Greens literally believe money does grow on trees

October 8th, 2012 at 7:00 am by David Farrar

I thought this madness died with Social Credit, but (and Labour may not be far behind) have said that they want the NZ Reserve Bank to effectively start printing money. They think that NZ printing more money is a good way to increase the relative value of the US dollar. We might as well start burning our savings.

Make no mistake, what they are calling for is the value of everyone’s savings to be reduce, as takes off. You know all how they say wages are too low for low income workers? Well they want the cost of food, goods and services like electricity to increase faster than they have been.

There are basically two sorts of countries that print money. Those that are bankrupt, and those whose economies are so stalled that the central bank cash rate is as low as it can go.  In the US it is 0.25%. NZ is at 2.5% so a fair way away from that.

claimed:

Secondly, when you look overseas at the use of – because all of our major— most of our major trading partners are using it

This is simply wrong. The US and the the Eurozone and Japan have done it (and sort of the UK)  – again because they are almost bankrupt or their central rate can not be lowered anymore. But they are not our major trading partners.

Our exports for the year to June 2012 came to $46.7b. Exports to the Eurozone were $2.9b, UK $1.4b, Japan $3.4b and US $4.1b. That is a mere $11.8b out of $46.7b – under one quarter. Australia is almost a bigger export market than those four combined.

And let me tell you if we started printing money, and Australia was not, watch the outpour to Australia get far far worse.

Some policies put forward are just silly, or ineffective, or wasteful. Some are very very bad and dangerous. This is one of them. The idea of printing money to grow the economy has never worked long-term. It gives you a short-term sugar rush at best. It puts up the price of pretty much all goods and services as inflation grows.

It is actually to our advantage long-term that the US and Eurozone are printing money. Proposing to follow them voluntarily is the worst thing NZ could do.

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81 Responses to “Greens literally believe money does grow on trees”

  1. Pete George (23,680 comments) says:

    This is a good announcement from the Greens. We needed to know how the Greens would want to manage the economy and they are starting to reveal details. Previously there were suspicions the Greens would be idealistic and wacky. This goes some way towards confirming that.

    Greens have promoted a ‘planet Key’ meme. That’s been a cute diss campaign, but when it comes to the fundamentals of managing a country – the economy – it’s now obvious whose monetary policy is out of this world.

    And it’s not just the Greens, their likely coalition partner Labour also seem to think Government can and should actively – and probably futilely – try and tinker with the exchange rate.

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  2. libertyscott (359 comments) says:

    It is a fundamental attack on the poor and those on average incomes with savings.

    http://libertyscott.blogspot.co.uk/2012/10/russel-norman-says-fuck-poor-with-his.html

    Governments from Argentina to Zimbabwe have printed money to pay the bills, and the people who lose out the most are average wage and salary earners who can’t keep up with inflation, or for whom imports or overseas holidays get sacrificed on the altar of the “greater good”.

    Russel Norman said QE was to boost exports in the US/UK and Japan, it wasn’t.

    He should be able to be eaten alive for his economic ignorance, but he is being feted at the sub-Standard.

    Money is a medium of exchange and store of value for that. Producing more of it reduces its value, and the people best able to protect themselves are the rich, who will flee the NZ$.

    and Russel, like some adolescent economic student, thinks only the rich benefit from the status quo. He thinks people can’t make money from an announced policy to devalue. It’s such an epic fail, it’s a joke.

    The way to cover a fiscal problem is a fiscal solution.

    Debasing people’s savings is theft by stealth. A common socialist strategy (Hungarians are suffering with it now, except the wealthy ones who moved out of Forints a couple of years ago).

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  3. fish_boy (152 comments) says:

    I suppose it is entirely predictable that the chief caddie on planet Key would cling to the failed ideas of his political youth, but the hysteria is general on the right – Steven Joyce is having an absolute tanty on the radio right now. The bankruptcy of middle aged men who can’t accept there might be another way other than their failed one is striking, and it points to an utter failure of imagination, an utter failure to accept the reality of the failure neo-liberalism and a near total need for self-delusion that the project they’ve sold their souls hasn’t turned out to be a croc of shit.

    The Gereens are simply proposing an alternative. The response illustrates the intellectual paralysis of the right wing establishment.

    [DPF: You don’t need to imagine what happens if a Govt starts printing money. We have seen it many many times before.]

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  4. Pongo (374 comments) says:

    Before dismissing it out of hand it is a well established fact that the baby boomers have done incredibly well voting themselves large amounts of taxpayer resources and have enjoyed massive increases in wealth which are simply unaffordable to supply, as a voting block there is no way to rein that in so one way of returning a bit of equity is to allow a bit of inflation. This punishes savers and assists borrowers or returns a bit of equality to a skewed system. It’s also the only way for the massive debt mountain to be addressed.
    There is a really good article in last weeks Economist in the finance section. Bit of inflation is a bit painful to go through but it is really the only way through this mess, Greece and Spain are going through internal devaluation which is deflationary and sees youth unemployment at over 50% and older people who have done very well out of the debt fuelled boom largely protected.

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  5. libertyscott (359 comments) says:

    An honest way for the state to confiscate people’s money is tax, because the allocation of the confiscation can be directed.

    Inflation punishes everyone, from the pensioner, to the student, to the working family saving for a once in a lifetime holiday, to the near retiree looking to retirement.

