. What’s so hard about building a peoples electric car for we, the masses?
      That ugliest of all cars, the Nissan Leaf, is a great wee car. Non generic cars like the Leaf could be built by first year electrician students using paddling pool parts and torch batteries so why are we concerned about petrol prices again?
      The problem, of course, is the banks. They have us hypnotised within a miasma of debt and they, therefore, must simply be told to fuck off. We don’t need the banks. The banks are our deadliest of enemies. As deadly an enemy as one with guns and bombs. The four foreign banksters must be sent yelping after a proper asset stripping.
      But then what, those of you with no imagination might ask?
      Well, sit back and enjoy our beautiful AO/NZ during high summer, pop a snarler on the barbie and take a swig on that lovely craft beer might be a start.

      • Yeah NZers could pick their classic cars and run them on hemp ethanol or drop in an off the shelf electric motor and battery. That gets rid of offshore dependence on oil. In fact AONZ could substitute most imports by dairy farmers switching to growing hemp. If global supply drains are blocked AONZ can create its own supply.

        If Luxon’s mates had not had a 1 $T handout over covid and that had been spent on public works using local inputs including labour then the value of goods and services flooding into the market would more than offset the flood of printed money now in the pockets of the rich.
        Left as it is inflation will rise because the cost plus subsidised crapped out capitalist will pass all costs onto the consumers – overwhelmingly the workers who have to consume food, fuel and housing to survive.
        Since the bosses say Labour is already ‘socialist’ why not teach them what it is in practice? If MOH can ‘expropriate’ RATS they can also expropriate all extorted rents via a Land Tax or Wealth Tax. That would drive the US/Aussie banks offshore damn quick. One big state bank!
        Working farmers would be protected by having the state bank take over their mortgages interest free, rewarding work not capital gain.
        All private monopolies like the supermarkets that make childrens’ health pay for price inflation can be broken up or nationalised and run by the workers who produced all the value. That would solve the rich/poor gap at source.
        So this Govt has deliberately engineered inflation by its policy of keeping terminal capitalism alive while imposing a police state on the poor to stop them rioting. Fat chance of that.
        While I’m at it. Russia and China are winning the battle for the global economy, why would they give Biden and Boris the excuse they need to go to war over Ukraine and Hong Kong to prop up their failing economies?

      • I agree that everything negative seems to come back to our banks. Off load risk to everyone else and maximise profits for themselves. If John Key is involved, and he is, you know it’s bad.

        I mean, as just one example, how much of NZ’s economy is stunted by housing speculation and costs? I would argue, massively.

        And whose the winner? Banks!

  5. Let me get this right, are you saying that inflation will grow purely because of potential overseas shocks and nothing to do with Grant printing off billions?

    Jesus weep…I give up

        • Calm down, it’s you that is insulting, you think worldwide inflation is Grant Robertson’s fault. Explain to me why that is?
          You are anti government, we see it in all your posts, we get it, but do some research before making ridiculous comments.

          • All good Bert. BTW I have done my research, and Economics 101 tells me that when a govt floods the economy with money, as per any monetary policy stimulation, as night follows day, inflation increases.

            For Ardren, Robertson and Martyn to not acknowledge this is tantamount to burying your head in the sand.

  6. I dont think Russia will wait till after the Winter Olympic. You cannot decamp that many troops from permanent bases and leave them sitting on their haunches for what will be six weeks, waiting to move into action. Troops are not going to be battle ready fresh, having lived in tents for any amount of time.

    Not to mention the logistics of keeping 100,000 troops fed and watered whilst “in the field”. Never mind the logistics of maintaining equipment.

    Putin is going to have to invade soon or decamp his troops. he cannot afford to wait.

    But does he really want to invade? Taking control of the a region wrecked by 8 years of war and in need of a massive rebuild budget? Putin ideally would like Ukraine to be back under his protectorate and the Ukrainians to fund the reintegration of the “republics”.
    The Minks accords were to help achieve this but failed.

