Days to the General Election: 21
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Both major parties make pitches as responsible economic managers - Robertson stresses 'consistency, continuity and balance', Collins shuns MMT and wealth taxes

Both major parties make pitches as responsible economic managers - Robertson stresses 'consistency, continuity and balance', Collins shuns MMT and wealth taxes
Judith Collins

The second start to the election campaign period has been predictable on the economics front.

National is painting Labour as a reckless manager of the country’s finances, while Labour is going all out to dispel this image.  

National Leader Judith Collins, during a speech to the Canterbury Employers’ Chamber of Commerce on Friday, came out stressing National would repay the “significant” amount of debt taken out by the Coalition Government.

Finance Minister Grant Robertson has of course never indicated this debt would be written off.

He last month told interest.co.nz, Modern Monetary Theory was "not something" he was "looking to take up".

But Collins merely raising the issue was a subtle nod to the possibility of Labour taking an unconventional approach towards money management.

“There’s this theory of Modern Monetary Theory, which I think is just fabulous,” Collins said sarcastically.

“It’s a great thing that Bernie Sanders in the US likes, and it works really well. What you do is, you borrow money from yourself basically - from one arm of government to the other - and then you just write it off. It’s great eh?

“I’m really looking forward to telling my bank about that. We could have that too. But we’re not silly, are we? We know that that does have to be [repaid]. That’s one of the new theories…

“What is really important to us is that we do pay our bills. No New Zealand Government has got close to not paying international debt since the first Labour Government of Michael Joseph Savage.”

National’s Finance spokesperson, Paul Goldsmith, last week asked Robertson in the House whether he would “rule out” writing off government debt.

Goldsmith was chuffed it took a bit of pressing for Robertson to categorically rule this out. Robertson’s initial response was that it was not his “intention”.

Meanwhile Robertson, in a speech delivered to the Employers and Manufacturers Association this week, pitched himself conservatively, championing the catchphrase, “consistency, continuity and balance”.

He emphasised his “careful management of the books”, “keeping debt under control and investing in public services, infrastructure and people”.

He also took a swing at National, saying the interests of business people were at risk if they let a “disorganised National Party take the reins of the economy”.

“It is only a Labour-led Government that can give that at the moment and provide the maximum certainty possible in a highly uncertain world.”

Robertson’s speech notes made no mention of Modern Monetary Theory, or even tax for that matter.

Meanwhile Collins, in her speech, said: “The National Party, unlike the other parties, can guarantee that we will not be putting in a wealth tax, we will not be putting in asset taxes, we will not charge you for dying.”

Labour is yet to release its tax policy. The Green Party is advocating for a wealth tax and two new top income tax brackets.

Collins reiterated her committed to repeal and replace the Resource Management Act, and invest in roads and water infrastructure.   

“The more regulations you put on people, the bigger the gap between rich and poor,” she said.

She also addressed the side-effects of low interest rates: “And what we’re seeing with the amount of borrowing now, with interest rates as they are, is asset prices are expected to grow, which means that that gap between rich and poor will grow as well. And so, people who don’t have assets that can grow in value would just be left behind.

“The worst thing we could ever do as a country, I think, is to encourage that.”

When interest.co.nz asked Collins to share her thoughts on low interest rates prompting asset price inflation during the week, her solution, as per the above, was changing planning rules to enable the building of more houses.  

Robertson has maintained the Reserve Bank's monetary policy is working well. 

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97 Comments

24
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" And so, people who don’t have assets that can grow in value would just be left behind.

“The worst thing we could ever do as a country, I think, is to encourage that" . Her eye brows were seen rising up to her hairline.

And so, people who don’t have assets that can grow in value would just be left behind.

This is confirmation that it's business as usual and bubble economics is the be all and end all. Preservation of the status quo.

Globally we’re not too far away from hyperinflation of asset prices, it’s not like they can hold back the tide. What they could do is channel the hot money into actually creating tangible things- housing & infrastructure. So far no good

That's one of National main policies is to disarm our money laundering rules so they become ineffective again. It was under Labour who had to enforce the Anti Money Laundering regulations to slow down the 'Hot Money' that massively bloated Auckland's housing market.

National are so corrupt I'm surprised they haven't been forcibly disbanded as a party, just look at them they always look smug and downright evil especially Judith.

