Norman said on TVNZ's Q&A Show that the Reserve Bank should print more money to take pressure off the high New Zealand dollar.
But Norman's suggestion has been met with scorn by National Party politicians and economists, and by some commentators.
"The latest idea of the Greens to print money, that's a pretty wacky idea. If printing money made you rich, Zimbabwe would be the richest country on the planet and it's not", Prime Minister John Key told TVNZ's Breakfast programme.
And Kiwiblog's David Farrar wrote: "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."
The idea of printing money is not new. However, New Zealand has long relied on the Money Fairy to supply freshly minted money to the Reserve Bank.
Nobody knows where the Money Fairy comes from, or why she delivers bags of cash at opportune times. Her mysterious deliveries usually occur a short time after Reserve Bank officials have noted the need for more cash.
The Government appears to be happy with the current arrangement, whereby rather than printing money the Reserve Bank awaits its magical deliveries of cash.
The design and production of bank notes would be time-consuming and costly, and would probably involve the contracting out of the production of special polymer notes to a specialist mint, such as Note Print Australia Limited.
It is easier to simply wait for a magic fairy to just drop cash into the Reserve Bank's vaults.
But it remains uncertain what the Government's reaction will be if the Money Fairy ceases to deliver those bundles of cash, since printing money is clearly something no sensible government ever does.
"It is easier to simply wait for a magic fairy to just drop cash into the Reserve Bank's vaults."
ReplyDeleteIsn't that better than telling the Reserve Bank to empty it's vaults trying to compete with much larger US and European currency manipulations?
Better to have a fairy half full than a fairy fucked economy.
Key carefully avoids attacking the US on their continued Quantitative Easing (in fact they have printed a shit load more than Zimbabwe ever could dream of).
ReplyDelete@ Pete George missing the point I think
ReplyDeleteMoney supply will be increased with the sole purpose of rebuilding and purchasing productive assets. The purchase will be made with money that the Government has essentially lent itself.
The money tree, money fairy, bald grey men in suits what ever method you like will provide x number of dollars to do this. There is no suggestion of competition with anyone, the Reserve bank is not being given a open check book to peg the NZD, we are simply creating some currency of exchange for goods and services internally to undertake some essential work. The outcome of this most probably will be a drop in the exchange rate.
Combine with a drop in the OCR, you would see the dollar drop and the export sector pick up and jobs appear via the job creation fairy.
What Russel Norman is saying makes complete sense.
ReplyDeleteHowever, you are right, the costs of printing the money in Australia is exorbitant. In particular, as you have pointed out, re-designing the notes replacing Hillary, Rutherford et al with a bust John Key.
One strategy that has been uncovered from a leaked cabinet paper has been to privatise the Reserve Bank of New Zealand. It is understood one of the prime selling points is the opportunity for the buyer to sell advertising space on the obverse of all notes and coins.
The paper says the monopolistic nature of the banknote advertising market in New Zealand will lead to the purchaser supplying notes, at private cost, until demand is met; tempered by the market for wallpaper and firewood.
*bust OF John Key
DeleteYou had it right first time.
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