    It’s lazy and dishonest. The Greens could argue for a 3% tax on all bank accounts every year, and there would be an outrage.

    It’s the same, by stealth, except that you don’t avoid it by taking it out of the bank and stuffing the mattress with it. The only way to avoid it is to buy assets or other currencies.

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  6. CryHavoc (46 comments) says:

    The PM was very strong on this on Breakfast this morning (“if printing money made you rich then Zimbabwe would be the richest country in the world”). And he was immediately followed by the NZIER who said that printing money was a terrible idea – the last resort of desperate countries… which we’re not. Not yet, anyway. [And for those on the lunatic fringe of the left who see all economics as right-wing, the guy started by saying “I hate to agree with the Prime Minister, but…” which I thought was pretty amusing.]

    I’m no economist but I would have thought that raising the costs of inputs into manufacturing (petrol, electricity, software?, steel, textiles, whatever) would be just as damaging as persisting with a high dollar. Moreover I also would have thought that one positive of the high dollar would be the increased ability for firms to invest in technology etc from offshore, to drive productivity increases over the long term.

    Yes, a high dollar can be incredibly painful in the short term (and it’s impossible not to feel for those who have lost their employment, tourism operators who are struggling) but if we print money we’ll be shagged in the long term.

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  7. graham (2,346 comments) says:

    I realise its very tempting to throw words like “madness”, “wacky”, and “out of this world” around, but once you’ve all finished patting yourselves on the back at your clever use of such words and smugly congratulating yourselves that you’re so much smarter than the Gweens, could we have a real debate? Y’know, like why it’s such a bad idea?

    I’m not an economist, so I cannot argue this and won’t attempt to, but I would hope there are some economists floating around who can bring some facts and figures to this discussion.

    I will note that Robert McTeer, who has a Ph.D. in economics from the University of Georgia, has worked for the Federal Reserve for 36 years, and was president of the Federal Reserve Bank of Dallas from 1991–2005, has stated that “there is nothing wrong with printing money during a recession” (http://www.forbes.com/sites/beltway/2010/12/23/theres-nothing-wrong-with-the-fed-printing-money/).

    So please, all you experts – tell me why you’re right and someone with a Ph.D. in economics is wrong.

    [DPF: We are not in a recession. Our annual growth rate was 2.6%. You print money if you are bankrupt or if you risk deflation and can’t lower the central rate as it is already at zero. We are neither of those]

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  8. wreck1080 (3,956 comments) says:

    The kiwi dollar is artificially high due to the actions of foreign jurisdictions printing money.

    And, you don’t think the Govt should protect ourselves from the actions of foreign govts?

    Completely disagree!

    The govt is borrowing crap loads of money, how about addressing that for a start? National have not reigned in the excesses of the clark govt, and annual structural spending is 20 billion dollars over what it would be had spending grown at inflation+pop. growth.

    Over the last 5 years, that is 100 billion sucked out of the productive sector.

    Then, print a little money, lower interest rates, tax foreign interest. This may introduce a little unpredictability to the dollar and burn a few carry traders.

    And, inflation is 1%, we can afford to try a few things.

    Or, just let the exporters burn….

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  9. Simon Arnold (109 comments) says:

    As I observed over at the Labour Party blog when they were discussing it, why not revalue the value of the NZ metre and gram by 1% p.a..

    Similar effect, just more obviously dopey.

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  10. Mobile Michael (460 comments) says:

    Wouldn’t be nice to have a politician diagnose the cause of the problem before giving us the solution. The NZD is relatively high because interest rates are relatively high. Kiwis are willing to borrow money at 8-9% when the rest of the world scream at 5%. If Norman really wanted to drive down the dollar he should argue for compulsory Kiwisaver with a compulsory investment in Government stocks or Wholesale Bank Bonds.

    Not that I support that approach, just it would be better for all than printing money.

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  11. flipper (4,194 comments) says:

    Good Lord.
    It is Monday morning and already the fish markeL is prostituting his brain for the sort of ideas that brought down the Weimaar Republic, gave birth to Hitler and Mussolini ( and their counterparts in the Sov U & Japan), and Peron in the Argentine.

    But then if one looks at the paucity of economic literacy in the MSM it is no surprise that the Watkin driven Q + A gave commo Russel [sic] legs yesterday and again this morning…….

    And Wreck – you would!

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  12. The Scorned (719 comments) says:

    You have to be a special kind of retarded to think that “printing money” has no consequences or can be done without impact on value and the real worth of currency. The Left have confirmed they are economic illiterates of the first order…

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  13. CryHavoc (46 comments) says:

    “graham (1,326) Says:
    October 8th, 2012 at 7:56 am

    I will note that Robert McTeer, who has a Ph.D. in economics from the University of Georgia, has worked for the Federal Reserve for 36 years, and was president of the Federal Reserve Bank of Dallas from 1991–2005, has stated that “there is nothing wrong with printing money during a recession” (http://www.forbes.com/sites/beltway/2010/12/23/theres-nothing-wrong-with-the-fed-printing-money/).”

    @Graham: we’re not in a recession. We’re a long way from a boom, but we’re not in recession.

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  14. graham (2,346 comments) says:

    CryHavoc: I agree.