Her smug look is irritating indeed.

Jacinda's smile is in the same boat for me.

Yes. Compare and contrast the carefully manicured stock images of Cindy that adorn the labour articles. Amazing what $50 mill will get you.

Your comment should be cut into strips, boiled and served with white sauce and leeks, a dash of salt and ground black pepper. That's about all it's good for

Hook so you're a Nats and Trump supporter = SUCKER Vote as Trump likes to call you! :)

So Chinky sounding names lists and claims of massive overseas hordes buying housing causing the house price inflation? That turned out to be only a couple of percent of the market, and was a Labour 'Truthiness" masterpiece that got treated as fact by an unquestioning media. One could call that level of inaccuracy corrupt too.....

I recall stats here on Interest showing that in one period investigated 49% of transactions on Auckland's north shore had no NZ citizen on at least one side of the transaction. Bit odd to be implying now that capital inflows from overseas have had no effect on NZ's housing market.

Frazz, you copy pasted half an idea.
you forgot the next sentence quote attached

“The worst thing we could ever do as a country, I think, is to encourage that.”

# how to start a hoax

16
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National has taken a stance that is easy to explain. No tax cuts, no tax increases. Labour should have revealed their tax “intentions” by now though. Well and truly. NZ is in a crisis, not on our own nor of our making, and the people have every right to know what lies in store and how it will affect them. Sufficient time must be given to allow evaluation and selection of the option(s) as they will be relative.

15
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National haven't announced their tax policy either.

20
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I find it amazing that 12 days away from the original election date we still don't have any substantive policy releases from either major party. What are they waiting for?? Seems to me each party's policies must therefore be so debatable as to the effectiveness of them, neither wants any in-depth critique done. Talk about "emperor's new clothes" syndrome!!

Aye. Recall a column here by Jenee some months ago, not long after the ill fated Mr Muller had arrived on the scene, that he needed then to get some substance on the table and fast. From a voter’s point of view though, not much substance has since emerged from any direction.

My feeling is the Nats don't want to rock the boat, and are hoping that Labour will stuff up some more. That's clearly deficient thinking.
My bet is that they will come out with a few more bribes, that won't be highly meaningful but might nudge a few people in their direction.
Unfortunately for them, given they are a 'tax reduction' oriented party they won't be able to do much in that space, because of our fiscal position.

I agree. Why don't Labour just come out and say how much they are going to tax us extra?? Or give the business community and individuals some certainty that there will be no new taxes. I don't think we will know what we will be voting for. As they (labour) are so far ahead on the polls, there is a bit of arrogance about voters will be only on a need to know basis.

Yes to your last sentence. They are incumbents, in a strong position, so they really don't need to do much (from their strategy perspective).
There is greater onus on the opposition, but they are conservatives and won't be radical enough to come up with a compelling policy package.

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The media need to be asking National where the money will be coming from, because if they aren't going to raise taxes, they will have to cut something. Labour has been reluctant to increase spending enough to repair National's past underfunding, so anything National made cuts to would compound the damage. I'm fairly certain National believe they have a snowball's chance in hell of gaining power though, so the main purpose of anything they announce now is merely to undermine Labour. Labour was in a similar place in 2017, and I'm fairly certain that they never expected to have to implement Kiwibuild.

Yes and like a lot of their policies, just hot air that sounds good. National did not under fund, the country did not have the financial means to implement
the upgrading without substantial tax increases. Yes they could have just printed money like the Coalition has done. But it will have to be paid back or written off take your choice.

Labour seems to have become very much like National IMO these days with it's policies around tax. They seem to just be different shades of grey. The area that needs and could sustain more tax being paid, is around housing, and to also to prevent the asset bubbles occurring. But that is politically not going to be popular, especially as many politicians also own multiple houses. Plus the reserve bank wants houe prices to keep increasing, and it makes NZrs feel like they are getting richers.

It's been that way for 20 odd years. Basically you are just voting for a colour and some populist idiots if you are voting for almost every major party/candidate. None of them actually want to make NZ a better place, they just want to push the boat out a little bit more so they can retain power in 3 years.

