The Reserve Bank says measures should be introduced to make New Zealanders understand more about the economy.The first NZers to be so introduced should be the governor of the Reserve Bank and his employer Michael Cullen. Their first lesson should be that "price stability" isn't working.
Monday 2 July 2007
PC agrees with RB
It had to happen. I'm in agreement with the Reserve Bank. Notes NBR:
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5 comments:
Slightly off-topic, but no comment on Bridgecorp PC? BAA rated coy no less.
I told you about 18 months ago to spread the word to get money out of finance coys. Three have gone to the wall since then. None are too big to go...now who does Richard Long promote?
Get your money out of finance coys everyone (it is possible that blog readers don't have any money of course).
PC, have you read this article shown below?
Humans made redundant as super-trader does the sums
Now, as you know that this is an area that of interest to me, ie, software mathematical modeling of the financial markets. Some of the models I have developed so far, can do exactly as what is described the article above. It is a commercial development that I am doing and I expect to be up in the 3rd quarter of the year.
Now back, to the Reserve Bank. I believe that Mr. Bollard listens to his advisers , those PhD economists who do mathematical modeling for him. I am sure that he doesn't base his decision on intuition but fact-based, that is the What-If scenario that their models projected, and for Godsake, what is wrong with making a decision based on such projection? Of course, projections will not always be 100% correct, but do you prefer that the decision is made by MPs in parliament who know very little about economics or made by Mr. Bollard's experts? Or perhaps, just put a Herald reporter such as Fran O'Sullivan to advise on those price stability matters? May be, you prefer Dr. Bollard to not use such PhD economists at all, who are expertise in building economic models?
Anyone can just browse thru the Reserve Bank's discussion papers found here , to see that they are deep in quantitative analysis. I am not an economist, but it is the trend these days, that most governments are relying on fact-based modeling for policy decision makers, rather than just guessing or pure intuition.
FF,
Looking at those discussion papers, they are knee deep in "New" Keynesian economics. Doesn't help that one paper is authored by a James Twaddle.
FF, the illusion under which you're labouring is that I WANT Mr Bollard, MPs, bureaucrats or any agent of the government at all to be making decisions about the currency, or anyone at all attempting to use the money supply to target an illusory idea of price stability.
As I've argued before (and as recent events are once again proving), the very idea of pursuing so-called price stability is destructive nonsense.
Giving agents of the government the power to make decisions about the currency has led to most of the money problems over the last two-hundred years. US Federal Reserve Governor Ben Bernanke confesed recently for example, "Regarding the Great Depression. You're right, we did it. We're very sorry." And he's right, they did so it, just as Alan Greenspan admitted three decades ago.
The tragedy is that central bank failures aren't followed by rejection of the myth of central banks. As Larry Sechrest says in the new 'Free Radical': "Mark this well. Central banks are the source of both inflation and business cycles. Tragically, many people seem to believe that both inflation and boom-bust cycles are somehow an intrinsic part of a market economy. They thus turn to the central bank to solve the problems that the central bank itself created." Bizarre.
As Larry explains, there's no reason that money can't be treated as a commodity open to the market, just the same as every other commodity. (Look out for your issue shortly, FF.)
Even if the Reserve Bank and its advisers weren't awash with New Keynesian bullshit (a theory whose attachment to reality is negligible, to say the least) they and all the other government agents should just keep their frigging hands off.
It seems Bob Mugabe could also do with some economic education. This news item was culled from the National Socialist radio website:
"Reports from Zimbabwe say shoppers have emptied supermarkets and shops of basic goods after police moved to enforce a government order that retailers halve the cost of products.
"The BBC reports the price cuts were ordered a week ago in an attempt to control rampant inflation, which economists say is now probably as high as 9000% per year."
It's been said before - try as you might, you simply can't repeal the laws of supply and demand.
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