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Thread ID: 81215	2007-07-20 20:50:00	The current NZ dollar inflation debate	Digby (677)	PC World Chat

Post ID	Timestamp	Content	User
570660	2007-07-22 23:41:00	The problem is that there are no easy answers to get away from commodities. As for the high dollar, other posters have pointed out that our currency used to be much higher than today. The exchange rate of any currency over time is a reflection of the economy it is based upon. Strong growing economies have strong currencies. If having a high valued currency is such a terrible thing, how does Switzerland survive? Sweden? Germany? They all sell stuff to the rest of the world and aren't starving in the streets.	Winston001 (3612)
570661	2007-07-23 07:47:00	The problem is that there are no easy answers to get away from commodities. As for the high dollar, other posters have pointed out that our currency used to be much higher than today. The exchange rate of any currency over time is a reflection of the economy it is based upon. Strong growing economies have strong currencies. If having a high valued currency is such a terrible thing, how does Switzerland survive? Sweden? Germany? They all sell stuff to the rest of the world and aren't starving in the streets. No relation to Winston Peters ? Just gone over 80 cents US ! Yes our currency used to be much higher but that was over 30 years ago and for the last 20 years it has been low. So you cannot use that argument to accept our high dollar rate now. Yes the exchange rate is a measure of the strength of a county's economy and a country should not need to survive by having an artificially low currency (yet China seems to do it, but would still sell its products if they were more expensive). Countries like Germany had their currency gradually increase as their economy and exports increased. Eg high tech chemicals, high value machine tools, high quality cars. All of these are expensive products not low value commodities like milk and butter. The main problem for our exporters and therefore all of us in the long run (we all need jobs and overseas income to buy what we like) is the very wild fluctuations in the currency because of interest rates and financial policy. Not on the strength of our economy. Regards Digby	Digby (677)
570662	2007-07-23 08:21:00	New Zealand screwed itself, when it did away with tariffs, making NZ produced goods no longer competitive, the result was thousands of jobs disappeared, because merchants could import everything more cheaply than they could buy NZ madeIf removing tariffs means locally goods are now too expensive relative to imports, the local goods were already uncompetitive, they were just being protected from competition. There isn't any point in running inefficient industries unless they are strategic, such as the US steel industry. Sure, it creates a problem if you are working in one of these industries, so ideally it would be best to slowly reduce tariffs, but new workers shouldn't be being trained for inefficient industries.	maccrazy (6741)
570663	2007-07-23 08:25:00	My calculator tells me that $1 NZ will currently by me $.7937US (79c)	winmacguy (3367)
570664	2007-07-23 08:59:00	I'm probably showing my extreme naivety here - but there seems to me one easy solution if we only adopted a bit of creative thinking. It seems one of the really big factors in the inflationary figures is the housing market. But yet to most NZers, an investment in housing is exactly that - an investment. EG I am currently building a new house - with the aim that it will appreciate in value, I will pay it off, and that when it comes to my retirement, I can downsize, and should have a nice litle nest-egg from the excess (+ private super / savings etc as well of course). Anyway - the point is that this is an investment - so why treat it as inflationary. If we took the housing sector out of the inflation figures, it would do two things: - Immediately drop the inflation rate Mean that you could drop the interest rate to encourage people to put money into long term saving (housing). The flow on effect is to immediately lower the NZ$ which would encourage exporters. More jobs. More economic strength. No doubt this argument has to be flawed because otherwise it actually makes sense - doesn't it?	Brooko (8444)
570665	2007-07-23 09:25:00	The problem is that there are no easy answers to get away from commodities... The Australians are blissfully ignoring this very same issue because unemployment is low. They ship tonnes of unprocessed ore. If they processed it into iron and steel, they would add many thousands of jobs to the industry, as well as boosting foreign income. It seems that they have to wait until things get bad before thinking of adding value, but then it becomes too hard. I reckon this is what happened to NZ. They did not prepare themselves in times of plenty. Ah well....	vinref (6194)