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"When interest.co.nz asked Collins to share her thoughts on low interest rates prompting asset price inflation during the week, her solution, as per the above, was changing planning rules to enable the building of more houses. "

This is fairyland stuff, divorced from reality. The answer to low interest rates pushing up house prices is to build more houses. WYF? An unelectable intelligence, either dumb or ignorant of the mechanics of the problem. The current lot aren't any better.

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Robertson says 'disorganised National Party'... Labour isn't any better IMO.

Problem is, at least for younger generations, National only offers a worse lot. Especially given their talk in recent months of encouraging foreign buying of land again. Young people would be voting for a party that would make things actively worse for them.

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National is a total broken record on 'planning rules'. They just have nothing to offer, and Labour are not really any better.
The two main parties are not equipped to address the new realities.

The two main parties are not equipped to address the new realities.

I agree. What has happened and is happening is basically being wiped out like in a war. The only difference being that the existing infrastructure hasn't been badly damaged. Look how Germany and Japan took control of their own destinies after WWII. And look at S'pore after they broke the shackles of colonialism. And even Vietnam now.

The biggest difference between these countries and NZ is that the former all had / have long-term plans for economic development. What is NZ's plan for economic development? Does it exist? Has it been delivered to the public? If it exists, where can we access it?

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The big difference between those countries and NZ is they are/were heavily industrialised and had large internal markets to support them in the initial stages. NZ is totally reliant on primary produce now, having sold off the last few large manufacturers. If NZ is to expand it needs a govt that can pick an innovative industry and support it with r&d subsidies,proactive labour laws, and then with export help. NZ's internal market is too small for a viable new industry to exist profitably. An example would be the strong wool industry - mandate the use of wool insulation in all new builds, invest in the production of keratin extracts, mandate the use of wool carpets in all govt buildings and progress that to all new social housing builds. Labour has a chance to make a real difference next term unencumbered by "clingons" hopefully they use it to build more than cycle tracks

The big difference between those countries and NZ is they are/were heavily industrialised and had large internal markets to support them in the initial stages

OK. Japan, Germany, S'pore, Vietnam have some advantages over NZ.

Your example of a wool industry is interesting. Unfortunately wool prices have collapsed for the time being. But unfortunately, being largely a primary producer is an issue. And we can see that NZ has largely failed at building manufactured brands from dairy.

"And we can see that NZ has largely failed at building manufactured brands from dairy." Not really, Synlait produces lactoferrin ( a very high value ingredient), A2 Milk is a success, Anchor and Anmum from Fonterra are also very successful. You need to remember our biggest dairy company was set up to process large volumes of milk quickly. The constraints of DIRA prevented Fonterra, in a large degree, from producing nutraceuticals which is where the money is

JC: Look how Germany and Japan took control of their own destinies after WWII

Try and ignore ignorant comments but WTF

The Marshall Plan? Douglas MacArthur? Didn’t contribute anything?

Try and ignore ignorant comments but WTF

Both Japan and Germany renounced aggression at the end of WWII and crafted long-term economic plans. You want to challenge that in any way?

So what are we going to do as a country, sit on our hands and moan about it. Or tell the Politicians to get their act together, or they will be burned at the Stake.

Even though I despise the woman she’s not dumb....”we have to build more houses” was the same rubbish JK said ad nauseam without addressing any of the demand side of the equation. She’s just following the same National playbook.

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Exactly, ignoring demand side. And ignoring monetary policy that is key to fueling the whole ponzi.

So what do either of you two suggest should be done about the "demand side"? it'd be interesting to hear some solutions suggested.

Introduce DTIs for both owner occupiers and investors, only allow home owners to use equity in home for new business creation/expansion (doesn’t include residential property investment) reintroduce LVRs, capital gains tax on all property and land tax on all vacant property, tighten FBB loopholes and remove all housing grants. I’m sure people can add more to the list.

You do realise pretty much most of those ideas will hurt the people (FHBs) equally as much as the ones I assume you're trying to target (investors & FBs)? The only way to short the housing market is to oversupply it, restricting and regulating merely delays and extends the problem. Removing the restrictions, or coercing Councils to free up more build space. Removing the significant delays (due to planning rules and the RMA) and requiring Council to reduce or dispense with the "development contribution", requiring them to provide the infrastructure to enable development would all help, imo. Also strongly advising Councils the country over to stick to their core business would be good

16
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How about not adding 50,000 people a year unless there’s the housing to accomodate them?

