The H word

October 27, 2012

Speaker Lockwood Smith has undone decades of tradition by allowing the h word to be used in parliament.

This is good timing as it coincides with the outing of hypocrisy from the Green Party.

Just a few years ago Green co-leader Metiria Turei was denouncing US democracy being bought and sold.

This week the party explained away using child poverty to attract donations for itself as adopting fundraising techniques used by the likes of United States President Barack Obama .

The h word might also apply to a campaign against any sort of poverty from a party which opposes many of the developments which could foster economic growth.

The Green Party is usually very good at getting publicity but most of that publicity in the last couple of weeks hasn’t been good.

The Lobbying Transparency Bill promoted by Holly Walker has been roundly criticised by numerous submitters including Clerk of the House, the Law Commission, Human Rights Commission, Newspaper Publishers Association, Tainui, Ngai Tahu, Association of Universities, Association of NGOs, and the Auditor General.

The party’s promotion of quantitative easing has been widely panned and got more criticism yesterday when new reserve bank Governor Graeme Wheeler said there was little evidence it had lifted growth overseas.

“New Zealand does not require quantitative easing: the economy is growing at an annual rate of about 2 per cent, and the Reserve Bank has scope to lower interest rates if needed.”

The Green Party recently suggested the Reserve Bank print money to bring down the value of the dollar to help hard-pressed exporters.

But Wheeler effectively slammed the idea, pointing out that since the start of the global financial crisis, the United States Federal Reserve had expanded its balance sheet by 13 per cent of GDP, the European Central Bank by 16 per cent, Bank of Japan by 10 per cent and the Bank of England by about 20 per cent.

“In all four cases the official cash rate is 0.75 per cent or less. In all four cases there is little evidence of any appreciable impact on economic growth,” he said. . .

He said the answer to the high dollar is not printing more money but an increase in savings and investment and a decrease in foreign borrowing.

Apropos of the h word, the most memorable line on quantitative easing was in Seven Days last week when one of the panel pointed out the hypocrisy of the promotion of printing more money coming from the party which also wants to save the trees.


Spot the similarities

October 10, 2012

Gerry Eckhoff spots the similarities between social credit and quantitative easing:

. . . I intend to follow the current fashion and print money. Some of you will say that is a heinous crime deserving of the most severe punishment.

Counterfeiting, after all, destroys our monetary system. Society cannot allow the printing of money just because there is a need for more cash. Society’s politicians however now promote printing our own money to solve the world’s financial problems so I figured “sauce for the goose … ” If our politicians believe printing a couple of billion dollars annually to pay for their pet projects is such a good idea, then surely my idea of printing a paltry few dollars for my projects is even better.

As I have no wish to be found guilty of plagiarism, as well as counterfeiting, I must acknowledge the idea to print money as required is not new. Many years ago a Major C. H. Douglas thought it was such a good idea he called it “social credit”, to legitimise the printing of money if and when needed.

Social credit sounded so much better than “money printing”. The good major failed to notice if you increase the supply of a product its value trends downwards. That applies to milk, lamb, beef, timber as well as the money you are printing, so you have to keep printing and producing to retain the status quo. One well-known advocate of this approach is one Robert Mugabe, from Zimbabwe, where his printing presses simply couldn’t keep up with the daily devaluation of their currency but would have been great for the local paper mill if they could only have printed enough money to build one. . . .

Rather surprisingly, the idea of the good Major Douglas and the not-so-good Robert Mugabe, is now fast becoming orthodox monetary policy endorsed by no lesser political and economic giants as our very own Green Party. This print-and-distribute policy has the backing of their MPs who have obviously studied President Mugabe’s model and commitment to printing money as the way to pay off debt. The sheer brilliance of the Greens scheme is that interest rates for borrowers will be zero. This policy will, of course, severely punish those not responsible for the monetary collapse the world’s savers. Those rapacious and retired folk who had scraped together a nest egg in the local bank to assist in their retirement will get no return for their deposit. I do struggle to understand how this policy offers an incentive to all others to save. Meanwhile, it’s business and bonuses as usual for Goldman Sachs and JP Morgan et al. The printing presses are rolling as the international banking industry and politicians now speak not of printing money nor of social credit but of “quantitative easing.” This phrase sounds more like a description given to a ewe about to give birth to triplets rather than a monetary expression but there you have it. All of which gave me the idea to print my own money. If the Feds can do it, if the euro zone can do it, why not me – or you?

. . .  counterfeiting or increasing the money supply for a private benefit is illegal but increasing the money supply by Government for public benefit and electoral advantage is not.

Both however have the same effect on savings and the purchasing power of our dollar and both should be illegal.

I go to jail and Mr Norman goes to Parliament. How does that work?

Gerry isn’t the only one to spot the similarities between social credit and quantitative easing. Democrats for Social Credit leader Stephnie de Ruyter has given the proposal her blessing.


Take printer out of box . . .

October 8, 2012

Clarke and Dawe explain how quantitative easing works – or doesn’t:

 


No miracle cure

March 13, 2012

Quote of the day:

So, what will happen if we were to employ quantitative easing in New Zealand?

Two things. Where there are constraints in the economy, inflation. No question. A short-term fall in interest rates will feed into house price inflation faster than a real estate agent can sneeze. Asset prices, all asset prices, will rise. This will mean that those with savings denominated in New Zealand dollars will be poorer, those with assets denominated in shares, property or other affected assets, will benefit.

Where there are no constraints in the economy, such as employment, wages and prices will stagnate. Meaning those people will be poorer relative to those benefitting from an increase in asset prices. There will not be any rush of new spending.

This is a redistribution of wealth, from savers to borrowers, from workers to speculators, from the frugal to the feckless. Damien Grant


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