Matt Nolan

All men are born free, but everywhere they are in chains

/3 Comments/in , /by

My favourite quote by Rousseau is the title of this post “men are born free, but everywhere they are in chains.

When I was a young boy of 16 I interpreted this with predetermined judgments, namely freedom is good and chains are bad. As a result my feeling was that I should try to break these “chains” and rediscover the freedom I was born with.

In this quote it seemed implicit that chains where the restrictions place on us by society (rather than the physical restrictions in nature – if we included these then freedom truly would be an illusion), while freedom was the absence of these chains.

However, as I grew older I came to realise that not all “chains” are bad and “freedom” in this sense (the absense of chains) may not be good. Read more

Will Taylor

3G iPhone: It’s all relative

/8 Comments/in /by

I’ve been watching all the hysteria surrounding the cost of the new iPhone with great amusement. There’s an article on stuff saying the prices are way too high (see the available plans here), a petition to get the iPhone on prepay here and John Campbell was having a good crack at the guy from vodafone about it too.

The thing that has bothered me the most is that the comparison’s being made are with what you would pay for an iPhone and a data plan overseas. This sounds like a reasonable comparison at a first glance but it isn’t. The first question I asked when I saw these plans was “what are these plans like relative to other mobile data plans available in NZ?”. The clued on Gen-Y blogger over at playing to win points out that the cheapest plan (the 250mb plan) actually offers more data then his current plan.

My general impression (although I haven’t researched this in any great detail) is that the plans are at least comparable to current plans. And if you get the cheapest plan you will have to pay $699 for the 16gb phone. Given that the 16gb iPod touch is current going for $599 at dick smith I can’t see why people are complaining about the price, you are getting alot more for that extra $100.

Read more

Matt Nolan

The cost of inflation

/14 Comments/in , , , /by

Note: Other posts in this discussion are available under the tag “inflation debate“.

Hi again everyone. Apologises for the delay getting this out, I have been sick. I’m still feeling quite sick, so if you read anything you think is wrong be sure to comment on it – as it probably is.

Without too many substantive criticisms of our view of what inflation is (yet) it seems that we can move on with our discussion on “re-thinking monetary policy“.

The next step in this process is to ask, what are the costs of inflation?

Previously we defined inflation as:

when the price of all goods consistently increase for no “real” reason

Given this definition, we have to ask are there costs associated with a consistent increase in the general price level?

Read more

Matt Nolan

What is inflation?

/13 Comments/in , , , /by

Note: Other posts in this discussion are available under the tag “inflation debate“.

Thank you for all the insightful and intelligent comments (and posts on other blog) on the Re-thinking monetary policy post. Now that you guys have put down the important issues that we have to look at with monetary policy all I need to do is discuss them with my own opinions 😉

However, even with all your help we can’t just jump straight in to saying whether policy should change or stay the same. First we have to define what the hell we are talking about! This involves starting with the question, what is inflation? Once we know what inflation is, we can figure out what the costs of inflation are. From there we can work out what trade-off exists when dealing with inflation, and then we can sort out whether current monetary policy is dealing with this trade-off appropriately.

There is a simple answer to what is inflation, but it isn’t particularly useful. The simple definition is that inflation is “the rate of change” in the general price level (*). To really understand what inflation is though, we have to understand what causes growth in the general level of prices.

Here I will go over some points that build off each other (the fundamental points are in italics, the bold bits are just titles 🙂 ). If you disagree with a specific point, raise your criticisms and we will discuss it and try to figure out where to go from there. Hopefully painting it out this way will make the final description transparent.

Read more

Matt Nolan

Welfare and time inconsistency

/3 Comments/in , /by

Hi all. Good to see people commenting on re-thinking interest rate policy here, I am going to give it another day for people to make comments (as I am waiting for some specific people) and then I’ll start writing things up on the weekend – so if there is anything you want to add, go there are add it!

Today I’m going to ask a couple of questions to Rauparaha (or anyone else that knows some stuff) about time inconsistency (using smoking as an example), an issue that Rauparaha covered here. Now I know close to nothing about this stuff – but hopefully a discussion on it will enlight me, and potential other readers 🙂

Read more

Matt Nolan

Re-thinking interest rate policy: Asking for submissions.

/27 Comments/in , , , /by

Note: Other posts in this discussion are available under the tag “inflation debate“.

So Trevor Mallard is suggesting that New Zealand “re-thinks” its interest rate policy.

Now his statements that the currency is a “one-way bet” is thinking that is associated with the NZX, while his statement that higher interest rates may have caused the housing bubble is the thinking of Berl – they both stem from submissions to a monetary policy review by the Parliament’s Finance and Expenditure Committee.

In fact, at the time I wrote about both of them, here for NZX and here for Berl. Overall, I felt that both of these organisations were completely wrong – which is why I’m so troubled that the current government has decided to follow their ideas.

Now given that I have discussed this business before I would like you guys to leave some comments saying what you think about the monetary policy framework and how you think it could be improved. I will then write some posts discussing the issues raised. Hopefully some people actually comment to this post :p . Please please please, write what you think 🙂

Note: I am not going to comment on this post, although I will be reading all the comments and thinking about them. Furthermore, and other blog members may comment. Feel free to say whatever stuff you feel about inflation and policy on it, and I will try to pull it all together later on.

Links to other posts discussing this issue can be found under the flap:
Read more