Yeah, that would probably have an impact, of course NZrs would also have to accept other countries closing their immigration to us, how do you reckon that'll go with roughly 1 million NZrs currently living and working overseas? For every action there is a reaction - especially in global affairs

Proof of that claim?

Countries make their immigration policy independently and NZ is currently running twice the OECD norm. We've a long way to reduce before any imbalance might cause changes of rules overseas - if there's any reason to assume such changes in the first place.

In the short term introducing DTIs and LVRs and removing grants will of course affect first home buyers but not doing so allows for more and more debt chasing a limited number of houses thus leading to unsustainable price increases. Prices at the lower end of the price spectrum in particular will come down when these demand measures are combined with supply measures which will obviously benefit FHBs.

Hook. We could adopt a set population policy. That would cut demand. Not difficult.
We already have a natural stable population, it could even be drifting down already. The increase we see only comes from immigration.
New Zealand would be afar better place with two million population

Plenty of things:
- significantly reduce immigration levels
- introduce a CGT
- introduce stamp duty
- reduce income tax
- govt building housing which FHBs can afford (will reduce speculator demand because there would be less demand for renting)
- Change the framework for the RBNZ

Cgt is a stupid idea and ineffective. As is stamp duty. Just do a land value tax and reduce income taxes to rebalance tax from incomes to income and capital.

I would prefer a land value tax, but realistically it seems even less politically tenable than CGT.

This is correct. There will never again be central government LVT in NZ. On the other hand, we already have land CGT in NZ - in the future the way it is enforced may change by extending the bright-line test.

Importantly, a logical argument can be made for CGT. The same cannot be said for LVT.

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Reserve banks have created a QE monster which is beyond their control and in trying to control the damage are doing more harm to econony than good.

Most reserve banks have lost the plot and are doing only thing that they can do is print more and more money. In US QE2 was bigger than QE1 and QE3 bigger than QE2 and now QE4 bigger than conbined QE1, QE2, QE3 and still does not end here as will be another QE but for how long.

Resserve bank cannot be blamed totaly as now they do not have or know of anything else that they can do except print money as interest rates are alrwady very low and going down further will nit be as meaningful as last time in 2008.

In USA fed is nit targetting inflation but niw targeting Stock market but for how long.

Coronavirus has given excuse for government to print money and no politican will miss this opportunity.

Just like low interest rate now even QE will be in economy for long time as the fear of recession / downturn was so strong as to avoid have ventured into one way street for now with no turning back.

Going by that track record it sounds like the "medicine" may actually be the poison.

Even medecine/antibiotics in excess are poison / harmfull.

Robertson has maintained the Reserve Bank's monetary policy is working well.
Assistant Governor Hawkesby told Bloomberg that the RBNZ was thinking the same way as the Fed and would likely embrace a period of inflation above 2%. - source
It must be time to discuss:

Meanwhile Chief Powell blatantly fails to reveal that the biggest beneficiary of his reformed inflation target will be big government, for whom his institution is now a mammoth tax collector, with emphasis at first on monetary repression tax, and later on inflation tax.Link

This is the phenomenon we study. Financial repression (FR) is defined in Box 1, while Table 1 describes a selection of policies that defined the FR era in the United States but are representative for other countries, advanced and emerging alike. There is considerable cross country variation in the extent of financial repression and the magnitude of the financial repression tax. When controlled nominal interest rates coupled with inflation produce negative real interest rates, it liquidates (reduces) the stock of outstanding debt; we refer to this as the liquidation effect. However, even in years when real interest rates are positive, to the extent that these are kept lower than they otherwise would be via interest rate ceilings, large scale official intervention, or other regulations and policies, there is a saving in interest expense to the government. These savings are sometimes referred to as the financial repression tax. Link

A sovereign can inflate away debt if the average interest rate on the debt falls below the growth in nominal GDP. (It doesn’t matter whether it’s volume growth or inflation driving GDP.) It's called covert default. Link

God grief. I thought it obvious that this is the election for National to lose but with a strong core of good M.Ps. Then Labour, governing alone, dig some deep holes for themselves, have a few wheels fall off their trolley, find it impossible to show how to pay back our debt, and lose the next election rather heavily. Auntie Judith can just chip away for 3 years and have a great old time, and then cruise in. Sounds like a good plan. Will be awfully entertaining to witness. The bets are already being placed on when Cindy will be off to UN, or WHO, or UNICEF, or to wherever her Auntie Helen has organised for her.

