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Comments on: Outgrowing Inflation II http://www.tvhe.co.nz/2007/08/27/outgrowing-inflation-ii/ The Visible Hand in Economics Wed, 27 Feb 2008 01:12:08 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: Random economist prediction: A sidenote « The visible hand in economics http://www.tvhe.co.nz/2007/08/27/outgrowing-inflation-ii/#comment-192 Wed, 27 Feb 2008 01:12:08 +0000 http://tvhe.wordpress.com/2007/08/27/outgrowing-inflation-ii/#comment-192 […] random economist had a more sensible argument, one that Rod Oram is a fan of. According to Kiwiblog it took the […]

]]> By: David Baigent http://www.tvhe.co.nz/2007/08/27/outgrowing-inflation-ii/#comment-191 Mon, 27 Aug 2007 10:05:09 +0000 http://tvhe.wordpress.com/2007/08/27/outgrowing-inflation-ii/#comment-191 Thanks db

]]> By: Matt Nolan http://www.tvhe.co.nz/2007/08/27/outgrowing-inflation-ii/#comment-190 Sun, 26 Aug 2007 22:09:20 +0000 http://tvhe.wordpress.com/2007/08/27/outgrowing-inflation-ii/#comment-190 Did Tender 243 fail, I didn’t realise. I noticed that the 10 years bonds didn’t get sold, is that what you mean by it failing?

The purpose of bond sales is to take money out of the economy. In a sense you are making people save instead of spend. So if $100m worth of bonds are not purchased that $100m is still being used for consumption, being invested in an alternative savings scheme or a mix of both. As a result, inflationary pressures will be higher than if the bond had succeeded, however I don’t think it will have that much impact.

Long term bonds are having a hard time at the moment as there is a general lack of liquidity. Although government offers a practically riskless asset, Tender 243 was offering three times the volume of bonds than are usually offered, and there just wasn’t enough liquidity out there to suck them up.

]]> By: David Baigent http://www.tvhe.co.nz/2007/08/27/outgrowing-inflation-ii/#comment-189 Sun, 26 Aug 2007 21:44:47 +0000 http://tvhe.wordpress.com/2007/08/27/outgrowing-inflation-ii/#comment-189 Can anyone explain (in simple terms) what the failure of the Government Bond Tender Number 243 means to NZ inflation.?

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