Negative Interest Rates – What Lurks Beneath / Jeremy Couchman
Negative interest rates – Are all our Christmas’s arriving at once, or is this a sign of something more sinister to come?
What’s a negative yield curve and why as an investor, should I even care? Jeremy Couchman, senior economist at Kiwibank joins Darcy in a discussion around how things like interest rates, exchange rates, and central banks, control and influence the environment in which we are investing in.
So in order to ‘leave no one behind’, here are some quick definitions, with links to more info, if required.
Let’s define a couple of things:
What’s the OCR: Official cash rate? In short, it’s the ‘official’ interest rate set by the RNBZ (Reserve Bank of NZ) to help influence the interest rate, and exchange rate, in an attempt to regulate inflation, and foster stability in employment. When things are going really well in an economy, the OCR increases, and when things aren’t going so well, it decreases. The way that this works is not too simple, but check this out https://www.rbnz.govt.nz/monetary-policy/about-monetary-policy/what-is-the-official-cash-rate. We’ve recently seen a big decrease in the OCR and most economists currently agree, we’re going to see another cut again soon.
What is the CPI? The consumer price index – well, it’s the measurement the RBNZ looks at when it sets the OCR. If it’s high, that means that inflation is high, and therefore the OCR needs to increase. Currently the CPI is very low at 1.7% at the time of recording – it’s important to note that the CPI measures the price for a ‘basket of goods’ – there’s a lot of things not included in the basket – the cost of your mortgage for example, is not directly included in the CPI. https://www.stats.govt.nz/indicators/consumers-price-index-cpi
What’s quantitative easing or QE? Sometimes this is loosely referred to as ‘money printing’ – The US for example, has, since the GFC or global financial crisis of 2008 been printing money big time. Quantitative easing is an unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to increase the money supply and encourage lending and investment. https://www.investopedia.com/terms/q/quantitative-easing.asp
What is helicopter money? A Helicopter drop, a term coined by Milton Friedman, refers to a last resort type of monetary stimulus strategy to spur inflation and economic output. Though it would appear to be theoretically feasible, from a practical standpoint, it is considered to be a hypothetical, unconventional monetary policy tool whose implementation is highly improbable. Again, check out this link https://www.investopedia.com/terms/h/helicopter-drop.asp – whilst unconventional and theoretical, I personally wouldn’t be surprised if we see this in our lifetimes.
What’s an inverted yield curve? An inverted yield curve is an interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality. This type of yield curve is the rarest of the three main curve types and is considered to be a predictor of economic recession. https://www.investopedia.com/terms/i/invertedyieldcurve.asp. The yield curve is currently inverted.
Today we’re going to have a discussion around these things and we’ll be zooming out a little bit and having a look at the wider international scene to discuss how central banks around the world seem to be dancing to the same tune at the moment.
Often when you hear about topics like this the eyeballs get a bit donut-glazed, but Jeremy makes this pretty easy to understand and I think we covered enough of the basics today to leave no one behind and enough depth to provide some protein for even the more seasoned thinker in this space – I hope you enjoy.
Thanks for listening in to this episode and thanks again to Jeremy Couchman – senior economist at Kiwibank.
KiwiBuild and ‘no jab, no pay’
Ruwan and Beth discuss KiwiBuild and ‘no jab, no pay’. What went wrong with Labour’s flagship housing programme and can it be saved without reforming our planning rules? What is ACT’s plan to improve housing affordability? Also, ‘no jab, no pay’. Is it fair to reduce or remove welfare payments for parents who don’t vaccinate their children, and has it worked overseas?
Listen now, or Subscribe free:
ACT’s Campaign for Freedom of Expression: https://freespeech.act.org.nz/
ACT New Zealand: https://www.act.org.nz/
School of Practical Politics: https://www.act.org.nz/school_of_practical_politics
Renee Dale: Moi Wines – NZ Wine Podcast 56
Renee talks about making wine in the Auckland region of New Zealand, the Moi brand and her wine journey so far….. and Cleopatra.
Listen to the Podcast Here:
Music Track featured on this podcast: ‘Kuaz’ – courtesy of Brent Page.
Golf Tours – On The Tee Golf NZ Podcast 10
We talk with Denise Langdon, founder of PaR NZ Golf, New Zealand’s leading golf touring company, about her business and the business of golf tourism in NZ and overseas. Denise also talks about her background running tournaments on behalf of Golf NZ and she tells the story of her first encounter with a talented young player named Lydia Ko.
