Hi Chris, mate, I have some bad news. Are you sat down?
Musical Chairs
Weekly jobs data is out. The week 19 bump from 2024 and 2025 returns. But, looks like we are going to carry on tracking the 2025 line. Standstill once we allow for population change. Graph 2 shows annual change in nominal terms (some hope there?) [1/2]
Trouble is we can't tax folks offshore once they are all cashed up on NZD. So, we end up having to create more NZDs domestically to pay the dividends (by going into private / public debt). This is why our balance with the rest of the world is important. It's a drain on demand and $. [Ends]
Now, what happens if Govt gives millions of dollars to public servants (/sarc) and they buy flash cars and go on offshore holidays? Well, the money that Govt has created ends up in the accounts of offshore investors (who typically use it to buy NZ financial assets like bonds). [2/n]
99% of policy debates are ruined cos people don't appreciate that Govt votes on how much new money to spend, and *then* relies on taxation to get some or all of that new money back. Free public transport? Sure. Spend the money. Now, who ends up with the cash spent, and how can we get it back?
It's worth keeping an eye on median earnings. Once RBNZ see wages picking up in response to higher costs of living those damn interest rate fiddlers start flexing their trigger finger, because adding higher mortgage costs to everything else will definitely help with wage pressures! [2/2]
