(With credible financial policy , of course.) Another interesting instance , from JP Koning's Blog "Moneyness"
Koning describes the lack of inflation every bit a resultant of the perceived "permanence" of the increased reserves. I mean value it comes from the fact that reserves pay involvement -- every bit they produce inward New Zealand. Either agency , the betoken is that banks in addition to people are happy to sit down on interest-paying coin , inward enormous quantities , but every bit they are on bonds.
The corresponding inflation in addition to involvement rates:
RBNZ decided to 'flood' the organization amongst balances to brand things to a greater extent than fluid. This involved conducting opened upwards marketplace purchases that bloated the monetary base of operations (comprised of currency addition deposits) from unopen to NZ$6 billion inward mid-2006 to but nether NZ$14 billion past times Dec of that year. See nautical chart below.
(Note that the RBNZ's problems began far earlier the credit crisis in addition to were due solely to the peculiar construction of the clearing organization , non New Zealand's economy.)
Koning describes the lack of inflation every bit a resultant of the perceived "permanence" of the increased reserves. I mean value it comes from the fact that reserves pay involvement -- every bit they produce inward New Zealand. Either agency , the betoken is that banks in addition to people are happy to sit down on interest-paying coin , inward enormous quantities , but every bit they are on bonds.
The corresponding inflation in addition to involvement rates:
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| Source: Reserve Bank of New Zealand http://www.rbnz.govt.nz/statistics/key_graphs/inflation/ |
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| Source: Reserve Bank of New Zealand http://www.rbnz.govt.nz/statistics/key_graphs/90-day_rate/ |
Tag :
Inflation
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