Economic rumination from an old fart

with Don Fraser
Fraser Farm Finance

I have been writing columns for approximately 25 years. I have about 500-plus philosophies around the articles I have written.  As I am now a senior the younger generation pay scant regard to our wisdom and think they know best and we are ‘old farts’.

There is a story right there, but I am going to talk about New Zealand and how I see the economy going forward and yes, I know, the younger people will cry: ‘you don’t know what you are talking about’, but common sense and experience really do count.

So, I have just returned from a trip around the East Cape. I had time to reflect as I looked at and considered our position much of it from the seat of my electric bike. Most of the younger generation have never been through the tough times we have.

We are a small farming nation at the bottom of the world and yes, we punch well above our weight. Our national income is largely from the sale of product – dairy, kiwifruit, avocados, beef, lamb, wool and horticultural products, logs (and I say logs advisably as it is sold cheaply in ‘log’ form to be processed overseas) plus, some industrial manufacturing and some excellent technology, and that is about it. About $50 billion in income for the national around five million people.  Tourism has virtually gone and looks unlikely to restart anytime soon.

We are reliant on the flow of exports overseas to provide funds to purchase the materials we need and all the basic stuff.

While I do accept that this government has done a great job in most respects, the ‘printing of money’ at an alarming rate is sending false messages to us all. They are releasing a billion dollars a week. That is about how much we earn every week as a nation.

It has inflated the economy and a lot of it has found its way into the housing market, which is booming, and it is little wonder New Zealand is printing money faster than any other country in the Western world. In essence they have doubled the amount of money in circulation. I think it is irresponsible of the government. It is sending the message that everything will be fine, and the future is rosy. Not so!

The world is shaky. The virus is going nuts and we have no idea down here what that might feel like. Bob Jones has taken his boxing gloves off and has $280 million waiting for a correction so he can rebuy at a bargain. John Key, economists and bankers are all trying to caution us, but hey there is a billion a week flooding the economy and she’ll be right mate.  But will it?

My strongest recommendation is that people make informed decisions and do not take on too much risk and debt. That they listen to the wise who have largely been silenced by the media and realise what has gone up will come down, and I make no apology for my economic ruminations of an old fart.

Disclaimer – These are the opinions of Don Fraser of Fraser Farm Finance. Any decisions made should not be based on this article alone and appropriate professional assistance should be sought. Don Fraser is the principal of Fraser Farm Finance and consultant to the farming industry. Contact him on: 021 777 675.


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