Forum Archive Index - February 2004

["Malcolm Cameron" <malharcameron@hotmail.com>]

Callum t this is America's big problem people are borrowing money at low 
rates and spending it on either unnecessary purchases or investing overseas 
subsiided by people mug enough to accept these rates. Image the massive out 
flows your ideah would create if NZ carried out your statedgy. And the 
hyperinflation as people tried to put cash into assets to try and keep pace 
with inflation.Then the almighty crash that would follow. Have a look at 
Germany before Hitler came to power.





>From: "Callum t" <callum00@hotmail.com>
>Reply-To: sharechat@sharechat.co.nz
>To: sharechat@sharechat.co.nz
>Subject: Re: RE: [sharechat] USD how low can it go. Date: Tue, 17 Feb 2004 
>04:05:17 +0000
>

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From:	"Callum t" <callum00@hotmail.com>
Date:	Tue, 17 Feb 2004 04:05:17 +0000

some options, though only considered whilest ignoring the flow on affects

1. drop interest rate to 0.01% like US. That would get rid of people seeking interest rates(i.e. they would take money out of NZ, increasing the supply of NZD, thereby in the short term possibly putting downward pressure on NZD

2. ignore the bad effects of inflation and turn the printing press to full speed, printing money would result in a. increased supply of NZD b. increased inflation. both would generally put down pressure on NZD.

3. buy back bonds, increasing the money supply

etc, but of course these are extreme examples and would cause violent volatility and  flow on effects, I would assume that Cullen, has he any sence, was considering the first 2 options, maybe...

regards
Callum Thomas

http://www.moneyquestions.co.nz

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