This was shown to be the case both in Hagers book from the 2005 election and in the covert taping last year. It is also clear that in a number of areas that NACT ministers have been less than honest in their presenting of information (Nick Smith and Rodney Hide come to mind) – skewing the stats and budget presentation to further their opinions.

Tell me – what ‘hidden’ position that you think Goff is concealing over this announcement?

Is the global price of oil set in NZ? Think about it – you’re the one who’s misguided.

“how exactly does what Goff is proposing give women an advantage over men?”

First off, equality isn’t advantage. Secondly, women are over-represented in minimum wage jobs, therefore boosting the minimum wage will close the gender pay gap.

“Debasement of the dollar in my hand is the very same debasement of the dollar in anothers’ ”

increasing the minimum wage does not lead to a proportionate increase in inflation, because only the price of goods and services that are set locally are effected.

I have no problem with arguing that Goff is right to change policy – even tho Labour revisited it recently and decided to keep the status quo.

The point is that many if not most here ranted and raved about Key changing long standing policy and putting the most negative possible spin on it.

So what’s different this time?

I’ve always been bothered by the idea our dollar must be low otherwise we can’t export.

A low value currency is to do with capitalist markets need to continually grow. If they don’t they can’t pay for themselves (debt+interest > income) or make any profit and the only way the markets can grow is by having more people in them.

If the market remained the same size rising productivity would induce deflation due to demand remaining constant. To counter this companies seek to export from the local market to try and maintain the same or greater demand. The problem then becomes price – a high valued local currency makes the price in export markets higher and when most of the markets you can export to are poorer than the local market then exports must fail. Throw in the fact that the market you’re exporting to may, and probably will if they’re developing any sort of economy at all, also have local competition with their own rising productivity and what you end up with is a massive over-supply of product.

If anybody really thought about it they’d realise just how stupid export/import markets really are and just why they don’t work. Unfortunately, most economists haven’t thought about it and continue to peddle the same irrelevant economic theory that they’ve been using for the last couple of centuries that just doesn’t work.

Yes. Which is why the US normally runs a much higher Debt to GDP Ratio than most other nations. For the US anything in the range 80-120% is perfectly normal.

I also thought our debt was around 98.2% of GDP page 25

For the country as a whole, net overseas liabilities rose from $99.8 billion to $173.5 billion. As a percentage of GDP the rise was from 76.1 per cent to 96.5

Agreed. But not all debt is overseas debt. The difference would be funds generated by various banking institutions within NZ leveraging off local depositors.

I couldn’t give a shit about that. High or low doesn’t matter too much.

The real concern is the volatility. That causes big issues for exporters. The normal annual cyclic effect as the farming receipts come back (ie the Fonterra effect) are one thing. But we’ve been having the effects of people shoving money into the currency and out based on perceived instabilities elsewhere. It means that from quarter to quarter you can never be sure of what you’re going to get. Since there is a monumental lack of capital for anything less secured than property, it means that people don’t invest in productivity improvements because they’re never sure what their revenue and profit is likely to be. Increases the risk, decreases the improvements in productivity investment. You need to hold the cash for the changes in the exchange rate doing nasty things to the bottom line.

The inherent structural issues with inflation have largely been overcome in the economic sphere through 20 years of adherence to quite rigid guidelines. We need to start fixing the other structural issues like the mis-investment and lack of available capital for productivity improvements.

This is timely, announced in the open, and set up for a debate on policy in the public arena. Only a paranoid git would consider that there is anything underhand about it….. *sigh*

I’m interested in this change of tack tho. The accusations here about secret agendas, dead rats and the like, and yet Goff can get away with oops we made a mistake with the EFA and monetary policy. To be fair, I think it’s straight out of the National game book but this was exactly the kind of thing most here were so adamantly outraged about.

And if things were so goddam good under Labour, while is Goff changing core things?

Perhaps Goff realises he has to do something for HIS own sake. I still can’t see him getting Labour back in power.

The age of pragmatism is on us.

As for Hickey, he writes some interesting stuff. But I always laugh when left-wing people quote him on stuff. Since his vision of New Zealand would be most awful to any left-wing person.

Also it’s best if he doesn’t go into too many details as the last time he did so he stuffed it up. Right now he just has to project a direction a for his party. Thus far they’ve come up with reversing the cuts to ACE, ACC changes, changes in benefits (though whether this continues after the recession or not is in the air)and now Monetary policy. Of particular interest is he’s targeting an economic area. Something we’ve not seen from Goff before and an area where Key is seen to have credentials. He’s done it spectacularly well.

Likewise, my other big impression was Goff with his response to Hone Harawira. I realise many of the left-wing will be disappointed in what he had to say. But his statements were never targeted to the liberal left. It was targeted at everyday New Zealanders. People that vote every election but don’t pay particular attention to politics. The people that would find Harawira’s comments to be distasteful. Goff did well there. Also while it was a huge PR exercise. He’s surely done some good in his opposition to changes in ACC levies for motorcyclists.

If Goff keeps up this momentum then his profile will lift particularly as National is entering a difficult year with what will be a very difficult budget. I still think Goff has a long way to go. His chances in 2011 are very slim. But he has certainly lifted his game this month.

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In regards to this policy. I’ve always been bothered by the idea our dollar must be low otherwise we can’t export. If anything that just exposes how commodity based our export market is. Real success in exports will not be obtained by a low dollar. Sure that can help for a short period of time as can increases in the price for commodities. Something that improved our economy from 2000 till about 2005. But the future is about adding value to those exports. For some areas such as forestry, seafood and our meat industry that is difficult. Even Fonterra and milk producers have struggled in this area. But the only way we can have a successful export market is if we offer high-tech, high-cost and specialised goods that are less impacted by a rise in our dollar and a fall in the price of commodities.

The total US Debt to GDP ratio is about 300% giving a total debt (Household + Business + Government) roughly in the order of $14T * 3 =~ $45T.

Keen points out that the historic rate of unwinding total debt during the 1890 and 1930′s Depression was about 5%pa. That translates into a $2.5Tpa hit on GDP. Combine this with the fact that this $45T of debt was growing at about 3-4% over the last five years ( an ongoing stimulus of about $1.5T which directly added to GDP) the total negative drop in GDP will be around $2.5 + 1.5 =$4T … in a $14T economy. Incidentally that amounts to almost a 28% total negative drop in economic activity. If you think this far-fetched, it is not. It is the consequence of such an outlandishly high Debt to GDP ratio.

The US has done a stimulus roughly about 20% of GDP (0.2 * $14T =~ $3T) which is close to, but still less than the $4T deleveraging, so to answer your question… no inflation. The obvious problem is that the prevailing model means that all the money being created is being done so in debt, so that there is a limit to how much more can be done without completely overwhelming the US ability to ever service the debt.

NZ is running Debt to GDP around the 160% mark. For our economy the long run average during stable periods is around 30-40%… so NZ has about 120% of GDP to unwind as debt before we hit bottom. If we unwound that at say 5% pa, it would still hypothetically take 24 years to stabilise.