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  15. CryHavoc (46 comments) says:

    @Graham – I agree with you that pejorative sniping at different ideas (and regrettably there is plenty of that on both sides of the debate… see above!) is really not helpful. But hey, this is a blog, right?

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  16. fish_boy (152 comments) says:

    Firstly, the problem isn’t savings – it is debt. Neo-liberalism has driven down wages, and allowed financial speculators to create massive amounts of money that led directly to a debt and housing bubble as the fake money created by these financial sector parasites sought new profits. It is clear that the major economies of the west have decided to inflate away it’s debt over a decade or so with above average inflation and quantative easing. The losers will be the minority holding cash, the winners will be everyone else. The alternative to this neo-liberal induced disaster will be default, political instability and probably war.

    Secondly, since consumption is depressed and the problem is debt some form of quantative easing won’t be inflationary – the problem is lack of consumption, QE will address that.

    Thirdly, only an idiot believes that we should do nothing if the USA and the EU are printing money and reducing the value of their currency. We cannot stand aside like so monay distainful monks of economic purity while they use monetary policy to destroy our exporting sector. We HAVE to react – note, I am saying we have to react – in other words, we have to do so money printing whether we like ot not because doing nothing is no longer an option.

    Paul Krugman and the rest of the Keynesians have been arguing for this approach for years. the failure of austerity in Greece is real world proof that the Keynesians are right and the neo-liberals, whose idoicy led into this disaster, have no answers for getting us out.

    Face it. neo-liberalism, Austrian economics, whatever you want to call it, is over. It has been tried and it was an unmitigated disaster that has destroyed the working class in the west and now it’s frozens tendrils are reaching up to snatch the west’s middle class down into it’s econmic wasteland the reaction has set in. No one believes in it anymore except for assorted fanatics, provincial acolytes like DPF and the loons who fund the GOP and think tanks. The major central banks may mouth platitudes, but their actions show exactly what they think of neo-liberal proscriptions.

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  17. graham (2,346 comments) says:

    @CryHavoc: (cont) It does rather piss me off when all the armchair experts jump on the bandwagon and loudly proclaim “Nyah nyah, the Greens are thickos” without backing it up. My point is that this theory has been put forward previously by people who know what they are talking about when it comes to global economics – unlike myself and, I suspect, some of the people here who are calling it economic illiteracy and wacky.

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  18. libertyscott (359 comments) says:

    Devalue the dollar – increasing costs of imports, increasing receipts from imports, both inflationary.
    Lower interest rates – increased credit, inflationary.

    In fact QE traditionally is implemented by having near zero interest rates and flooding the banks with credit, which in the US, UK, Japan and eurozone, they have used to recapitalise – it hasn’t gone into the economy. Big winners are banks.

    When people who believe that cellphone transmitter towers might cause cancer and want to scaremonger people into opposing them start talking about monetary policy, it’s time to laugh and ignore them.

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  19. wreck1080 (3,956 comments) says:

    @thescorned:

    Who on the left said that printing money would not impact on the worth of money?

    Considering you are calling the ‘left’ retarded for saying this, then, where did they say this?

    I suspect you are inventing convenient porkies, but, prove me wrong.

    For the record, I don’t think this issue is a left / right issue. eg, the conservatives in the UK are printing money. A few clowns are turning this into a left/right issue though.

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  20. Exclamation Mark (86 comments) says:

    Remember when Pauline Hanson suggested Australia should just print more money to solve their economic problems?

    Remember how she had the holy living piss mocked out of her for it?

    That’s what should be happening to the Greens now right?

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  21. Mighty_Kites (85 comments) says:

    At least they’re proposing something, which is a lot more than can be said than the current government. Tell me DPF, how’s leaving it up to the market going for you? Oh, that’s right, not even close to those 170,000 new jobs that were promised, record migration to Australia despite Key’s pledge to reverse the brain drain. I wouldn’t go criticising when this government is failing so comprehensively on every level

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  22. libertyscott (359 comments) says:

    fish_boy: If you think that monetarism has anything to do with Austrian economics then you are sadly mistaken.

    Austrian economists believe in commodity based currencies (von Mises) or free banking (Hayek), not fiat currencies issued by a central bank. That model is a key part of the reason for this financial crisis, and will be the central part of the next one. To understand why you need to understand what money is, what its characteristics are and why creating more of it out of nothing is destructive and distorts resource allocation, ultimately hurting those who are the least well off.

    We have had 40 years of pure fiat currencies, tempered only by Milton Friedman’s monetarism which created asset bubbles as the cheap credit was misallocated, because it was created by the state through the banking system, effectively giving banks a state guarantee. The same happened when the NY reserve bank issued more and more credit in the 1920s, and the German central bank printed money to pay its debts.

    This doesn’t remotely represent an Austrian style free market banking or monetary policy model. The last time there was such a monetary policy was before WW1.

    Paul Krugman’s approach has been failing in Japan for 15 years, his own QE has done nothing more than minor blips, yet he is still addicted to it.

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  23. Griff (8,154 comments) says:

    Fish brains why do the left ALWAYS resort threats of war or civil unrest when they don’t get their own way?
    “”The alternative to this neo-liberal induced disaster will be default, political instability and probably war””
    Printing money does not create wealth it destroys it. Those at the bottom with no assets will see their living standards fall and the real value of their wages drop those “rich pricks” with assets are insulated.

