I thought this madness died with Social Credit, but Greens (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 inflation 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.
Russel Norman claimed:
Secondly, when you look overseas at the use of quantitative easing – 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.
, Monetary Policy
, quantitative easing
, Russel Norman