As readers will be aware, TDB has been arguing that economically shit is going to hit the fan as a cavalcade of issues collide to create an inflation tsunami.
From the structural issue of printing $25Trillion to stave off a global economic collapse in 2008 to the war in the Ukraine, the impact of geopolitical tensions in China, the collapse of global supply chains, China’s zero Covid regime and the impact of extreme global warming are all compounding to explode inflation, not curtail it.
TDB has been highly critical of Treasury forecasts that somehow this inflation spike is transitory.
We asked how on earth will a war between two countries responsible for 15% of the total global calories plus Russia cutting off gas to Europe plus the Ukraine being a base producer of many metals and minerals plus China closing down again to avoid Covid outbreaks before the November conference plus the American midterms plus the Fed Chair’s new war on inflation – we asked how on earth all those things combined could lead Treasury to claim inflation was transitory REMEMBERING they already told us that inflation;ation peaked in March.
It’s September.
Well, it seems some of our criticism has been heard because lo and fucking behold Treasury quietly noted that maybe inflation hasn’t spiked…
A Treasury note has warned the long-term consequences of the war in Ukraine could be with the world for a long time in the form of lower growth, higher food prices.
…well, well, well.
We are in the throes of Late Stage Capitalism, Treasury has no fucking clue how this is going to pan out and the moment will require more vision than this blind cyclops is capable of.
Orr has no choice but to ramp up interest rates now before the Market doesn’t believe him.
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Yip and NZD is fast heading for sub-60 cents US. Crazy days are upon us. The fan is still spinning and there’s plenty of shit, flying at us all about now
If the US inflation is higher than here and yet our currency is in relative fall – gold is one option.
except it’s fiat like any other means of exchange it’s only worth what people think it’s worth..better to ‘invest’ in tinned baked beans they’ll hold their value spc
It does go up during inflationary periods.
https://goldprice.org/gold-price-charts/10-year-gold-price-history-in-new-zealand-dollars-per-ounce
Neutral to El Nino conditions being predicted early next year…
This year’s warmest winter is going to be the coldest winter of the rest of our lives I reckon.
Whether our inflation has peaked and is on the way down, or not, is not the point. What is the point? The reality that a higher value dollar reduces imported inflation and a lower value dollar does not.
Inflation is higher “over there” and will remain higher over there, and so they will also be raising rates which will increase their relative currency value. That is the market reality Orr faces.
At this time Orr has not stopped the dollar falling in value. Many exporters are getting higher market prices and greater returns on their export revenue back into local currency (usually stimulating local spending).
The real issue is that there is a global shortage of goods because of supply chain disruption (lockdowns, weather induced famine, sanctions and war) and also a domestic shortage of local labour.
The former is not solved by domestic (monetary) policy and migration to solve the latter stimulates the local economy – at variance with raising interest rates to reduce demand. And given at least some of the labour shortage is in important sectors such as health, export sectors and restored tourism …
SPC. Stimulated local spending won’t last for long. A low dollar value means we pay more for everything imported. Fuel, cars, machinery, food ,medicine and anything else that comes over the border. Tourists will like the currency, but oh wait, we have no workers to run it.
Yeah na. Higher wages for locals and or more migrant workers means a fairly soft landing.
Tony Alexander
https://www.oneroof.co.nz/news/42176
“We are in the throes of Late Stage Capitalism…”
Nope, we’re in the throes of late stage Green policies. Policies that Europe and the US are now reversing ‘toute suite’. So far the UK has approved another nuclear power station and has reversed its fracking ban. The Germans are moon walking away from decommissioning their remaining nuclear capacity. The French have recommitted to nuclear.
The loss of energy autonomy across the Western world emboldened the tyrant Putin to play his cards. It hasn’t worked out so well for him so far but the cost in human life and suffering can be sheeted straight back to the ‘magical thinking’ of the green movement who thought that modern industrialized nations could be powered by wind and solar. The last straw was the ‘election’ of Biden and his promise to destroy their oil & gas industry. What a joke!
Long term, Putin may have done us favour because he has lanced the boil of septic green policies once and forever.
Except that nuclear has always been a green option vs carbon use. This is Greens and the EU being forced to accept the French route, rather than be tied to dependence on Russian gas/carbon.
Nuclear with wind and solar add ons is the fastest route to decarbonisation of EU energy supply.
It has always been a green option SPC, to any sane person that is, but it hasn’t been an option to the political Green movement.
Isn’t it tragic when the leaders of the western world take their policies cues from a 15 year old girl (Greta) who hasn’t even finished high school. One wonders who the puppet masters were for that kid!
Her father a political speech writer.
Be wonderful if this green hysteria is coming to an end.
Amen. Sense at last!
ohhh andrew the same old tired tropes like windpower was responsible for the unmaintained texas grid…
and frankly the failed state the UK is, is no example of anything other than how to destroy your own country
Nope…after central bankers creating trillions and allocating it to non productive assets…reality is coming home to roost.
But what if they gave an inflationary spike and no one turned up to give a fuck?
Fuck the Americans, fuck the Chinese and fuck the banks. Job done. Knight me later.
We have vast LPG reserves for heating, industry and vehicle running. Just ask Todd Group and Shell what happened to that? We also have state built and run hydro electricity coming out the wazoo and there’s only 5.2 million of us. Aye Meridian? Giving sweet deals to fucking Tiwai.
We have foods and forests and seas with fishes. We have world leading universities and first world cities and most excellent Dope.
In short, we have it all. So why are we worrying about a small bus load of calculator fetish traitors looking like they might lose the wealth they’ve secreted away off-shore they never earned?
Stop worrying. We’re ok. And if we’re not, it’s because we’ve been left wanting because of the investor breed, the parasites who fiddle with the money of others who’ve head fucked us into a small box in a dark room in a deserted building on an uninhabited land where all we can expect is to continue to be exploited by them while they live elsewhere in the sun.
Everything you think you know about our resources and our economics is a work of fiction they’ve scripted to sell their lies to us as facts so they can continue to exploit us. It’s that simple.
For example; Fletcher Challenge has just held our entire building industry to ransom while we were left dangling like puppets. To do that, it takes real power and influence over our politics and they have it in spades and it’s that which should be scaring the be-Jesus out of us right now.
Cup of tea, pill, and a lay down
A lot of “we have”s in that essay which should read “we had”.
– In my opinion anyway.
okeydoke. cb. I’ve got to the starting point – a bit scared. WHAT SHOULD I do now? Is there a handbook or just a boot in the bum for me?
I agree with the article and found it insightful. Very good.
Inflation spikes this sharp are rarely “transitory”, because they have a nasty habit of snowballing.
People will not save for anything they think will be more expensive later on, so they’ll borrow to “buy now”, putting more pressure on supply and further increasing prices. People are also demanding more pay to make ends meet, increasing costs for businesses and thus forcing them to increase prices.
This feedback loop is very hard to contain, and central banks can only do so much – increasing interest rates obviously addresses borrowing and incentivises saving, but it would need to be higher than inflation to make that work (so interest rates of at least 7-8% are required right here right now!). Some sort of freeze on wages/salaries could address the the other issue, but flies in the face of capitalism (not that this should bother this government, that seemingly loves putting its jackboot on the necks of the very people that voted for them).
This response (so far) by this absolutely useless government is borrowing money to help subsidise/offset costs – literally throwing fuel on the inflationary fire. It’s almost like this entire fiasco was planned.
Are you suggesting that inflation globally wasn’t initiated by Jacinda or Labour…stop it!
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