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  24. fish_boy (152 comments) says:

    Look, we all know why this intellectually bankrupt government clings to a high dollar – their hopeless policies have delivered massive unemployment, a widening wealth gap and massive outflows of New Zealanders to Australia, and a collpasing export sector. If the dollar were to drop then the lack of ideas of Bill ‘not a clue” English, whose religious belief in a narrow set of ideological tools would preclude any sort of intelligent response, would mean we’d end up with stagflation.

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  25. tvb (4,494 comments) says:

    Your post is plain stupid. I suppose you think you know better than the Federal reserve, The Bank of England, The Economist magazine, The Bank of Japan and the European Central Bank. I thought Russell Norman’s proposal was quite moderate and responsible. I hope he gains support from people including me. You and various luddites can contemplate opposition.

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  26. Matthew Hooton (131 comments) says:

    Is fish_boy really claiming Greece is in trouble because it ran an austerity programme!!!??? It never has. The opposite is true. It is in trouble because it borrowed so much and had a fixed currency. The idiocy of these people is startling.

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  27. Matthew Hooton (131 comments) says:

    Fish_boy. Wow. “massive unemployment” you do know our unemployment is much lower than in the US and Eurozone?

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  28. slijmbal (1,236 comments) says:

    Japan has tried this tactic amongst others in the modern version of Keynesian economics for decades and it has not worked.

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  29. fish_boy (152 comments) says:

    “… Those at the bottom with no assets will see their living standards fall and the real value of their wages drop…”

    You are assuming that QE will automatically lead to inflation. This isn’t necessarily so, since as i said above the problem isn’t over consumption, it is lack of consumption – we could stimulate consumption without that lerading to inflation.

    The other argument – that lowering the dollar will lead to imported inflation for all sorts of things from petrol to flat screen TVs – is true. But that is hardly sustainable. Following that logic, we’d crank the dollar right up and keep on borrowing to cover the gap in export receipts until the whole fake scheme collapsed. At some stage we’ve got to grasp the nettle and deal with the utter futilty of continuing to gut our import substitution and export sectors and ween ourselves from the politically popular heroin of cheap imports and imported money fuelled housing speculation.

    No one has said lowering the exchange rate and re-orientating our economy towards real production would be easy. It would be hard and require our captains of industry and those highly paid economic boffins in treasury and the reserve bank and parliament to actually think. But (as a great New Zealander once said) “We might make mistakes but we will make other things too.”

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  30. Keeping Stock (10,405 comments) says:

    Parker has said on 3News that “his party can see some merit in the Green Party’s call yesterday for the Reserve Bank to create money”

    http://keepingstock.blogspot.co.nz/2012/10/the-thin-end-of-wedge.html

    There you have it; both Labour and the Greens want to go down the path that has created our high dollar in the first place; the failed economic policies of Barack Obama.

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  31. nasska (11,779 comments) says:

    ….”No one has said lowering the exchange rate and re-orientating our economy towards real production would be easy.”…..

    The part that has so far escaped the “great unwashed” & their halfwit union mates is that the wages for manufacturing a “widget” in NZ must be close to those paid to a similarly uneducated worker in India or Brazil. If they were then money to build factories & infrastructure would appear overnight.

    Since they aren’t the “widget” gets made in Delhi & our workers either emigrate or are unemployed. Like it or lump it, there isn’t a third way.

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  32. Manolo (14,029 comments) says:

    Just consider that an illiterate like Norman is dangerously close to political power. If Labour wins, financial Armageddon awaits.

    He’s a true depiction of a modern-day Luddite, and member of the neo-communist party that has managed to con many naive and gullible people.

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  33. Pete George (23,680 comments) says:

    Greens (and Labour) are suggesting that the Reserve Bank should have more targets than inflation, including controlling the vale of the dollar.

    Apart from the obvious problems that would arise if solutions for multiple targets conflicted and worked against each other, how could a dollar value target work?
    – what target range of dollar value?
    – against which currencies?
    – would the range/s be set in concrete or be able to adapt to changing economic conditions?
    – what budget would the reserve bank have to try and influence the value of the dollar?
    – what would happen if they used up the budget and hadn’t achieved their goal?
    etc

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  34. Lipo (229 comments) says:

    Can someone please advise me

    Don’t we print money now?
    When the Reserve Bank / Government issue bonds isn’t it paid for by printed money?

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  35. david c (254 comments) says:

    Literally… I do not think it means what you think it means

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  36. flipper (4,194 comments) says:

    Look at California…Greece … Spain…. Portugal… Ireland … and now France…AND US of A.
    Printed money = economic collapse.
    “Green” economic policies = economic disaster.
    Green jobs = runaway unemployment = “green” growth!
    Don’t believe?
    Look at California’s Green jobs outome – unemployment now running at 27% true… AND a State deficit of trillions.
    Spain – introduced “green jobs” and lost 2.2 jobs for EACH job “created”.
    The Problem?
    Just like most (There were even worse examples like the fraudulent Solandra which ripped off $US 90 Billion) of the US’s “shovel ready” Obamination jobs “created” were short term Government funded. When the funding ran out the jobs followed.

    Spain has had an identical experience and now has UNEMPLOYMENT at 26% and rising.

