"In the late 1980s, the New Zealand central bank like most central banks worldwide had worked assiduously to bring down the double-digit inflation that afflicted many developed countries from the mid-1970s until the early 1980s. When asked in a television interview what he thought should be a sustainable, healthy level of inflation, the New Zealand finance minister stumbled for a moment and said that it should be around 1%. That was then refined by the bank staffers to 2%, which was officially adopted as a target in the 1990s by other central banks ..."
The plight of the cost of living created by corporate price gouging, making lives difficult and expensive, driving austerity and difficult choices, rendering people impoverished and even homeless. The wealthy baby boomers you refer to with safe & large incomes no doubt, like Marie Antoinette, would cry mockingly, “Let them eat Cake!”
“The ABS does produce cost of living indices which consider the cost of living according to your source of income – wage, pension, or government benefits“, stated the Guardian’s Greg Jericho some years back now. Once you add the real cost of living factors, you will quickly realise real wages are not keeping up with the actual costs of living.
Despite small wage growth, these rates are less than both inflation AND productivity, both of which have expanded in recent years, by all indicators. One would assume if the nation is being more productive that wages should rise accordingly. Instead real wages have fallen! Your purchasing power is roughly the same as it was a decade ago (despite nominal wage rises) because of inflation. Prices having been brought up are not going down. There is no sign of deflation and housing costs are getting worse. REAL inflation which should include housing costs which would render a far larger CPI increase measure! CPI fails to account for substitution, and it also fails to factor in the price of housing and the cost of financing. Let’s face it: if they included the cost of financing (thanks RBA), guess which direction inflation would be headed in? 🤔
Hi John, Heard you on the RN Money show last night on the way to Bill Mitchell's book launch at Readings (in Hawthorn not in Carlton if we can take anything from that!).
You told Richard on Money (paraphrasing losely here) that the (false) normative narrative of central bank monetary policy as being the best way to control inflation and indeed manage the economy is impossible for a federal government to challenge because any resistance would be interpreted by markets as "panic" and that panic would cause damaging consequences for the government and nation.
You're describing what we sometimes call a Catch-22, that the federal (and state) government is constrained by the myths of neoclassical economics only because of their dominance in financial circles and that a federal government challenging that would worsen economic conditions generally and set the government up for dismissal (not by a Governor General).
This came across as being a deeply cynical appraisal of the potential of federal governments to act and educate, I might be *completely misinterpreting* your comments of course, but if that was a correct interpretation, are the actions of the Japanese Government a contradicting point of reference. I acknowledge that Japanese culture is very different to Australia and there's a level of trust and commitment between the people and their government in Japan is much more serious that in Australia. So take the Inflation Reduction Act in USA, a country with a culture more similar to Australia than Japan, and a country more heavily conditioned to the myths of neoclassical economics and mantras of neoliberal politics .
While the members of the Biden-eterm Congress who signed the Act didn't go into the public arena and denounce the Friedman/Greenspan edicts, they did understand that fiscal expansion can be used to REDUCE not increase inflation and that Central Bank powers are very limited in the context of seller inflation. They'd also understand by now that rate rise lever at The Fed is an exceedingly blunt tool for managing an economy, let alone the potentially dislocating transition out of fossil fuels and emissions intensive livestock farming based economies to net zero or true zero emissions economics.
Are you really so convinced that Governments cannot act with expanded fiscal policy tools and possibly educate the public as they go about it?
I'll just note here that many workers don't even get paid the minimum wage. My overseas born wife has been paid below minimum wage in 3 of her 4 dressmaker jobs and it has been the same for her siblings in that industry. My daughters were paid below minimum wage when they worked as waiters in their late teens and early 20s.
While Labor under Albanese has improved the Fair Work Act to make it easier for employees to claim unpaid entitlements- for instance boosting the Small Claims cap from $20K to $100K- the truth is that it is frightening to take legal action against your employer, even if English is your first language and you have some legal knowledge. You get to learn a lot about the dark side of human nature when you take someone to court.
It's just the same in NZ. Monopolised key industry sectors driving greedflation like groceries, electricity, building materials, real estate... you name it.
