In the post-COVID world, New Zealand’s economy is very much at risk of being destroyed by inflation.
Like the rest of the world, although we are seeing reduced productivity across many sectors, many people/businesses are expecting/demanding an unchanged revenue stream; lower overall production yet maintaining high returns – this is inflation.
Rising house prices are one aspect of this phenomenon while dwindling interest rates are another; anyone with financial acumen will deduce how the aforementioned factors are connected and how, of course, providing the conduit is our beloved ‘inflation’.
Borrowing money from a bank with debit interest rates below 4% is a dream for house-buyers, therefore the demand for, thus the prices of, houses have gone up; Kiwis are now in debt by over $150 billion while this year New Zealand’s GDP was only around $300 billion – we now owe our country around 50% of what it makes in a year. Compare that to a few years’ ago; national debt was closer to $90 billion, around 30% of GDP, and interest rates were steady at around 6%.
In the previous instalment I mentioned ‘youthful entitlement’, and the above is essentially to what I was referring; too much hire-purchase (or whatever flash name companies are giving it), done by everyone but in higher frequency by younger people having just entered the workforce thus with some element of financial security but, ironically, perpetually without money yet, typically, those who believe they should be able to own all the latest toys, invariably, now.
Many of these youth, largely because all their floatable income goes towards less important things, cannot afford to buy a house thus often find themselves at the unscrupulous mercy of a New Zealand Landlord.
This act of ‘charging people as much as they can afford to pay’, as most Kiwi landlords do to their tenants – if the Government allows a rent increase, irrespective of their own financial requirements, increasing the rent is what most Kiwi landlords will do – is a harmful mentality to support; this desire to make as much money as possible from other people is not only damaging to ‘other people’, it’s damaging to the economy of the nation in which you live, alongside these ‘other people’.
Our unrestrained avarice, the compulsion among people to get, and to stay, ahead of the rest financially, is fuelling New Zealand’s economic collapse.
Bear with me.
On the political far left you have Communism and just right of that sits Socialism, further right is Capitalism and hard right is Republicanism; Communism is not the horror that many are conditioned to believe it is, Socialism is New Zealand’s Labour Party, Capitalism is the National Party and Republicanism is Trump(‘s political viewpoint; most are unsure at this point where Biden places himself on the scale).
Neither one of the above is inherently wrong – North Korea’s Kim Jong Un makes Communism seem horrendous yet, between 1945 and ’55, General Ho Chi Minh created a peaceful communistic existence throughout much of Vietnam – all a nation needs to make each of those political standpoints economically viable is cooperation among the populous; New Zealand currently has a socialist system of governance (which most people seem to think they love because on the face of it the Government just gives away money) while in fact New Zealand is largely a population of capitalists – the only reason Labour can afford to so freely give away money is because our previous (capitalist) National Government did such a good job of building up financial stability.
The point is that Jacinda will not be able to continue sprinkling her Socialist fairy-dust forever; New Zealand is at heart a nation of capitalists and we will again need to start earning, not just spending, our money.
New Zealand needs to stop gouging its own people, stop screwing money out of those who are also trying to make a living, and importantly, stop comparing our incomes to countries with five times the population, thus five times the commerce, of our own, and be satisfied that we live in a country where we take care of our own.
Be satisfied with less and you will have more.
Article by Tim Walker
Edited by Taek Hare
Photography by Noah Gudgen