    Green jobs and printing money is like sprinkling fairy dust. They sparkle momentarily then create an economic fire storm as the economy burns down.

    GREAT SOLUTION.

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  37. peterwn (3,298 comments) says:

    Quantative easing (aka printing money) is effectively a stealth tax on kids and the elderly because both are dependent on fixed interest accounts for investment (conventional investment advise wisdom is older people should put their money into allegedly lower risk fixed interest). What surprises me is that Winston Peters has not made an issue of this on behalf of the elderly – but then he is another money printing advocate.

    Russell Norman is also arguing that international speculators will clean up if NZ does not start printing money. By his irresponsible comments he is setting the scene just for that.

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  38. dime (10,095 comments) says:

    Makes sense to me!!!

    Step One – Print a shit ton of money for every little pet project they can think of. Use it to subsidise “green fuels” etc
    Step Two – laugh at the “rich” who saw their savings get fucked with
    Step three – Extra benefits and tax relief for people on lower incomes
    Step Four – Whack interest rates up to punish greedy home owners and land lords
    Step Five – Capital Gains tax to help stop inflation
    Step Six – tax increases for the rich just cause

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  39. scrubone (3,104 comments) says:

    As I’ve argued before, inflation is a great way of keeping unions in busines.

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  40. dime (10,095 comments) says:

    scrubone – true that. one of the first things i learned in 4th form economics was the wage/price spiral..

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  41. wreck1080 (3,956 comments) says:

    @dime — a capital gains tax is a very good idea — assuming it is fiscally neutral via cuts in the personal income tax rate.

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  42. The Scorned (719 comments) says:

    Printing money makes as much sense as “printing food”….or “holidays”….or “girlfriends”….or…..

    ugghh….

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  43. Redbaiter (9,503 comments) says:

    “The idiocy of these people is startling.”

    I agree with Hooting for once. The ignorance concerning the negative outcomes of printing money is amazing, and the debate above extremely revealing in terms of the weak economic understandings of some Kiwiblog commenters.

    Its as disappointing as the discussion the other day on freedom of expression, where so many proved themselves totally ignorant on that issue too.

    No wonder really that NZ’s up shit creek. Proof that a democracy won’t work effectively if the voters are not informed and educated.

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  44. The Scorned (719 comments) says:

    People who advocate this shit are intergenerational financial paedophiles who are fucking their Grand children’s futures over big time….

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  45. Redbaiter (9,503 comments) says:

    BTW, NZ’s in deep shit economically and there is probably no way out of it so hand wringing over what to do with taxation is a waste of time.

    The only survival route is mass sackings of government employees and reductions in welfare, but that won’t happen because no party has the courage to do what is necessary and the parasites won’t give up what they see as their entitlements.

    It will happen in the end though. When the government finally has no money left and can’t borrow any more (as its doing now) there’s nothing else that can happen.

    Well done socialists. Yet another country brought to its knees by mis-educated brain damaged leftists and a population too lazy and too greedy and too uninformed but most of all too dumb to know when they’re being shafted by idiots.

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  46. dime (10,095 comments) says:

    Red – and when the country does end up broke and fucked they will blame capitalism..

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  47. bij (66 comments) says:

    “The only way to avoid it is to buy assets or other currencies.”

    yes, that is the point.

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  48. scrubone (3,104 comments) says:

    Step 1. Buy votes with borrowed money
    Step 2. When anyone points out this can’t work long term, argue that this is good and brings prosperity
    Step 3. When the economy tanks, argue that you need to spend more money to “stimulate” the economy
    Step 4. When the economy gets worse, argue that you need to spend even more money to “stimulate” the economy
    Step 5. When the bankers refuse to lend you more money, blame the bankers for trying to crash your economy
    Step 6. When the bankers force you to do something about your massive debt, make a few token efforts at cutbacks
    Step 7. When the the economy tanks because of all the above, blame it on the cutbacks
    Step 8. When the “cutbacks” don’t work, print money to try and cover your government’s debts
    Step 9. When massive inflation hits, blame capitalism for all your self-created problems.

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  49. davidp (3,587 comments) says:

    It takes a special kind of stupid to look at the economic policies of Weimar Germany or Mugabe’s Zimbabwe and say “why don’t we try that in NZ?”

    Russel Norman IS that kind of stupid.

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  50. Redbaiter (9,503 comments) says:

    “and when the country does end up broke and fucked they will blame capitalism”

    Eggzactly- and a large number of these fekkin idiot voters will believe it.

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  51. simo (151 comments) says:

    We have been waiting for this moment for wee Wussell, its got to be his “ginga” moment, he’s just tipped himself down the hydroslide to oblivion, thankfully its happened now and not in 2014. If he come’s back with any Green financial policies in the future – even seemingly viable, he will be skewered “Vlad the Impaler” style, along with his rotundus lieutenant

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  52. Mark (1,489 comments) says:

    A free hit for for National

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  53. Gerrit (107 comments) says:

    How smart was it to invest in kiwisaver? Not very if the state starts to print money. All those private super schemes will be worthless long term as well.

    Mass withdrawal of funds from savings and reinvested in Australia?

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  54. James Stephenson (2,223 comments) says:

    Can I just say LOL @ the greens using “mainstream practice” as some kind of argument winner. Does that mean we can now have that lovely “mainstream” Nuclear Power in NZ?

