> What is to stop someone refinancing a year later and reborrowing the 1%
> they paid off the capital the year before?

Nothing... and who cares? It's still a far better outcome than now. Their
disposable income reduces now when we need it too without them actually
losing money in the long term (in fact they gain money).

> It would be a minefield to try to regulate an individual's debt/equity
> ratios like that.

Whereas regulating individual's debt/equity ratios by changing the exchange
rate for the WHOLE economy is in any way better?

The main reason I can think of that it might not work is because revolving
credit mortgages would get around it - your 1% extra repayment would be
instantly available again. But in theory I think it is a great idea.




On Fri, 27 Jul 2007 11:53, David Brennan wrote:
> Give that man a job!
>
> Pity the vast bulk of the public are too short-sighted (stupid?) to accept
> "cemp" because that would appear to be "government intervention" and the
> government trying to hurt their pockets and steal their money (even though
> it would benefit them hugely in the long run by paying their mortgage off
> earlier). So instead we get a 1% base interest rate rise which hurts their
> pockets just as much, doesn't benefit them... oh and just happens to lay
> waste to other areas of the economy such as the export sector... Ooops!
>
> Rant off! ;-)
>
>
>
> -----Original Message-----
> From: offtopic-bounces@delp...
> [mailto:offtopic-bounces@delp...] On Behalf Of Robert martin
> Sent: Friday, 27 July 2007 11:44 a.m.
> To: NZ Borland Developers Group - Offtopic List
> Subject: Re: [DUG-Offtopic] RE: [DUG] basic question
>
> Hi
>
> Inflation is a BAD thing, when it is significantly greater than Growth
> and caused by certain factors (wage / price spiral etc).   It is not BAD
> if your economy is growing and it is being caused by factors that the
> economy has no control over (petrol prices for example).
>
> The idea of looking a housing and saying it is causing to much inflation
> yet ignoring fuel prices (which push up the price of everything) is
> patently ridiculous.   As is excluding Interest rates from the inflation
> calculation.
>
> There are better tools to control inflation that economists don't talk
> about because they (generally) work for banks.  For example what if we
> had a compulsary extra mortagage payment percentage (cemp).  So instead
> of raising the general interest rate, add say 1% to the cemp.  This
> extra payment would go to the persons mortgage (paying it off faster,
> and actually benefit the person), be immediate (not have a 2 yr lag) and
> help savings.  this would acheive the same thing as raising general
> interest rates (make people have less money to spend). The only people
> who would loose would be...... the banks.
>
> The other thing is that GDP should be factored in to inflation calcs.
> I.e if GDP is 5%  (wouldn't that be nice), an inflation rate of 3.5%
> wouldn't mean that the reserve bank needed to put the brakes on.
>
>
>
>
> Rob Martin
> Software Engineer
>
> phone +64 03 377 0495
> fax   +64 03 377 0496
> web www.chreos.com
>
> Wild Software Ltd
>
> Phil Scadden wrote:
> > And inflation is a BAD thing. The problem for government is how to
reduce
> > consumer spending. OCR is very crude tool but other measures (limit
> > overseas investment, capital gains tax, etc are dubious and very hard to
> > parlimentary support for). Kiwisaver MIGHT reduce expenditure but I'll
> > bet sharemarket soars as fundmanagers desparately try to find places to
> > invest will in turn put more pressure on dollar.  Shame government
didn't
> > have to balls to tackle the property market 3 years ago.
> >
> >
> > ----------------------------------------------------------
> > Phil Scadden, GNS Science Ltd
> > 764 Cumberland St, Private Bag 1930, Dunedin, New Zealand
> > Ph +64 3 4799663, fax +64 3 477 5232
> >
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