Listen now:
PaR NZ Golfing Holiday – http://www.parnz.co.nz/
Entrepreneur Kenyon Clarke talks Business, Housing, and End of Life Choice
This week in Politics in Full Sentences, businessman, entrepreneur and humanitarian Kenyon Clarke talks about business, housing, and succeeding against tough odds. He recovered from the Great Financial Crisis by building a world class company to tackle the housing crisis. Kenyon shares how he came through those tough times, and what is needed to get more New Zealanders into homes now. He also opens up on why he supports the End of Life Choice Bill, and others should too. Added in is all the usual reviews of the political week; the Rugby World Cup licensing hours, and why David Seymour doesn’t get invited to the Police Minister’s birthday.
Listen now, or Subscribe free:
ACT’s Campaign for Freedom of Expression: https://freespeech.act.org.nz/
ACT New Zealand: https://www.act.org.nz/
School of Practical Politics: https://www.act.org.nz/school_of_practical_politics
Wealth Web 3.0 / Jerome Faury
Jerome Faury from Centrality joins me today and we’re discussing some of the characteristics of the new financial world we’re heading into. I’m interested in this because to develop wealth (not just manage it), we need to be open to new methods. Current financial media doesn’t explore this topic and financial advisers are rushing into endorse this sort of stuff yet (it’s confusing as heck let’s be honest, and no one’s figured out how to make money promoting it either!)
For some of us, the future is pretty far away and we honestly don’t care about this sort of thing – ‘why bother’ and ‘why should I care’?
You should care.
I suspect we’re on the edge of a shift – not just in international equity markets, but a shift when it comes to our personal faith in the current financial system. The alternative or at least one of the alternative solutions has already been built – Bitcoin. What it’s built on is what’s of interest in this episode, and in particular, how things work on the blockchain is what matters the most.
Centralised governments and corporates currently own the image of us – our data – the new oil / gold. Can we trust them? Well yes up to a point, is the short answer, as most of us currently do. Perhaps the question is, should we trust them? To answer this question we need to see how they either resist or adopt the move to more decentralised systems – why? Because decentralisation shifts power from the middle (big corporates and governments) to the edges (you and me).
If you’d like to reach out to Jerome you can reach him at Centrality or give him a call on 021 Jerome.
Special offer from Centrality:
If you’re into all things blockchain, complete the following survey and receive 3 months free membership to Blakeley.
What is Blakeley? Blakeley brings independent, data-driven insights to sophisticated cryptoasset investors. We leverage our community of experienced traders and industry insiders to identify actionable strategies and help readers navigate the rapidly-evolving world of blockchain assets.
Covering everything from macroeconomic analysis of digital assets to the factors that drive successful blockchain ventures and projects, Blakeley’s deep market experience and quantitative tools offer an opportunity to stay ahead of the competition at a critical moment for investors – the emergence of a new global asset class that is based on fundamentals.
Fonterra’s dismal performance and better public policy
David, Ruwan and former Finance Minister Ruth Richardson discuss Fonterra’s recent performance and what should come next for the dairy giant. Also, Ruth gives her view on how the current Government is performing and how we get better public policy in New Zealand.
Listen now, or Subscribe free:
ACT’s Campaign for Freedom of Expression: https://freespeech.act.org.nz/
ACT New Zealand: https://www.act.org.nz/
Our Digital Gold / Jerome Faury
What’s your most valuable asset – your car? Your house? Your sock puppets? What about your self, and more specifically, what about the digital version of your self, or your image. Here’s one of your assets currently already out there benefitting a handful of a few very powerful companies in the world.
One of the ways you can grow your wealth is to own your SELF.
Jerome is Group GM at Centrality + Co-Founder of Centrapay. He’s also been on a number of Boards, either as a non-exec Director or Advisor.
Previously, Jerome was a founding member of Payment Express, where he helped grow it into one of the largest processors in the Asia-Pacific region, processing more than $40 billion per year across more than 15,000 merchants. He then became Executive General Manager at Orion Health where it reached $1 billion on its IPO listing and in 2014 received Hi-Tech Company of the Year Supreme award.
Jerome is an interesting character, who’s been in difficult and challenging circumstances. This is the first of a two-part recording with Jerome. In this episode you’ll hear about how he was left in the desert by his parents, he survived by eating dried noodles and wearing socks on his hands to a point where he sold his Falcon at the airport to buy a ticket back home. That kind of background builds resilience. This and his work experience has set him up supremely well for the difficult and challenging task before him, to usher in a future where value is transferred as easily and efficiently as information… ‘Where the possibilities for what we constitute as currency are infinite; where consumers, brands and businesses can engage and transact directly with each other’.
Here are a couple of points to take home from the episode:
The internet was the democratization of information. There was one ingredient missed out when the internet was being baked, however – identity.
Data is the new oil/gold, but it’s being controlled by only a handful of companies.
