Reserve Bank of New Zealand’s Post

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Is there a more New Zealand analogy than sheepdogs to explain inflation and the Official Cash Rate? 🐑 We recently kicked off the 2024 Monetary Policy Challenge with a webinar where our panel Paul Conway, Hamish Fitchett, Caitlin Davies and host Georgina Hassell-Hopkinson covered careers in economics, the August Monetary Policy Statement and answered questions from the audience.   The Monetary Policy Challenge is open to secondary school senior economic students all over Aotearoa New Zealand. The winning team will have the opportunity to visit the Wellington RBNZ office, join us for a press conference and have lunch with the Governor. Watch the full webinar and get competition details here: https://lnkd.in/g5wqiQKu

Peter McCaffrey

Founder and President at Alberta Institute

2mo

It's a cute analogy, but it's nonsense. Inflation is caused by an increase in the money supply. The Reserve Bank printed money, meaning there was more money despite there being the same amount of stuff, so everything got more expensive. Imagine if we DOUBLED the amount of money that exists and gave everyone a proportional amount so that they had DOUBLE what they used to have. You would have more money, but no one would be richer, because the price of everything would just double. Inflation works like this, except it's even worse, because instead of the government giving everyone a proportional share of the new money, they keep it for themselves and use it to spend on things the politicians want, which may or may not benefit regular people (and usually they don't). The price of things doesn't really matter - we could add 6 zeros to the price of everything tomorrow and as long as we add 6 zeros to wages and savings and debt too, everything would stay the same. What matters is how much stuff we produce per person. We used to have a reserve bank that understood this. Maybe one day we will again.

Brett Cottle

SmartShelters - Dairy Housing

2mo

The mind boggles 😂

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