Musical Chairs
@musicalchairs.bsky.social
Ugly graphs, insights and outbursts. NZ.
Regular viewers will know that I had serious doubts about the 'recovery' well before Trump decided to cause global chaos (and trading opportunities for his buddies). Suffice to say, today's unemployment data is GRIM! Let's have a look... Unemployment rate vs the guesses of clueless ghouls. [🧵 1/n]
[🤓post] This is the pile of financial assets that RBNZ is holding for the purpose of 'liquidity management'. See the big red hump? That's Govt bonds that RBNZ bought during Cvid (aka QE). RBNZ's been selling them off for a few years. 'Green' is the low interest cash sprayed at banks (FLP) [🧵 1/n]
One of my favourite things about election time... This was one of a series from 2023. I'll have to dig out the templates.
Good chance that credit flows are going to dip deeper into the negative over coming months. It would be a miracle if that didn't pull employment down too. You won't find economists worrying - their models assume that banks lend out other peoples savings 😖 (as well as many other wrong things).
What I would say to you is that the only way we can increase wages and the living standards of the working poor is to grow the pie. Bigger pie. TINA.
It's labour market data week for those that celebrate - so let's look at where things have been getting grimmer over the last two years and where things have been going OK to good (it's only fair). Grim to grimmer in image 1, Good to OK in image 2.
Every time we get a shock, the oil companies cash in. Remember that those companies are just intermediaries between us plebs and the richest 1% who pockets 50% of those profits. Credit to Isabella M Weber on the other place.
One of the key blind spots in reckonomics - the very real economic impact of commercial bank money printing (aka endogenous money creation). Banks create brand new money when they make mortgage loans. Some of that money gets spent into the economy, some gets saved, some is repaid to banks. [🧵 1/n]
Deficits that matter - exhibit one. As a country we shovel billions offshore (net) every year. A big chunk of that is rent extracted by offshore banks / investors. We also can't sell enough cheap ecologically disastrous products to offset our imports of tech, fuel, machinery etc. [🧵1/n]
Hmm. Credit growth stumbling while RBNZ increase interest rates is hardly a recipe for resurgence. Our economy is credit-fuelled.
Whenever you hear the commentariat about the 2026 'recovery' - remember that they're talking about things not going to shit quite as quickly as they were last year.
Household living costs data in technicolour. Fuel prices kicked quarter two up in the air, falling debt servicing costs (relative to last year) helped out. CPI doesn't include debt servicing costs, because we increase those to tame inflation. Yes, we increase the cost of living to tackle inflation.
New loan drawdowns net of repayments - a measure of credit demand. For the avoidance of doubt, when that white line runs below zero for any period of time, that's a solid recession indicator. Our economy is credit fuelled. Can you see the start of big 2026 recovery? Faded before it got started, ay?
I discuss Govt spending with reckonomists often (🤓) I argue that the order of things absolutely has to be: > Spend then Tax They say it's: > Tax then Spend Eventually, after going round the houses (RBNZ blah)... they say it's all semantics anyway, and what does it matter. Oh it does! [🧵 1/n]
Geek level high (sorry). Graph shows NZ Govt deficit vs private sector deficit over the last 40 years. The 2011 result is an anomaly - thx to a massive injection of foreign capital (insurance). Key take out is that NZ Govt only gets to run a surplus if private sector debt is going hard. Why? [🧵 1/n]
Stand back and look at the full set of NZ surpluses & deficits. They have to add up to zero - iron laws of accounting. Now, if businesses are paying down debt (grey), net household deficits are low (blue), and we're net payers to the rest of the world (yellow), what will the govt deficit (pink) be?
Your daily reminder that in 1991 we set social welfare payments at less than the cost of staying alive - on purpose - and fundamentally this hasn't changed. It's a feature, not a bug.
Matt Whitehead@mjwhitehead.bsky.social · 2w agoI am shocked it's only 8%. You can't mentor your way out of not enough money to live. I'm worried about minimum wage too, it's pretty appalling atm.
If you saw articles this week celebrating a big increase in advertised jobs, sorry, they were talking about that little pick up. Zoom in between June 25 and June 26 if you can't see it.
Offcut from a discarded thread. One of the most pervasive myths in modern reckonomics is that 'too much money' in the economy causes inflation. There is basically no empirical evidence for this rotten reckon.
NZ has - almost uniquely amongst our peers - tanked its economy and pushed 10,000s onto the dole (and offshore). We were told that this strategy would 'get interest rates down, tame inflation, and drive growth 🎉'. Yet, here we are, slumped and vying to be inflation champs. What went wrong? [🧵1/n]
Regular reminder that Govt creates new money when it spends, and deletes money when it taxes. The spending has to come first. The more Govt spend, the more money we have to pay taxes (and the more resources are appropriated by Govt ofc).
Ah, CPI day. This is a breakdown of the (allegedly) non-tradeable or domestic inflation data. I've stuck the tradeable inflation on top in grey. Homegrown inflation is above pre-c19 levels. House building and rent costs have been replaced by energy cost & rates hikes. [🧵1/5] See ALT.
There are about 15,000 jobs advertised today and... - 174,000 people officially unemployed - Another 144,000 people who want more hours - A further 80,000 potential jobseekers (underestimate) This is a failure of laissez-faire economic management on an absolutely tragic scale.
Are the RNZ subeditors sponsored by property management companies? Another headline detached from the reality.
Reckonomists are taught grossly simplified, assumption-strewn theories... supply/demand, Phillips curve, diminishing marginal returns etc... and they stick to those theories like stubborn mules. Let's take the assumption that higher interest rates always and everywhere reduce inflation... [🧵 1/n]
Monthly price data is out. Only covers about half of the CPI basket but it is clear that fuel prices (yellow/tan) will be pushing on CPI for Q2. Thankfully, RBNZ are hiking interest rates to demonstrate their blind faith in medieval monetarism (careers depend on it).
Latest weekly jobs data. This is not what a recovery looks like. Job ads online from MBIE is the second chart. Wellington / Auckland stuck at GFC levels. At some point, folks will work out slumps stay slumped until something changes.
For all the talk of recovery, the benefits numbers just keep on rising. We're at record levels and at 20-year records when you account for population growth. GFC left in the dust.