    Worth a read

    https://krytyka.com/en/articles/averting-collapse-in-the-donbas

    “For Moscow, the Accords should facilitate the incorporation of the “People’s Republics” of Donetsk and Luhansk, unbowed and armed, into the Ukrainian state. For Kyiv, the Accords should facilitate the disarmament of the Russian-controlled enclaves, followed up by a package of economic, linguistic and political concessions to the local population to ease their reintegration.”

    I would say stalemate and the longer it lasts the lesser chance of a Russian invasion. An invasion that would lead to an occupation and another Chechnya like war in the Ukraine.

    Also worth a read

    https://www.npr.org/2022/01/13/1072867402/the-view-from-border-city-kharkiv-ukraine-as-russian-troops-appear-ready-to-inva

    “You know what? I don’t. And people here have told me they’re not expecting war. And they say that perhaps the Russians could go into the two areas Donetsk and Lugansk that are already under the control of the Russian-backed separatists, but they don’t expect them here in Kharkiv.

    And they’ve gone out of their way to show that Russian troops would not be welcomed. You know, I came here expecting to find pro-Russian sentiment in the east, and I haven’t seen that at all, Ari. To the contrary, there are Ukrainian flags everywhere. And in front of the town hall and the Christmas market, there’s a big exhibit about Russian aggression. There’s, like, pictures showing Putin with a Hitler mustache and signs talking about boycotting Russian products.

    And people here even tell me that they’re making an effort now to speak Ukrainian, whereas before everyone mostly always spoke Russian.”

    • in soviet times summer field maneuver’s by large numbers of troops happened every year woth a massive one every few years usually involving several military districts, which entailed living in the field and basically deploying for war(every year in the west there would be low level speculation as the whether this was ‘the big one’..so with todays more volunteer/professional army camping in a field for a few months isn’t really an issue, but the ‘rasputitsa’ ie the muddy season coming is a limiting factor or put it off till next spring.

  7. The Central Bank will rapidly ramp interest rates to combat the inflation (as they are mandated to do). This will lower prices for imported goods (e.g. petrol). The higher dollar will be devastating for businesses, so expect a recession. Flip side, is it will also of course destroy the housing market too, but you could argue that’s a good thing.

  9. Don’t worry, our dears in Parliament will not suffer one bit. That is reserved for the proletariat that live in poor NZ. Our betters from the PM down to the last coffee and tea making puplic relations person in Wellington will suffer no hardship, but they will frown every now and then and be very very concerned. Now watch this stupid announcement about something something, that will of course never be done. 🙂

  12. Joking aside, the current inflation rate can be broken into the permanent portion and the temporary portion.

    Permanent:
    1) The international fuel price hike caused by Biden’s actions when he first got into office. Stopping fracking on federal land and stopping the Keystone pipeline. These two actions immediately turned the USA into an oil importer with obvious consequences.
    2) The hidden cost of climate change policies. All those punishing restrictions and taxes on transport are coming home to roost. The additional taxes on fuel here in NZ are typical. Someone needs to explain to the average South Auckland Labour voter why food has become so expensive,

    Temporary
    3) The printing of money to paper over the cracks created by lockdown policies. Not the virus itself, but governments reactions to the virus. This should abate as the global economy returns to normal, IF some fiscal discipline is imposed. The worry here is that left leaning governments like ours and in the US seem to want to keep on spending like drunks. In which case it becomes permanent.