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  55. Bevan (3,924 comments) says:

    “and when the country does end up broke and fucked they will blame capitalism”

    Eggzactly- and a large number of these fekkin idiot voters will believe it.

    Contain the gag reflex and read fish_boy’s post @ 8:12am. They are already blaming capitalism.

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  56. wtfunz (133 comments) says:

    Simo – Sadly it will have no effect on him or his luny party, at all as only 10% of the population has any idea that this represents “banana republic” economics at it worst. They see the grand old US of A printing money but have no clue of the impact it has i.e. the NZ $ is 82.5 / the US$ because the US$ is shit. Not because the Kiwi is super strong. The Euro is f=kd because they’re bankrupt – a combination of this type of economics and Debt.

    A message – Get your money out of NZ in the next 18mths. A gween, liebor, maoris coalition will borrow to fund the unemployable, print money, and try to influence the currency as they are financial and economic illiterates who will make this country look like Greece in 3 -6 years.

    A few examples of countries “playing” with their exchange rate in a floating market for you –
    nbr.co.nz/article/wr-opening-salvo-parkers-currency-fantasy-mh-129158

    The case for currency intervention is, at best, mixed.
    In 1992, the Bank of England lost British taxpayers NZ$10.5 billion in today’s money trying unsuccessfully to keep the pound in the European Exchange Rate Mechanism.

    Japan had a policy of holding the yen down against the US dollar. In 2010, it spent over NZ$41 billion trying, losing its taxpayers around NZ$7.4 billion. Last year, it spent nearly NZ$210 billion, for losses, luckily, of only NZ$931 million.
    Dear Huluns foray in 2007 went as follows:
    After the only publicised intervention, on June 11, 2007, the dollar fell from around US$0.765 to US$0.75, although it was above US$0.80 within six weeks. (MORE MICKEY MOUSE ECONOMICS – THE CURRENCY WENT UP)

    It is fanciful that the little old RBNZ could intervene in the market to materially drive down the New Zealand dollar – which in reality means pushing up the Australian dollar, renminbi, US dollar, yen, won and euro – especially if those major powers are trying to push their currencies down.

    Is anyone old enough to remember when the NZ dollar was worth $1.25 US. The country was prospering.

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  57. Monique Watson (1,062 comments) says:

    Shows the danger of the pull of the cultish communists. I didn’t read many of the comments before I got worried about the left winges like Fish falling for the printing money rubbish.
    Heres a good article on how it worked for Venezuela:
    http://devilsexcrement.com/2011/12/19/the-venezuela-money-printing-machine-is-definitely-running/

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  58. Monique Watson (1,062 comments) says:

    @flipper, taxes in California make me fucking uneasy. They are shortly about to vote for one of two propositions 38 or 30. Both hike up the taxes AGAIN and promise to send the money straight to the near bankrupt school districts. The effective tax rate on high earners is 45% before sales tax. three more counties went bankrupt recently. Redbaiter said it, shrink the government and can welfare but that means corporate welfare as well . Stuff bailing out every half baked institution or ubsidies to the film industry.

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  59. rouppe (980 comments) says:

    Someone needs to call Russell Norman out on his “because all our trading partners are doing it” line.

    If that were a good reason the Greens would be supporting mining and deep sea oil drilling “because all our trading partners are doing it”.

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  60. wtfunz (133 comments) says:

    Thanks Monique – can you forward it to Wussell – oh thats right he’s illiterate.

    Article quote: Venezuela (NZ under the gweens)
    Barclays estimates that inflation in 2013 will reach 36%. The Government will pull all of the stops, decrees, bills and threats in order to slow down price increases. Unfortunately, this is a very difficult game as inflation accelerates, as the private sector may decide not to sell or make goods at a large loss. Then scarcity will increase and politically and scarcity seems to carry more weight with voters than inflation.

    And no matter who wins the election, there will have to be a very significant adjustment to the rate of exchange in 2013. And thus, more inflation. The mirage of lower inflation moves further into the future, while the Government ignores the fact that it is the main driver behind it.

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  61. Falafulu Fisi (2,179 comments) says:

    Russel Norman wants to make bankers richer, and wage-earners poorer
    http://pc.blogspot.co.nz/2012/10/russel-norman-wants-to-make-bankers.html

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  62. JC (968 comments) says:

    For a country thats supposedly having problems we seem to have achieved acceptable growth in GDP:

    http://www.rbnz.govt.nz/keygraphs/Fig2.html

    And here’s the dreadful impact of a high dollar:

    http://www.tradingeconomics.com/new-zealand/exports

    As you can see, we’ve been trucking on trading within a pretty tight band of a variance of about a billion per month.. some of that is seasonal, some volume issues, some the exchange rate and some other factors.

    And here’s the movement of imports and exports, as you can see one offsets the other to some degree.. and creates opportunities.

    http://www.stats.govt.nz/browse_for_stats/industry_sectors/imports_and_exports/OverseasTradeIndexesPrices_HOTPMar12qtr/Commentary.aspx

    The thing is, many exporters are also supplying the domestic market, so you end up with a mix of internal and external trade to maximise returns.

