Source: MIL-OSI Submissions
Source: Chris Leitch, Leader of Social Credit Party
Yesterday’s announcement by the Reserve Bank that it will increase its money creation by an extra $40 billion dollars up to $100 billion over the next two years to buy government IOU’s off banks and rich investors sets an all-time record for money creation by New Zealand’s Central Bank.
This is still eclipsed by the country’s commercial banks which create about $80 billion in new money out of thin air every year.
While the memorandum of understanding signed between Reserve Bank Governor Adrian Orr and Finance Minister Grant Robertson limits the bank to purchasing no more than 60% of government bonds, effectively the Bank will be purchasing government IOU’s off rich investors and commercial banks for money they loaned to the government barely a few months earlier.
Taxpayers will be footing the bill for this nonsensical money merry-go-round which will see profits for those investors increasing at taxpayers’ expense.
Instead, the Reserve Bank should be purchasing bonds directly from the government and cutting out the middleman – a process which even arch-conservative former ANZ chief economist Cameron Bagrie agrees is possible.
It’s a process which is supported by Berl chief economist Ganesh Nana, Sense Partners economist Shamubeel Eqaub, former senior lecturer in economics at Victoria University Dr Geoff Bertram and numerous others.
Government borrowing from the private sector is already predicted to be $200 billion by 2024 at a cost of nearly $5 billion dollars every year in interest.
That interest will be deducted from money taxpayers expect will be going to hospitals, education, and housing.
On top of that, money to repay that borrowing will also come out of taxpayers pockets and that burden will fall most heavily on the shoulders of young people currently in the workforce and their children.
It’s time for that stupidly to end and for the artificial arm’s length Chinese wall between the government and the Reserve Bank to be pulled down in the same way the Berlin Wall was in 1989.
The Reserve Bank could fund government without the need for interest payments or repayment of the money provided.
Taxpayer’s money would then go where it belongs – into hospitals, schools, housing the homeless and reducing poverty.