New Zealand is positioned perfectly to take on the Goliath of the corporates in an attempt to free ourselves from their tyranny. Why, because our values are conducive to innovation using the blockchain tech.
Regarding the growing gap between the rich and poor, it’s not about how to redistribute the wealth, it’s about decentralization.
This isn’t your typical episode of the NZ Everyday Investor but hey, what is?
How to get in contact with Jerome? 021 Jerome
How to get in contact with Darcy? – darcy.ungaro@nzeverydayinvestor.com
Special offer from Centrality:
If you’re into all things blockchain, complete the following survey and receive 3 months free membership to Blakeley.
What is Blakeley? Blakeley brings independent, data-driven insights to sophisticated cryptoasset investors. We leverage our community of experienced traders and industry insiders to identify actionable strategies and help readers navigate the rapidly-evolving world of blockchain assets.
Covering everything from macroeconomic analysis of digital assets to the factors that drive successful blockchain ventures and projects, Blakeley’s deep market experience and quantitative tools offer an opportunity to stay ahead of the competition at a critical moment for investors – the emergence of a new global asset class that is based on fundamentals.
Jacinda Ardern lectures other countries, Labour goes soft on criminals, ACT launches Firearm policy
In this episode of Politics in Full Sentences, David, Brooke and Ruwan discuss why Jacinda Ardern is overseas lecturing other countries when our economy is in trouble. Also, why did Andrew Little call ACT’s three strikes law “fascism”, and will he give prisoners the right to vote? In contrast to this Muldoonist approach, ACT has consulted the community to generate a new firearm law.
Listen now, or Subscribe free:
ACT’s Campaign for Freedom of Expression: https://freespeech.act.org.nz/
ACT New Zealand: https://www.act.org.nz/
Bitcoin Building Blocks / Andy Higgs
You wouldn’t think it, especially when hob-knobbing with the banking elite (as I don’t!), but NZ is growing something pretty cool in the blockchain world.
Our #8 way of thinking and innovating is expressing itself in in the web 3.0 digital realm- Kiwi’s are solving problems using blockchain technology right under our noses, and it’s fantastic. Andy Higgs, the GM of a company called Centrality, joins me today. Centrality is one of these firms at the epicentre of this innovation – ground zero if you like.
This month I’m taking you on a bit of a journey around blockchain and with this episode, we’re covering Bitcoin. Don’t worry, we’ll go mainstream again soon – well, one day, heck, this will be mainstream.
It’s important in the context of wealth development, that you at least consider this strategy: that some of your wealth is denominated using a currency from the future. Value is evolving and web 3.0 is all about this.
Mike Novogratz, as mentioned in the podcast, is a great person to follow on Youtube and social media if you’re into this sort of thing – check him out presenting recently on something called ‘the herd is still coming’.
**Note that investing in Bitcoin is extremely high risk, please proceed with caution.** Please do not, even though it is tempting, decide to purchase Bitcoin as a result of listening to any of the content on these shows. If you do, however, wish to buy Bitcoin or Ethereum, and you have decided this based on your own research, I recommend using VIMBA. By visiting them and signing up using that link will result in a small payment being paid (at no extra cost to you) from Vimba to us.
Special offer from Centrality:
If you’re into all things blockchain, complete the following survey and receive 3 months free membership to Blakeley.
What is Blakeley? Blakeley brings independent, data-driven insights to sophisticated cryptoasset investors. We leverage our community of experienced traders and industry insiders to identify actionable strategies and help readers navigate the rapidly-evolving world of blockchain assets.
Covering everything from macroeconomic analysis of digital assets to the factors that drive successful blockchain ventures and projects, Blakeley’s deep market experience and quantitative tools offer an opportunity to stay ahead of the competition at a critical moment for investors – the emergence of a new global asset class that is based on fundamentals.
Who’s Next After Lydia Ko? – On The Tee Golf NZ Podcast 9
Lydia Ko remains New Zealand’s number one professional golfer but chasing her for that esteemed spot is 25-year-old, New Zealand-born Munchin Keh, who earlier this year came within one shot of qualifying for the Evian Championship and the Women’s British Open. She talks to our hosts about her game and her hopes for the future.
Listen now:
The Reserve Bank’s interest rate cut.
This week, Ruwan and David are joined by former Reserve Bank Governor and ACT Leader Dr Don Brash to discuss yesterday’s decision by the Reserve Bank to cut interest rates. What does this mean for borrowers and savers? How should the Government respond in terms of fiscal policy?
Listen now, or Subscribe free:
ACT’s Campaign for Freedom of Expression: https://freespeech.act.org.nz/
ACT New Zealand: https://www.act.org.nz/