    Finally, how do you think NZ survived the 1960s when we were way up the OECD ladder and our dollar was worth $1.40 to the USD? Why, you might almost think that the exchange rate is a symptom, not a cause of economic success or failure.*

    *Note to Red Russel, the exchange rate is a consequence of a mix of economic policies and the vagaries of trade and generally a high dollar is not considered a “problem”. If you think it is, you should demand the Govt reduce its spending by about $20 billion per year, get rid of the Minimum Wage, dramatically streamline regulations, get rid of the ETS and ditch the Resource Management Act in its present form.. for starters.

    JC

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  63. alloytoo (571 comments) says:

    Russelnomics in a nutshell.

    “Ever since adopting the leaf as our unit of currency, we’ve all become extremely rich, leading to enormous inflation. So to solve that problem, I recommend…burning down all the trees!” — Douglas Adams (Hitchhiker’s Guide)

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  64. Manolo (14,029 comments) says:

    Thank you, Falafulu.

    A good article by PC and a good exposition of the economic illiterate Norman is. A comrade dedicated to the destruction of NZ’s economy.

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  65. Kimble (4,443 comments) says:

    Unfortunately, most of the damage the Greens could do is already done.

    Inflation targeting is intended to manage inflation expectations. Now we can see that if the Greens ever hold the balance of power, inflation will increase. Take the expected probability of the Greens holding power, multiply by the expected inflation increase due to their economic illiteracy, and add that to current inflation expectations.

    You can see the same thing happening right now in Australia; the reputation of Australia as a great place to do business has been skewered by the power Labor ceded to the Greens to form government.

    It doesnt really matter how many stupid policies the Greens end up forcing on a sleeping populous. The greater practical impact is made on expectations thanks to those constant stupid policy announcements.

    I think this is what Bob Higgs calls “regime uncertainty”.

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  66. Colville (2,298 comments) says:

    Before the NZ$ hit 80 cents we never had export grade lamb legs at $8 a kilo in the butchers :-)

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  67. Redbaiter (9,503 comments) says:

    “For a country thats supposedly having problems we seem to have achieved acceptable growth in GDP:”

    GDP is always artificially high in socialist countries as a result of the “churning” that arises through redistributive economic policies.

    IOW, a lot of money changes hands but fuck all gets done.

    In such cases, its not really any accurate measure of economic well being.

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  68. ross69 (3,652 comments) says:

    So the government’s handling of the economy is a mess, but the focus is on the Greens? Yeah that will work…for the dimwitted, of which there seems to be quite a few on here.

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  69. ross69 (3,652 comments) says:

    Thousands of jobs have been lost in manufacturing since this government took over, and unemployment continues to rise. Even Phil O’Reilly – traditionally a friend of National – has said interest rates need to be cut. I won’t hold my breath.

    http://www.nzherald.co.nz/unemployment/news/article.cfm?c_id=353&objectid=10833618

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  70. RRM (10,001 comments) says:

    Ross, Ross, Ross…

    The Greens are the focus here because what they are proposing is Russian Roulette at best, and more likely economic suicide for the whole country.

    As DPF and numerous other commentators have explained already, the only time Russian Roulette is an attractive prospect is when the only remaining alternative is Hara Kari.

    You DON’T embrace Russian Roulette at a time when a healthy balanced diet consisting of more vegetables and less saturated fat is all you need to return to good health.

    I’m no great economist but your view of the nations economy as one where cash flows down to the workers from the Government (our source and provider of all employment, wealth and happiness) is fundamentally wrong… but by all means, go on slamming Key and English for their failure to wave their magic wand and “fix the economy and everybody’s jobs” if it makes you feel better… ;-)

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  71. wreck1080 (3,956 comments) says:

    Amazing the number of know-it-all armchair experts that are putting this as a left / right issue.

    Plenty of right wing exporters will be supporting some way of bringing the NZ dollar down, and plenty of lefties would be against QE.

    QE should be a last resort option and is nasty economics.

    The government should cut down it’s own borrowings first — John Key needs to grow some nads and dump working for families and free student loans.

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  72. Pita (374 comments) says:

    To the simple, everything is simple…The Greens (Norman) understands this and is appealing to his constituents, any subtle nuances that arise out of demand-pull or cost-push inflation are irrelevant in his game play.

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  73. Redbaiter (9,503 comments) says:

    Actually, you’ve got a good point there Pita, and it underlines why the education system has to be removed from the clutches of the left.

    Fouling our education system so that it produces politically ignorant brainwashed imbeciles is a big part of the leftist political strategy.

    A stupid poorly educated welfare addicted population will more easily fall for the lies of the left.

    A well educated, independent and thinking populace never will.

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  74. Longknives (4,855 comments) says:

    Well said Redbaiter.

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  75. Longknives (4,855 comments) says:

    I remember many years ago when I was at High School some kid in third form economics asked ” Why don’t we just print more money?”- The teacher scoffed at him for such a laughably childish suggestion. Clearly Wussel Norman never did third form economics…

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  76. KevinH (1,236 comments) says:

    On the subject of brinkmanship, when you are pushed to the edge of a precipice with both feet on the edge, do you jump to a certain death like the rest of the leemings?, or do you turn around and face down the forces that pushed you there?

