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The Crown Settlement Account at the Reserve Bank, where the Government deposits surplus funds, reaches new highs as the COVID-19 crisis rages

The Crown Settlement Account at the Reserve Bank, where the Government deposits surplus funds, reaches new highs as the COVID-19 crisis rages

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Government to set aside $14 billion from Covid-19 fund in case of second wave.
Surely this policy statement accounts for the bulk of the Crown reserves sitting on account at the RBNZ

Why does our currency issuing government even need to store up money when it is the only source of our currency in the first place? Government spending creates new dollars and taxation deletes them again, there is no need for them to be stored up by the government when the Treasury and the RBNZ are both part of government anyway. It is the RBNZs job to create currency for the Treasury as required and on demand.

The Crown authorizes banks to monetise it's government bonds to finance deficit spending in the same manner banks monetise customer loans. A separation of duties.

The RBA sets out the reality here.

Banks play no part in financing the government. The government is a sovereign currency issuer. Bonds drain reserves from the banking system that the governments spending has created and they do not fund it.

Read the RBA's wording above - new government deposits are created out of thin air bank lending against new government IOUs.

We start with the idea of credit creation, specifically a swap of IOUs between a bank and myself involving a bank loan that is my IOU and a bank deposit that is the bank’s IOU. Nothing could be simpler, and yet the mind rebels, especially the well-trained economist’s mind, because this simple operation increases my purchasing power without decreasing anyone else’s. It seems like alchemy, or anyway a violation of some deep conservation law. Real productive resources are the same as they were before, and the swap doesn’t change that, does it? Spending of the new purchasing power adds another layer of perplexity. If spending increases but real resources do not, then it seems logical that the increased spending must exhaust itself in higher prices—that is the intuitive appeal of the quantity theory of money. My purchasing power may increase, but everyone else’s decreases because their money balances buy less. From this point of view, the alchemy of banking seems like a kind of theft, something to be deplored in the name of economic science and if possible outlawed in the name of the general good.Link

Yes banks create money for private borrowers but they don't do so for government. No central bank will acknowledge that they create money for government, it is a carefully guarded secret. We are all meant to believe that our government is financially constrained, it is part of the neo-liberal agenda, all deception and lies.

Stop the conspiratorial nonsense.
From the RBA above,

When the Australian Government borrows from the banking sector, it holds the borrowed funds as a deposit at the Reserve Bank until the funds are spent.

Economist Wynne Godley worked for the British Treasury and there is nothing in his accounting identity sectoral balances for borrowing in the government sector because borrowing by government doesn't change its balance sheet it only changes the form of its debt, bank reserves for bonds. Borrowing only occurs in the private sector in sectoral balances. QE is a reversal of operations where bonds are swapped back into reserves again.
Plenty of articles here by Bill Mitchell on central bank deception.

The RBA rests my case with it's August 2020 Statement on Monetary Policy.

Well no - money circulates so it isn't 'deleted' by taxation. This is one of many ways the monetary system can be grossly oversimplified (in this case through a MMT lens).

An easy to understand explanation here.
Beardsley Ruml director of the New York Federal Reserve Bank (1937–1947), and was its chairman from 1941 until 1946; had this to say in 1945, since the end of the gold standard, "Taxes for Revenue are Obsolete". The real purposes of taxes were: to "stabilize the purchasing power of the dollar", to "express public policy in the distribution of wealth and of income", "in subsidizing or in penalizing various industries and economic groups" and to "isolate and assess directly the costs of certain national benefits, such as highways and social security"

Days to the General Election: 21
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