570666	2007-07-23 11:13:00	New Zealand is the most efficient Dairy farming country in the world bar none, and much of the countries prosperity comes from thousands of milking sheds round the country. Fontera has done a fantastic job marking NZ Dairy products internationally, and is a success story that NZ can be very proud of. Farm products, and especially dairy products are amongst the most protected commodities in international trade, and Fontera faces strict quotas, tariffs and restrictions in most areas that they market NZ produce. The point is that everywhere NZ tries to sell our produces there are barriers to trade, but these same countries not only expect but have free access to New Zealand markets. There are very few manufactured goods that NZ can compete with on their home market because of economies of scale, plus the fact that many of the imported goods originate from countries that are extremely low wage, with working conditions no New Zealander would tolerate. Additionally many of these countries are gross polluters and violate the environment in a way that would not be tolerated in NZ, North America or Europe. How can NZ manufacturers compete against such opposition? The clothing and footwear industry in the Phillipines pays their workers less than a NZ employer pays in ACC levies for each worker - result NZ jobs are exported. However, do you see this reflected in cheap Reeboks, Nike etc. Shirts made in China with labels such as Pierre Cardin sell at $NZ120, except at the end of a sale when they may go for $39.95, and at this price everyone in the chain is still making a profit thank you. The importers and the merchants are making a killing, at everyone's expense and at the cost of NZ workers jobs. To pay for all these imports Fontera has to sell Dairy Products into protected markets. New Zealand has manufactured a permanent Balance of Payments problem for themselves, and a high NZ Dollar due to high interest rates ensures that the average Kiwi battler will go on paying and paying for this folly. PS nobody is further from being a socialist than me, I just think that successive NZ governments have overlooked that they should look after their own people first ( ie just not small sectors of the community)	KenESmith (6287)
570667	2007-07-23 19:34:00	I'm probably showing my extreme naivety here - but there seems to me one easy solution if we only adopted a bit of creative thinking. It seems one of the really big factors in the inflationary figures is the housing market. But yet to most NZers, an investment in housing is exactly that - an investment. EG I am currently building a new house - with the aim that it will appreciate in value, I will pay it off, and that when it comes to my retirement, I can downsize, and should have a nice little nest-egg from the excess (+ private super / savings etc as well of course). Anyway - the point is that this is an investment - so why treat it as inflationary. If we took the housing sector out of the inflation figures, it would do two things: - Immediately drop the inflation rate Mean that you could drop the interest rate to encourage people to put money into long term saving (housing). The flow on effect is to immediately lower the NZ$ which would encourage exporters. More jobs. More economic strength. No doubt this argument has to be flawed because otherwise it actually makes sense - doesn't it? Brooko - your idea is good and I have often thought of it. Indeed I think some countries do not count house prices in their CPI calculations (i may be wrong). Yes Kiwi's DO treat a second house (or their first house) as an investment as they are "safe". Don Brash used to piss me off when he was Reserve Bank Government when he kept saying Kiwis should stop buying houses and rent ! It was alright for him, he probably had a nice house or two. Owning a house is not only a good investment it is also good for families providing a stable home for them and giving an incentive for people to look after their house/area. There is probably some "technical" reason for not doing as you say, but there should be some sort of tax treatment to treat second houses as an investment as if they were shares or any other investment. But then again this could push rents up ! The bottom line at the moment is that house prices have doubled over the last 5 years ! Causing huge inflation and wealth effect. This to me is ridiculous wages have not doubled, the population has not doubled. A lot of the price rise is due to the high prices of houses overseas and local body charges. Regards Digby	Digby (677)
570668	2007-07-24 02:05:00	When Don Brash said that he had just moved to Wellington, and bought a house. To go with his house in Auckland, his holiday home, and the kiwifruit farm. Those rules apply only to us. We're supposed to put our "spare" money into "productive" things like the sharemarket or Broadbank or ... :) I own one house. I live in it. If I didn't own a house I would have to rent one. This is something which the economic voodo doctors don't appear to understand.	Graham L (2)
570669	2007-07-24 04:33:00	The basic problem with investment in housing is that it is non-productive . Factories/work-places provide jobs creating goods and services . If things go well, the work expands, more people are employed, more wages are earned . A house just sits there - and consumes money . Of course we all need somewhere to live but in NZ we overcompensate . Ideally we'd all have modest houses and own/invest in productive businesses . It sounds unrealistic yet that is what happens in other countries and over decades it pays off .	Winston001 (3612)
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