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LVR's, Stimulants, and Depressants / Jeremy Couchman
Episode 12813th December 2020 • NZ Everyday Investor • Podcasts NZ / WorldPodcasts.com / Darcy Ungaro
00:00:00 00:29:46

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Stimulants, depressants, and LVR’s – what do these things have in common?

Well, they’re all attempts to force change on an otherwise natural state. Markets boom and then they bust – the pendulum swings – there are gains there are losses, but in the long term it all kind of works out. That’s equilibrium – and it’s not that pretty.

What happens in the macro, happens in the micro also - short term its chaos, but as long we keep our speed low and velocity high, we're all good.

Intervention (lower official cash rate, bank funding for lending programmes, large scale asset purchases), distorts not only the free market, but ultimately the end state of the everyday investor.

Free markets are seldom pretty, but because we prefer pretty, we vote for more intervention every chance we get.

To stimulate growth following the global financial crisis in 08, well ahead of the coronavirus pandemic, interest rates were lowered. As a side effect of this intervention though, the housing market took off – to offset this, loan to valuation restrictions were implemented.

Hope you enjoy part one of my discussion with Jeremy.

 

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