Yes if I was National I would be in no rush to get in this election just sit back and let Labour try and get out of the mess they created.

I wonder if that's ever a real view that is held by a political party in the position National is in? I don't think they are strategic and long termist enough to think that way.
They should be working towards an up and comer taking over from Collins in a year. Give her a year to continue as the rottweiler.
I pick Luxon to be in the role within 1- 2 years.

We haven't seen much of the rottweiler - more of a confused spaniel.

I hazard a guess from the timing of her releasing her book that she was all set to retire from politics but the chance to grasp power tempted her to stay. But the same also caused her to be a little unprepared.

Ha a plot, but not an outrageous one. Expect for the first time in a long time we are going to witness a Leader of the Opposition capable of putting the government‘s feet to the fire. That is what the Westminster adversarial concept requires. Key’s government was allowed far too much rope and up until now the opposition to this government has been too, ineffectual. So we have in Ms Collins all the aspects of the able jurist going on barrister, and the ability to turn words into body blows. Yes might as well be entertaining, to say the least.

You think National will keep a loser in place as leader? That's not what they've done in the past.

Judith has very low levels of support in her own party. Can’t see her being allowed to stay on once she loses. Too much real business talent coming through with Luxon, Bezzant and I’m sure Mark Mitchell and Ximon will be in the mix

You said "business talent". Other than Luxon there's none in that list

Luxon is primarily a salesman. Do we need a salesman in charge?

Historically correct. Marshall, Muldoon himself, & then early runners such as McLay & Bridges & incumbent ex PM, Shipley. Strategically it would have been better though for Ms Collins to step in after the election which say Muller would have certainly lost. Similar timing to Muldoon over Marshall. Expect that assurances of loyalty will have had to be given in order for her to take on the role earlier than she would want. You need to remember, similarly but on the other side interestingly, that Mike Moore who too came in at the eleventh hour completed the next entire term as leader. Did very well too at the next election, didn’t stop the knifing afterwards though.

If the Nats don't win nobody will blame Judith. Losing was probable before she came along. So likely she will stay

Sounds like a good solid plan Sit23

I know that we should ignore personalities and concentrate only on the policies that the parties put forward. But, as others here have observed, the major parties haven't put up any substantive policies on the big economic issues, so we are stuck with our gut feelings, our inbuilt biases and trust. On that, I don't trust Collins and from what I see, I really don't like her. I just don't want her as our PM.

Yes I agree with you and feel the same about Jacinda. Really dislike her and absolutely don't trust her.

Maybe you should be thankfull for what you have there in NZ...You have trust issues...try living in the States where the head of the administration is a chronic and habitual liar with one of the most despicable. corrupt and inept characters in the history of their country. ( Sorry, couldnt get myself to say 'leader')

Increasing taxes during a recession is the dumbest thing they could do, if anything they should cut taxes temporarily, and increase them higher than current rates in about 3-4 years. There's no point having low taxes long term if it means you have less money overall, you only need tax reductions to stimulate economic activity, raise them when the economy recovers, and you would have higher net income. Would you rather make 1 million taxed at 33%, or 1.5 million taxed at 45%?

We have a graduated tax system so you don't pay the top tax rate on all of your income

How about cut GST on all new housing to 5% for 2 years. That would make it much more achievable for developers to stay within the 650k price ceiling for 3 bedroom dwellings in Auckland for Kiwibuild. If it significantly boosted housing construction the loss in tax revenue may not be that great.

What National would do for a John Key return. Judith is passed it- should step down and let the next generation of National lead.

Not so sure, many people realized how destructive his government was only once he left and allowed Labour to deal with the underfunded mess.

I don't think the National party or most of its supporters would care about that damage though...

MMT is the Homeopathy of economics.

It would be a great tool to push the average NZ house up to $50M, because there will be no trust in the NZ dollar. A $20 note will better used as toilet paper than legal tender. Banana republic stuff.

Collins described it perfectly. It’s something a toddler would think up.