Just a reminder that these inflation targets are a made up number based on a throw away line in a TV interview with an NZ Finance Minister.
https://time.com/6548908/inflation-target-federal-reserve-essay/
"In the late 1980s, the New Zealand central bank like most central banks worldwide had worked assiduously to bring down the double-digit inflation that afflicted many developed countries from the mid-1970s until the early 1980s. When asked in a television interview what he thought should be a sustainable, healthy level of inflation, the New Zealand finance minister stumbled for a moment and said that it should be around 1%. That was then refined by the bank staffers to 2%, which was officially adopted as a target in the 1990s by other central banks ..."
The plight of the cost of living created by corporate price gouging, making lives difficult and expensive, driving austerity and difficult choices, rendering people impoverished and even homeless. The wealthy baby boomers you refer to with safe & large incomes no doubt, like Marie Antoinette, would cry mockingly, “Let them eat Cake!”
“The ABS does produce cost of living indices which consider the cost of living according to your source of income – wage, pension, or government benefits“, stated the Guardian’s Greg Jericho some years back now. Once you add the real cost of living factors, you will quickly realise real wages are not keeping up with the actual costs of living.
Despite small wage growth, these rates are less than both inflation AND productivity, both of which have expanded in recent years, by all indicators. One would assume if the nation is being more productive that wages should rise accordingly. Instead real wages have fallen! Your purchasing power is roughly the same as it was a decade ago (despite nominal wage rises) because of inflation. Prices having been brought up are not going down. There is no sign of deflation and housing costs are getting worse. REAL inflation which should include housing costs which would render a far larger CPI increase measure! CPI fails to account for substitution, and it also fails to factor in the price of housing and the cost of financing. Let’s face it: if they included the cost of financing (thanks RBA), guess which direction inflation would be headed in? 🤔
Hi John, Heard you on the RN Money show last night on the way to Bill Mitchell's book launch at Readings (in Hawthorn not in Carlton if we can take anything from that!).
You told Richard on Money (paraphrasing losely here) that the (false) normative narrative of central bank monetary policy as being the best way to control inflation and indeed manage the economy is impossible for a federal government to challenge because any resistance would be interpreted by markets as "panic" and that panic would cause damaging consequences for the government and nation.
You're describing what we sometimes call a Catch-22, that the federal (and state) government is constrained by the myths of neoclassical economics only because of their dominance in financial circles and that a federal government challenging that would worsen economic conditions generally and set the government up for dismissal (not by a Governor General).
This came across as being a deeply cynical appraisal of the potential of federal governments to act and educate, I might be *completely misinterpreting* your comments of course, but if that was a correct interpretation, are the actions of the Japanese Government a contradicting point of reference. I acknowledge that Japanese culture is very different to Australia and there's a level of trust and commitment between the people and their government in Japan is much more serious that in Australia. So take the Inflation Reduction Act in USA, a country with a culture more similar to Australia than Japan, and a country more heavily conditioned to the myths of neoclassical economics and mantras of neoliberal politics .
While the members of the Biden-eterm Congress who signed the Act didn't go into the public arena and denounce the Friedman/Greenspan edicts, they did understand that fiscal expansion can be used to REDUCE not increase inflation and that Central Bank powers are very limited in the context of seller inflation. They'd also understand by now that rate rise lever at The Fed is an exceedingly blunt tool for managing an economy, let alone the potentially dislocating transition out of fossil fuels and emissions intensive livestock farming based economies to net zero or true zero emissions economics.
Are you really so convinced that Governments cannot act with expanded fiscal policy tools and possibly educate the public as they go about it?
Why not an Earne income tax credit?
I'll just note here that many workers don't even get paid the minimum wage. My overseas born wife has been paid below minimum wage in 3 of her 4 dressmaker jobs and it has been the same for her siblings in that industry. My daughters were paid below minimum wage when they worked as waiters in their late teens and early 20s.
While Labor under Albanese has improved the Fair Work Act to make it easier for employees to claim unpaid entitlements- for instance boosting the Small Claims cap from $20K to $100K- the truth is that it is frightening to take legal action against your employer, even if English is your first language and you have some legal knowledge. You get to learn a lot about the dark side of human nature when you take someone to court.
It's just the same in NZ. Monopolised key industry sectors driving greedflation like groceries, electricity, building materials, real estate... you name it.