  13. Good time to be closing down the oil refinery making us more reliable on supply from off shore . Good time to stop delay or block gas exploration . Good time to have a country full of people in overpriced houses with barely substantial mortgages.
    Good time to sign up to a $16b Auckland transport system that most experts slam baring in mind in 2020 this government
    committed to 32 transport upgrades at a cost of $6b these are now $13b and 5 are not going ahead !
    Pass me my tranquilizers

    • Go to the top of the class Trevor you actually joined the dots on he massive up-fuck that closing the refinery is. And this is only the beginning. Everything that is happening right now regarding fuel supply was painstakingly pointed out to Woods and Shaw last year by the unions at Marsden Point. They are too thick to understand how grossly over charging the Refinery for it’s electricity has given the refining company the green light to run it into the ground. It is a valuable piece of infrastructure that could be repurposed for a myriad of alternative fuel production technologies. It was paid for by us the taxpayer. Our government thinks wasting millions on green hydrogen for trucking is more important than electrifying rail and repurposing Marsden Point. The Refinery closure is sucking 60 million a year out of Northland’s economy with no initiative from government to replace that gaping hole. The government are utter fuckwits!

    • yeah if this was novel about a small island banana republic somewhere in the south pacific it’d be thrown out as too far fetched.

      I mean yeah by all means junk oil…but PREPARE first…that means dams built, electrical infrastructure built, faux lekky market nationalised….then and only then indulge in grandstanding show pony antics.

  14. I just want to address a few things coming out of the comments when normies say oh Jacinda is terrible, she’s the worst, she can’t build house’s, or she can’t build a no welfare state or bad for business or not hard enough on business.

    It’s as if once a prime minister is elected that they can just do whatever they like. There are rules, natural laws, laws and conventions to abide by as if Jacinda can just side step them when someone gets a there feelings a little hurt or in worse.

    Yes, ultimately the rules do prevent a prime minister from going to far but it has lead to immature leadership and has far more sway on why National and Labour are still the major power centres and why we don’t see a more colourful selection of parties than say arbitrarily moving the 5% threshold up or down.

    This dogma that the prime minister and finance minister can only be in a Labour or National member ultimately limits our world view and is immature and leads to minor parties going extinct.

    Said another way, why would the bureaucracy actively fight against Jacinda best wishes when she clearly won a majority, why would anyone fight against Jacinda best wishes?

    I guess one answer could be that Jacinda follows a subset of politics that deviates from common practice and can adapt to the wishes coming upwards on the regular, independent of research of costs.

    The 9th floor symbolises honour and nobility and those who do not attain it in combated are simply not worthy.

    So those who refuse to win by combat will ultimately be fighting to get anything done.

    • sam what’s a normie? a cis gendered middle aged white male–perchance? well I’m probably more left than any member of the labour party soooooo..maybe YOUR bigotry and prejudice are showing.. don’t fall into the easy generalisations your enemies do.

      otherwise interesting post

  15. Russia will not invade Ukraine, unless their stupid President Zelensky attacks the breakaway Republics of Donesk or the Donbass! Russia has nothing to gain from Invasion, Ukraine is a bankrupt, failed State comprising of Neo Nazi’s! America committed a Coup d’état in 2014 & effectively is running the Show & creating a hysterical & phoney Invasion crisis to divert attention away from American domestic politics, because Joe Biden & his Democratic Party has been a utter failure, this senile, geriatric idiot is polling worse than Trump ever did & all his Policies, like Build back better & the Covid Mandates are being flushed down the Toilet? So Biden has gone to the old shell game straight out of the McCarthy handbook declaring that the Russians are coming, the Russians are coming? Pathetic! And Inflation is being caused by unprecedented money printing thats debasing the currency with the result being the fiat currencies purchasing power is declining! Like Biden’s brain farts!

  17. I’d kill for 10% inflation.
    6 years ago my rents were going up between 14% and 25% per year.
    My food bill and petrol bills have more than doubled in that time.

    No Biggy is right: CPI, like neo liberal economics, is a scam. If you need any more evidence: The answer to all this pain is for the government to make everyone’s mortgages more expensive (and give the banks even more money) – brilliant.

  18. Wow, a neocons wet dream here. But a dream is all it is (as far as Russia/China is concerned). Inflation is the direct result of the Covid measures the world chose, or were led to, adopt. That’s it.

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