Source: MIL-OSI Submissions
Source: Social Credit Party – Chris Leitch, Leader
In today’s Beehive press conference Finance Minister Grant Robertson admitted that over the coming decades taxpayers will spent billions of dollars paying off the government’s economic rescue package.
Not because it is not possible for the Reserve Bank to fund the government directly and then write off any debt, but because the Government has decided “[that is] the way we manage monetary and fiscal policy in New Zealand.” “There is a separation. There is an independence there.”
He went on to say “Certainly that idea has gained a bit of currency around the world but I am still confident that we have a system in NZ where we’ve got a functioning bond market where debt is managed well.”
He is clearly happy that funding of the rescue package will continue to be done through an economic merry-go-round that will see a massive transfer of wealth from ordinary Kiwis to the mainly overseas shareholders of the country’s banks and investment funds.
The result will be Kiwis saddled with massive additional debt and interest payments when it could have cost nothing – freeing up tax dollars to be spent on health, education, housing and infrastructure.
The Reserve Bank could directly fund the government requirements without incurring any cost to taxpayers – something called for by BERL chief economist Ganesh Nana – “The government can borrow from the Reserve Bank. To be technical, it’s literally borrowing from itself”.
Economist Shamubeel Eaqub agrees – “I don’t see why we don’t jump straight to the RBNZ buying bonds from Treasury direct”.
Former Senior Lecturer at the School of Economics and Finance at Victoria University Dr Geoff Bertram says “This is not wild radicalism. It is mainstream, even conservative, economics”.
Instead the government is borrowing billions through the sale of bonds to banks and other financial entities and investors.
Those purchasers buying the newly issued government bonds are the very same people who are flush with funds because the Reserve Bank is spending $100 billion dollars to buy from them bonds they previously held.
Those wealthy investors will make a substantial profit from ‘clipping the ticket’ on both transactions, and taxpayers will foot the bill.
$5 billion dollars of taxpayers’ money will be going every year to pay interest on government debt – money that could be spent on health services, solving the housing crisis by building rent to own homes, providing free dental care, or a multitude of other possibilities.
The self imposed appearance of the Reserve Bank not directly financing the Government is sheer economic madness in these unprecedented times.
Ganesh Nana – Radio New Zealand Morning Report – 16.04.20 – Transcript attached. Link https://podcast.radionz.co.nz/mnr/mnr-20200416-0725-coronavirus_a_different_economy_to_emerge_from_recovery-128.mp3
Shamubeel Eaqub – https://www.interest.co.nz/bonds/104351/finance-minister-and-rbnz-unwilling-stage-link-directly-fund-fallout-covid-19 and on TVNZ Sunday programme 19.04.20
Dr Geoff Bertram – https://berl.co.nz/economic-insights/employment-and-skills-gdp-and-inflation-global-issues-government-and-fiscal and NZ Herald article 13.04.20
Canada’s central bank purchases approximately 20 percent of government bonds issued every year on a regular basis.
The first Labour government financed the building of thousands of state houses with Reserve Bank money.
The Commonwealth Bank (Australia’s central bank at the time) supplied the Australian government with funding for major infrastructure development.
China finances the majority of its government owned companies and major projects like its Belt and Road projects from its central bank.