ROBERT MacCULLOCH: Let the Good Party Times Roll at the Reserve Bank of NZ - the architect of our Recession - no austerity there
- Administrator
- Mar 24, 2024
- 2 min read
The Reserve Bank has doubled staff numbers in five years to 510, with personnel costs rising to $80 million in 2023 from $32 million in 2018 - up by a whopping 150%. I guess when you print $50 billion and flood markets with liquidity, causing runaway inflation that now requires the Bank to "engineer a recession" (in the words of the RBNZ Governor) to get it down, there's always spare cash floating about to spend on your own employees. Last year the Australian Financial Review said, "The latest data from across the ditch suggests NZ is the first advanced economy to enter into a bona fide stagflationary recession. Now it's got worse - a double dip recession. Funnily enough, our Governor told Bloomberg News in 2021 it would never happen: "The fear of the 70s, the 80s, stagflation", he said, "it is such a different world”. It's so different that for those with a long memory, it feels just like the 70s.
The upside of the 510 people working at the RBNZ now may be that one of them is at last able to produce some decent research on hot topics, like the effect of immigration on inflation. That, of course, assumes the extra staff hired were economists. No such luck. Instead the Reserve Bank's latest report on immigration was not even written by anyone at the Bank - it was sub-contracted out to consultants!?
The report itself is mostly a literature summary - but why hire an expensive consulting firm to go through some past economics papers on this topic? Can't the RBNZ staffers read it for themselves? What did the consultants find out? According to the RBNZ they "outline how migration can add to or reduce inflationary pressures depending on the size & direction of flows & the characteristics of migrants". Oh great - so immigration can increase or decrease inflation, meaning they don't have much of a clue to its overall effect. We already knew that in the first place, because immigrants - wait for it - buy more stuff, adding to demand & inflation, but also, to the extent they get jobs, supply more stuff, which reduces inflation.
What did the Bank pay for that amazing insight which is not news to anyone? Who knows? The only thing we do know is that it is your money - and that not everyone in Wellington is anxious about cuts.
Sources:
Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. Rob blogs at Down To Earth Kiwi
How can anyone be inspired to remain in this country when you read this stuff.
I was expecting Luxon to have kicked Orr for touch as part of the hundred-day plan, but no such luck. His performance doesn't warrant him remaining in the office any longer than it takes to close the door behind as he leaves. An individual who manifested their own agenda and continues foist it upon the people with reckless disregard. There is only one man who can manage us out of this, Mr Brash.
Even with 500 staff the RB still have no idea - may as well go back to sub 250 staff
The LSAP $50 billion QE losses are circa $10.5 billion (taxpayer picks up this tab with nothing but inflation & higher interest rates to show for it). Orr has no shame - where is his resignation?