Our PM has no idea what to do, thats what he is saying.  Lets just muddle along until something external happens to wake us all up.  When that happens they will blame everyone but them selves. These guys are really hopeless. 

How about printing $300m every week and pay off overseas loans that are in $NZ .  Even if it didn't lower the NZ$ it would still be a win win situation because it would save the taxpayer a lot of money via interest payments.   But just imagine if it did lower the exchange rate.....

Jeez John, just put  a tonne of gold in the vaults each day the NZD is over US 80cents and stop being so limp.

Running up external debt to GDP of 84 % is apparently without risk.
Running a trade deficit in excess of $ 1.5 billion is without risk.
Borrowing to pay the interest on the debt is without risk.
Forecast current account deficit of 7% is without risk.
Can't possibly print - too risky. Yeh - right.
Let's start by putting Treasury staff on salaries indexed to the TWI when National came to power. Will clarify their thought processes!
Today we are a nation running on borrowed money on borrowed time.

Key is saying printing money won't shift the dollar?
Every other country that prints sees their currency dip when they print.  It's one of the big fundamentals.  Therefore Key is either a fool, or incompetent.
 
What he is really bleating about is that if they print money, (a) the dollar will dip a bit BUT it will create wealth generation and THAT will appear as inflation.  Unfortunately inflating prices is something that will show up in the automatic machinery already in place, and Treasury will either have to think, or just do a kneejerk response.
 
Unfortunately in NZ the government cannot (will not?) see the difference between wealth generation (good) and inflation (bad).  So they treat both as inflation thus destroying wealth generation, driving the little investment wealth left into low performing safe havens (residences).
  For NZ to grow (and to pay off the interest on the bonds it just sold) it is going to need to be able to invest in things other than Junk (government baseline bonds, residential housing) - which means the governmentis going to have to allow wealth generation (rather than destroying it to control inflation - it if the counctry is kept in controlled poverty then there will be no chance of inflationary growth, only the odd bubble...and even then they try to work on how to stamp those out)

It's very pleasing to see most posters here challenging Key's very superficial non arguments. He is right that the Aussies lowering their interest rates had no effect; just as lowering ours has not. It's the capital flows- the buying and selling of currencies- that makes the biggest difference. And our government through the Treasury Debt Management Office is the worst offender. The Aussies have not materially printed money either.
As an absolute minimum we should be printing enough to hold the dollar down at current levels, or our own industry and wealth has to be flying out the window. And if printing substitutes for foreign money for say government debt, then it should not be inflationary at all. We in any case have inflation at less than 1%.
If money printing is inflationary; and in time it is likely to be; the Japanese, Euro, Swiss, British, US, and other printing will be massively inflationary, even in NZ; and the thought that we will be able to stop it with a few tweaks of the OCR is dreamland. If oil and other commodities for example double or treble in USD terms, what do we think our response will be? We would have to put the brakes on everything else so hard that it would be economic suicide.
Far better, if printing is happening, that we are doing our share and targetting it at government foreign debt and the exchange rate; such that the currency is at least stable, and businesses and people can manage and invest accordingly. Such a policy will not be inflationary here so long as world inflation does not ecalate significantly.
Now it's just a free for all on property and the sharemarket; with significant real wealth leakage offshore in the process, while slowly killing off our productive industry. 
If Key, English and Wheeler really believe their spin, they need to make better arguments.

I am just trying to think through the advantages of printing money to lower the exchange rate.
If the Reserve Bank prints money, we all know this will be inflationary and interest rates will eventually go up, so the first thing to do will be to borrow heaps and buy some houses. This will give us all tax-free capital gain, if we are quick enough. The flood of money will cause the market to boom and we can all sell out at the peak. Then foreign lenders will realise that we are on an inflationary path with our money supply, so interest rates on the money they lend to our banks will go up. So the banks will put their rates up and everyone who wants to borrow to buy machinery or houses will have to pay more. In fact not only will they pay more in interest but they will pay more for any imported production machinery or goods or petrol because the exchange rate will have gone down. Everything imported will go up in price, so we will all be poorer for that. And poorer for the higher mortgage rates we will be paying. Very poor. And locally produced products will go up because of increased transport costs. Even poorer.
But then on the plus side we will be getting more for our exports, in $NZ terms, so that should help reduce the poverty. But only if it trickles down to us workers. It will take a while for wages to start to climb to catch up with inflation, so we will all be going backwards financially in real terms until some kind of catchup occurs because we are all whining about the extra cost of living. This is the result of that well-known fact that in an inflationary economy it is those that are first in line to get their hands on the newly printed money that are the ones who benefit. It takes a while for the market as a whole to react to the drop in real value of the dollar, and wage rises are at the end of the line. Government and banks are first. By the time our wages increase, everything we buy will have gone up higher, and we will move into higher tax brackets, so we will be falling behind in purchasing power.
Of course, our wise government will spend on goods and services using the money it has created, so that will create demand for a while. It will spend on employing more government servants which will even help drive up wages. But that will soon evaporate unless it keeps printing and spending. But if it keeps printing the inflation rate will get higher, the interest rates will get higher, the inflationary spiral will continue...
At this point I have lost my way. It has all got a bit too complicated and I cannot see the great benefit of all that money printing. Can anybody point to a time when money printing gave a clearly identifiable net benefit?

"But what can NZ do about that?  Any country that embarks upon printing money has to think through the ramifications of that," Key said.
 
Seems to me that almost every other country have thought about it and decided to go ahead - why are we different? Is JK so clever that he is the only person in the world that knows a secret?
 
The other comment that bothers me is when he says printing may not bring the $ down - but equally it may bring it down, or at least stop it rising forever.
 
JK is obviously concerned about his legacy after he is gone - but he could be remembered as the man that sat around and did nothing while we sunk.

"Printing money wouldn't necessarily see a devaluation of our exchange rate," he said.
Please note this softening from the equivalent of
"Not over my dead body"

JK should follow Japan , print more money , cancel SOE Sales .
1) The NZ$  will depreciate !
2) Exports will increase  !
But he will not , because he"s  MONEY will be worth less, and his  net worth will be less  in International terms ?

If you are going to print money, do not follow the current model and give it to the bankers so that they can lend it to the masses, we are already debt slaves.

The money printed should go straight to the masses to pay down their obligations to the bankers.

Its a crazy system in the US etc at the moment where they print it give it to the banks so they can lend it to the punters who are already over burdened with debt.  The economy doesn't win, the punters dont win, the only winners are the bwankers.
 
 

Amazingly smart interest.co. readers and dumb government! How can Key not understand that borrowing overseas drives the dollar up so printing money takes that driver out of the equation allowing the dollar to go down. Printing money is no more inflationary than borrowing..... the same amount of money is funnelled into the economy, but with no interest costs. Printing money is the only sensible approach to funding the Christchurch rebuild. However, lowering the dollar hurts the overseas corporations that own much of New Zealand when they take their profits offshore.  Holding the NZ dollar high is just another in a long line of government actions to benefit overseas corporations at the expense of the New Zealand taxpayer and future generations.