Oh sure, with the squeezed prudential reserves, the apparent amount of extant money goes down, but I mean just the actual issued $$$. Not the derivatives based on the real thing [real as defined from time to time by Big Ben and the gang, not actual objective reality].
I'm okay with deflation. Bring it on. Inflation is what has annoyed me ever since I started noticing it about 50 years ago as prices went up and things like farthings disappeared and doughnuts went from 3d to a shilling. [That's the monetary lingo I learned as a child - pounds, shillings, pence, guineas, florin, half-crown, crown, halfpenny, penny, threepence, sixpence]. A shilling [bob] was a serious piece of money. This sums it up well: newcoins.govt.nz
They haven't finished yet. The $1 coin is already brown, ready to be downgraded to replace the 10c coin which replaced the 1c coin which replaced the 1d coin which 60 years ago was a real piece of money which could be swapped for a couple of halfpennies and not long before that could have been swapped for 4 farthings.
The present $1 coin was a $1 note in recent times and when changed from 10 shillings in 1967 was serious money which adult men would work 3 hours to earn. In 1968 I worked loading hay from dawn to well after nightfall for 1c per bale. A 10 shilling note was 10 x 12 pence per shilling = 120 bales of hay. That was serious work. That was actual manual labour, not driving around with a machine doing the picking up, though if we were lucky, there was sometimes a machine which would lift the bales up to the truck.
Those 120 bales of hay are soon going to be diluted all the way down to 1c with zero purchasing power. Already, the $1 it represents will buy only half a litre of petrol, 1 or 2 bananas, half a loaf of cheap bread, or quarter of a loaf of Vogels [Kiwi official tucker, especially with Vegemite and butter]. It will buy a third share or less of an ice-cream at a movie.
I used to save my hard-earned pennies from when I was 5. It felt like total betrayal to find that I was being swindled as inflation ramped up. It took decades to figure out how to handle the situation of ruinous inflation. I could never bring myself to do as so many did which was load up on debt, leverage at least one but preferably several houses into tax free capital gains. Many in the USA are now wishing they had not been seduced into that easy money. But Barack is bailing out many of them with free opm.
So yes, I'd love to see my NZ$1 turn back into 120 bales of hay through "destructive" deflation. Since democracy and politicians do not operate like that, I expect we will see something more akin to how Robert Mugabe runs things, with an Argentinian outcome and Russian default.
Mqurice
PS: NZ coin history. rbnz.govt.nz I didn't realize it was so recently that gold coin circulation was stopped. Wow, even "collector sets" are a dime a dozen - they are obviously not holding their value even as items of historical interest: sella.co.nz |
