RBNZ Cretans

New Episode of OfInterestNZ out. I wish I was paid a salary, then I could blog Billy Mitchell style all week about these Cretans.

Their headline:

“Last-mile gains in inflation war hard to achieve.”

Is “Cretan” too strong an epithet?

I’ll spare you the run-down of their “economic” assessment. My comments will suffice.

Comment 1.

False framing [referring to the headline]. It’s not a “last mile” it is a small percentage in the price level you are seeking padwan. It’s a “last millimetre” if you want ruler based metaphor. But the wonks at the RBNZ have it backwards. Raising rate in this environ is pro-inflationary. All demand for zero supply. Pus you seek to put lower income folks out of work, so are subtracting from supply, while loss of supply was the cause of the current inflation. So why ware you pursuing this policy. “No matter how much we chop off the stick it keeps getting shorter!” (RBNZ policy wonks.)

Comment 2.

Furthermore, the NZ gov is the currency monopolist, they are price setter not price taker. No one can force Tsy to sell bonds${}^\ddagger$ . In fact Tsy bond operations are nothing but an interest rate floor policy choice. Or, basic income but only for people who already have money and in proportion to how much money they already have. Obscenely regressive. And you think you are all progressives. Soi-dissant. Mon dieu! All demand for zero supply. And you guys wonder why this is not bringing down inflation? You are raising the price level by policy choice, the floor rate is the own price of the currency, so when you raise rates in a floating exchange rate environment you are causing inflation, devaluing the dollar relative to other goods, one-to-one.
     Did they not teach you monopoly pricing and chartal currency principles in high school econ? Ask yourself, is the NZD a barter system, or a chartalist system? Hint for homework: Look at the NZ Law statutes and Acts. For you to live in ignorance might be bliss in this context, but in this context it is needless financial ruin and suffering for the poor.

Comment 3.

${}^\ddagger$ I do realize the Parliament statutorily demands a positive number on the spreadsheet at the RBNZ. This is a cause of incredible needless suffering and austerity. No one dies when the government account at the RBNZ hits a negative number. It is an accounting record. No gold, no grandkids, no “tax payer” is at risk of anything. In fact that negative number would represent net non-government sector savings. Is that a bad thing? (Depends on who gets to save and who gets to work in the factory all day, I guess.) We need more rentiers to either die or start working honestly in factories or on farms… or cash registers and retail sales counters, I will permit.

I realize I should be nicer and make friends with policy wonks at the RBNZ. But some headlines are beyond the pale.