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  77. Paulus (2,658 comments) says:

    You do not think that Greenpeace, and New Zealand’s political branch, really care anything but there own grandisement.
    They are made up by middle class, well educated (except in Economics), mainly white, or off white, latte drinking do gooders.
    Most of their ideas are imported from other countries, as are their New Zealand members. Norman is the nearset to a Trotyskiite as you will find, ex the Australian Communist Party equivalent.
    Ask Greenpeace for a balance sheet, as I have done, and have been told they are a Reistered Charity and as such do not publish one.
    Ask them how much of every dollar given goes overseas a Head Office expences. Same answer.

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  78. Pete George (23,680 comments) says:

    KevinH – you first determine whether in fact you are on the edge of a precipice.

    If the sky has been stormy and still looks cloudy and you hear there’s flooding in other countries how much notice do you take of people claiming that the sky is falling?

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  79. thor42 (971 comments) says:

    Printing money….. yeah, right.
    Gee – it worked ***really well*** for the Weimar Republic and Zimbabwe. /sarc

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  80. wtfunz (133 comments) says:

    Ross – knock knock – earth to Ross
    You choose from – http://en.wikipedia.org/wiki/List_of_countries_by_unemployment_rate

    Who’s doing best Ross? Unemployment rates compared :-
    Spain 25 %, Greece 24.4%, Italy 10%, Ireland 14.9% UK 8.1% US 7.8%

    New Zealand 6.8% ( Complete with a race that wouldn’t work in an Iron lung) You tell who’s doing better.

    Now look at these:-
    China 3%, Nrth Korea 0%, Sth Korea 3.7% Thailand 1.2% Vietnam 2.9%.

    If you have half a brain you will see the latter countries are communist or have no social welfare ie. dreamers like you are shot or jailed. Income redistributors like you fail to exist. You work or die – quite simple really. I suspect in the communist countries they might find a job for you.

    Wake up to yourself and accept you are full of shiiite. National has shielded this country from bankruptcy. Had your girlfriends been in charge we would be gooone.

    Ross – Labour ran this country for 9 years when the world had its biggest economic growth in history. Under them we still had unemployment and the only thing to grow in this country was the grievers industry, govt jobs and social welfare programmes. Classic example – Unemployable 60 year olds were encouraged on to interest free student loans they would NEVER, EVER, IN YOUR WILDEST DREAMS, repay.

    In those 9 years Liebor, the gweens, and Maoris wasted billions of dollars in this country. And you want them back when the world economy is stuffed and still tanking. Please show me I am wrong.

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  81. smoog (3 comments) says:

    I’d advise you not to use statistics much, as you don’t appear to know how to use them.

    Exports to the EU were $4.9 Billion, not $2.9 as you claim.

    You managed to miss out China. It is NZ’s 2nd largest export market accounting for $6.1 billion in exports, and printing money like there’s no tomorrow in order to desperately keep their RMB artificially low. The year the US did all their QE’s, they increased the US money supply 3%: the Chinese increased the Yuan supply 18%.

    That brings us up to $20.1 billion already: 43% of our exports.

    It doesn’t stop there. What of the ASEAN-10? Their combined NZ exports was $4.5 Billion and I think you’ll find that most, if not all, of them have done some sort of QE themselves in order to maintain a level of currency parity with China and/or the USA. That puts us up to $24.6 Billion: We’re now at 52% of our total exports. And we’ve barely begun!

    Exports to Hong Kong was $800 million. As the HK$ is pegged to the US$, they’ve effectively devalued. We’re now up $25.4 Billion.

    What of Taiwan? It’s $ has appreciated just 3% against the greenback over the past 5 years which heavily indicates that their reserve bank is printing money. That country takes in $900 million of NZ’s goods. Now we’re at $26.3 Billion.

    India: their rupee has actually depreciated against the greenback by almost 40%. They must be printing money as well. Their $950 million of NZ exports brings us up $27.25 Billion. While we’re at it, we may as well throw in Sr Lanka with it’s $350 million of NZ exports, Pakistan with it’s $100 million of NZ exports and Bangladesh with it’s $150 million, all countries having devalued their currencies over the past 5 years: that brings us to $27.85 Billion.

    Russia & Canada: practically no change to the ruble or the Can$ over the past 5 years against the greenback, so they must be printing money. Another $300 million and $600 million respectively to add to the tally. We’re now at $28.75 Billion: 62% of our exports are being sent to countries who manipulate their currency and have been printing money.

    And we still have not finished! Algeria, Egypt, UAE, Saudi Arabia, Nigeria, Iran, Morocco, South Africa, Mexico. All have devalued their currency against the greenback in the past 5 years. Combined NZ exports to these countries is $3.35 Billion, making for $32.1 Billion – 69% of our exports.

    South Pacific – Fiji, Western Samoa, Tonga, French Polynesia, etc? They account for almost another $1 billion and I’m pretty certain their currencies are effectively pegged to the US$. $33 Billion and still going.

    Then we have other smaller countries within Europe and elsewhere. Switzerland for example has effectively pegged it’s franc to $0.80Euro. There’s another $100 million in NZ exports just there alone.

    I haven’t even bothered looking at the old Eastern Bloc countries, South America, Africa or any country who buys less than $100 Million of NZ goods. No need, I’ve already found that over 70% of our exports go to money printing countries.

    Tell me again how the claim that “all of our major — most of our major trading partners are using (QE)” ‘is simply wrong.’ and how ‘they are not our major trading partners.’

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