The Road Back to 2% Inflation -- Thoughts on RBNZ Chief Economist Paul Conway's Speech (19 June 2024)

Gaslighting? Decide for yourself.

https://www.rbnz.govt.nz/hub/news/2024/06/the-road-back-to-2-percent-inflation

These are just some initial thoughts.

1…The RBNZ think the Phillips Curve is a thing — it’s not. Even Bill Phillips, the NZ economist who invented it—who trained as an engineer so he wasn’t stupid (I know, I’m biased), and required evidence when he made claims—said this so-called ‘Phillips Curve’ was only useful as an academic analysis tool; not really valid for anything because it had such tightly defined assumptions which were NEVER met. He whipped it up over a wet weekend.¹

The fact these RBNZ neoclassical economists do think it’s a thing, and are using the Phillips Curve in their analysis invalidates their whole analysis. And these people have control of all economies.

Think about that.

2…Conway talks about the “COVID-19 pandemic.” Whether he knows the “pandemic” was fake or not I don’t know (if I had to put money on it my guess is he did, all central bankers know. In my opinion) but he is blaming the inflation on the “pandemic.”

This is exactly what the bankers did post WW1 to get the global central banking regime in place. Shift the blame. The inflation is due solely to the money (albeit electronic) printing that is an intrinsic inescapable ‘feature’ of a debt based currency like New Zealand’s.

During CovAIDS they printed on steroids and they just can’t hide the consumer price inflation like normal.

So they gaslight and shift the blame (see more below).

3…The RBNZ is re-emphasizing the 1-3% inflation target range. Remember when the target used to be a 2% upper limit.

When the RBNZ talks about inflation, they mean core consumer price inflation. This excludes food and energy.²

Image from speech.

4…In general it’s as expected; mainly jargon filled nonsense, invalid (in my opinion) assumptions, and “models” — science™. But I thought these statements were interesting (emphasis added).

Looking at recent history, inflation breached the upper 3 percent limit of our annual headline CPI inflation target in the second quarter of 2021, before rising to a peak of 7.3 percent a year later (Figure 1).

Know any politicians talking about this? Please tell me if you do.

This work suggests that the labour market played a key role in New Zealand’s inflation experience, and to a larger extent than in other countries.

They want to blame inflation on workers demanding higher wages. This has been an evolving theme for a few years now.

First, we expect spare capacity to start emerging in the economy over 2024

This is a euphemistic way of saying to expect bankruptcies and unemployment to skyrocket. In my opinion.

Overall it’s banker speak for plan for the worst, hope for the best. Again, in my opinion.

There are also some very interesting charts.

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1. Addendum: 24 June 2024. It would appear US economist Judy Shelton agrees.

2. Personally I think this is fraud. Inflation is a monetary phenomena only. When the currency supply increases, this is inflation. When the currency supply decreases, that is deflation. Everything else, including consumer price inflation, is a consequence of this. Everything.

In my head, for back-of-the-envelope type calcs, normally I double official core inflation. Currently, I triple it.

All their definitions are moving feasts too. You need to continuously check how they define words to see what they mean. I think it’s to obfuscate; lots of work required to keep up.