Dairy prices nosedive; US data quite positive; China housing woes deepen; inflation low in South Korea & EU; RBA minutes leave rate hike on table; UST 10yr 4.43%; gold and oil soft; NZ$1 = 60.7 USc; TWI-5 = 70.3

Retired Boomers ..ask not what the country can do for you, rather what can you do for the country!

Yeah I guess in the short to medium term could be better opportunities for skilled people?

Quite the contrary actually.

Several of our high-value business are finely balanced with barely enough skills in their sector to operate in this country.

The missus works for an accounting consultancy that has clients in the gaming industry. The sector is still bleeding talent unfortunately.

Smaller developers have no option but to relocate to Aus for better access to talent. The economic losses will likely be significant as these companies already had successful offerings on the shelves and were cashing in millions of dollars each year in IP checks.

I would worry more about your precious Kiwi Peso...

Could the US just zero its debt?

Bottom line, and you have stated this, is that the trading medium (read 'money') is underwritten by the availability of material resources, and they (the resources) are running out, becoming increasingly scarce at an exponentially increasing rate. Manipulating the money supply doesn't cut it. 

What is not mentioned, although heavily implied, is the politics and that those in power are only there by the will and blessing (to a degree) of the people. Those in power have backed themselves into a tight little crack, to the degree that if they have a clue, their eyes are starting to water. But they have sold the infinite growth promise and wealth for everyone without understanding the consequences in a finite world. They are now having to convince read bullshit, themselves that they can continue and the consequences are someone else's problem. Or they really do believe their wealth will protect them (They're gonna build a wall!). But being a trillionaire won't save them if there are no resources to underwrite the value of those $, and there are 10,000 angry have nots standing outside those walls preventing their access to those resources.

The fear though is real. What is not said is the effect of what they are trying to do. They're selling debt, and when the average Joe buys into that debt, then they can control them. It becomes a form of enslavement. Drive down living standards, devalue the $ without increasing wages and people will struggle to get out of that debt. Who then owns them?

That's because we let the market and ideologues at RBNZ determine what debt can be raised for... low risk investment in weatherboard castles [tick], developing build to rent apartments in areas with sky high rents [tick], investing in a project that has a decent chance of increasing productivity [get outta here].

We used to extend cheap Govt / RBNZ credit to stuff that made our lives better. We lost the plot.

The problem that we need to face up to is that we grew our economy through the 1990s and 2000s by boosting private debt from 65% to 150% of GDP. The torrent of freshly printed bank credit money was gathered up as 'surplus' by businesses and then transferred to savers, shareholders and Govt (who reduced Govt debt to nearly zero). We celebrated the increase in GDP like it meant something.

Private debts approached 150% of GDP in 2008 at the same time as interest rates increased. Before we knew it, the interest being paid on private debt hit 15% of GDP! This meant that a huge proportion of household income was being redistributed via banks to savers (and bank shareholders). The economy crashed spectacularly of course, unemployment boomed etc.

We have just repeated the same pattern. Private debt levels were steady at 140% to 150% of GDP from 2010 to 2019 but low interest rates meant that interest payable on that debt was in the 6% to 7% of GDP range. Low interest rates gave private debt levels a nudge up in early 2021 and then RBNZ hiked the OCR from basically nothing to 5.5%. Interest payable on private debt went from 3.2% of GDP to over 10% of GDP in two years! That's $42bn per year going on interest payments - or a quarter of total wages and salaries!

So, to get to the point. Our private debt level is currently 140% of GDP and interest payable on that debt is around 10% of GDP. Our economy will crash and unemployment will continue to climb, until we get that interest payable back into the 6% to 7% of GDP range. That requires an OCR that starts with a 2 or a reduction in private debt that would take years. Here's a chart showing how reliably interest payments as a % of GDP create splendid recessions.

My general view is that monetary policy destabilises the economy, achieves sod all in terms of stabilising prices or taming inflation, and NZ would be a better place if RBNZ just parked the OCR at 3% and packed up shop.

I agree with much of that - and made some similar points above. I guess what I struggle with is the idea that controlling the flow or stock of money (credit) is an effective way of managing the over-consumption of natural resources. When we slow the flow of credit money, it is not the people consuming too much stuff that lose their jobs and stop consuming, it is the young and precariously employed who consume the least. To move to a more sustainable future, we need something akin to a revolution in how we manage our economy.

Indeed! I have just gone on a long rant about the very same thing above!

It's not the interest rates.  The problem is running things on huge debt.

Better to work from ownership and a bank account in credit.

What trouble is Japan actually in? They would take a falling currency value above a rising one any day of the week - their economic management model relies on a current account surplus. They have the means to meet the needs of their population. That's what they focus on. People have been saying 'Japan is about to crash' for 20 years - it's getting boring.

My view is not that NZ needs to run massive Govt deficits. I would also note that we already print money everyday (it is how Govt spends, RBNZ buys foreign currency etc).  

What I advocate for is an economy where we focus on the real resources available to us (people, tech, materials, energy etc) and Govt uses spending and taxation to ensure that (a) our real resources are utilised to meet the needs of all kiwis, (b) we have the infrastructure and capacity we need to meet out current and future needs, (c) we don't destroy the ecosystem we rely on, and (d) offshore NZD savings are managed down (by reducing our current accout deficit) and we build the food and energy sovereignty to better insulate ourselves from a crazy world.

Monetary policy is basically irrelevant to the above.

Funnily enough I was at the Warehouse yesterday too, as it was bucketing down and I wanted somewhere to take dumbthoughts jr for a walk around (or else she likes to play up at bedtime) and also because mrs dumbthoughts wanted me to try and find some home brand makeup product that is doing the rounds on TikTok. Alas there was no stock ... at least something sells at The Warehouse.

My observations:

• The store was practically empty
• Pricing was definitely inflated, even on sale items. E.g. massive display of V Energy drink cans, but you can literally buy a single can for a better price at the petrol station and it's much cheaper for a box at Pak N Save. 
• The Warehouse doesn't help itself by having so many items out of stock, untidy displays, clearly no care/effort to present the store well

Don't you know? 

Records are a constant - just like exponential growth

How these folk think, beats me. 

It's not denying climate change, it is questioning who should be responsible for reducing emissions. So long as the private jets whiz around to COPxx talk-fests there is no credibility from those telling other people to pay without sacrificing anything themselves.