Well, it’s good to see that some people understand the critical role inflation played in getting us to the situation we’re in now.
The drop in inflation is based entirely on the collapse of petrol prices – a factor outside of the Reserve Bank’s control. Had oil not suddenly halved in value, inflation would have increased by 1% instead of dropping by 2%. And it increased because dumbarse Bollard, cheered on by the dumbarse media, continues to flout his employment contract and dropped the OCR. The drop collapsed investment in this country, which collapsed our dollar, which made everything imported into this country suddenly a shedload more expensive.
Inflation is nasty. Inflation impoverishes people, empowers the moneylenders, and yes, widens the gap between rich and poor. And not in a good way. Dropping the rate further when food and commodity prices are rising only leads one way, and that is the way to poverty.
If we’d stood out amongst all the Western nations firing up the printing presses and held firm on the OCR, we would be weathering the storm right now. New Zealand would have been a safe haven for those looking for financial refuge. And we’d be halfway to an economic recovery. But no, it’s like the lessons of the last eighty years never happened and we’re all spiraling right back down.
Brash held inflation down like he was serious. He tried to keep it at the bottom of the range.
Bollard thought (and still does) that if inflation might dip under his upper target then no action is ok. When he finally woke up, it was too late – people had taken advantage and locked in long term fixed rates.
Workers might be able to overlook a percent a year for a while, but no one is going to sit still while he looses upwards of 3%. Bosses don’t just give money from the goodness of their hearts and that’s where industrial disputes come in.
Which don’t help anybody – except unions.
Written by scrubone
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