The NZ monetary system already operates just as MMT describes. You should try studying it before critisising.I suppose that you are quite comfortable with the banks creating all of the money that they lend though. Every dollar that is lent to buy houses is created by the banks, it has nothing to do with the money that the government creates for its own spending. Taxation takes care of most of that and try saving bank created money, we can only save the money that the government creates. The Bank Of England explains here.
https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creatio...

You think we are currently operating according to the principles of MMT? Sounds like you are the one that hasn’t researched it if you believe that.

We currently use banks as an intermediary for government debt. RBNZ is buying up to $100bn of bonds in the secondary market, an open market operation that encourages banks to lend more money and at a cheaper rate.

Under MMT, RBNZ would instead purchase debt from Treasury and just write it off. Free rein with an open cheque book - no concern for the debt incurred. This isn’t a responsible way to go about it for the sake of long-term trust in the NZD.

We currently balance the books and care about debt even though government can just print its own money. Under MMT, debt wouldn’t be a consideration, and instead inflation would be the driver. This simply isn’t how the system works currently and you are incorrect to say that the NZ “system already operates just as MMT describes”.

Every dollar that the government spends is a new dollar. Government spending creates reserves in the banking system and all that borrowing does is lower those reserves again. QE is the reversal of that operation where the reserves are returned to the banks. Banks do not lend their reserves except to another bank if it is short of reserves for its exchange settlement account and banks cannot create their own reserves, only government can do that. This is the means by which the reserve bank maintains its interest rate settings. Economist Bill Mitchell explains here why governments borrow.
Part one. http://bilbo.economicoutlook.net/blog/?p=45106
Part two. http://bilbo.economicoutlook.net/blog/?p=45108

And we aren’t currently operating according to the principles of MMT. No debt being written off. Government still balancing the books in a conventional sense instead of just ignoring debt levels and focusing on inflationary effects of its spending.

If you think that we are currently operating under MMT then all the MMT advocates should be happy for us to continue down the current path. But we aren’t operating under MMT.

What is government debt and what does it represent? As sectoral balances tell us, a government deficit equals a private sector surplus, they create the money that we can hold as our savings, that really is all that government debt is. As Bill Mitchell has said budget surpluses destroy private sector wealth. Who holds those savings though is a different debate. Some further explanation here.
https://gimms.org.uk/fact-sheets/sectoral-balances/
https://www.economicsjunkie.com/sectoral-balances-and-private-saving/

What do you think the difference between today’s QE programme and MMT is? Your initial statement (“The NZ monetary system already operates just as MMT describes“) suggests you think they are the same thing.

At the risk of sounding like a broken record - we are currently operating under the conventional QE model, not MMT. RBNZ is not buying Treasury bonds and then writing off the debt. Government is not operating with an open cheque book without any concern for balancing its books and paying off debt.

Its all just semantics as the RBNZ and the treasury are both part of the government, it's just the left pocked owing money to the right pocket. The money has been returned to the banking system and bond holders and so in effect the debt no longer exists. Only taxation though can extinguish the money that the government creates. What has happened in Britain and other countries is that austerity has been inflicted on the poor through budget cuts to try to reduce the governments debt that was created in bailing out the financial sector.

We’re talking past each other here, but the difference between writing off government debt or not is much more than “just semantics”. I assure you, our current monetary policy does not “operate just as MMT describes“. For starters, we fund government spending through issuance of bonds and tax, not direct injections to Treasury that are written off. These things are different.

There are fundamental differences between MMT and conventional monetary theory that have huge implications in terms how the currency is perceived internationally (banana republic currency), role and rates of taxation, how govt spending is funded, relationship between monetary and fiscal policy, interest rate implications, how inflation is controlled.

No taxation and borrowing do not finance the government, all spending is made by issuing new currency in just the same manner as it is done by all countries with sovereign currencies. Economist Steven Hail has told us this on this very site.
https://www.interest.co.nz/news/106341/steven-hail

You are ignoring an important step, being the banks as an intermediary. It is RBNZ that issues currency. Treasury (what I was referring to by “government”) is funded by selling bonds (banks and other lenders are an intermediary between RBNZ and Treasury) and tax. Importantly, government needs to balance the books by paying the debt back. This is a future hand brake on money in the system.

The status quo is different to the MMT approach. MMT would see government/Treasury funded directly by RBNZ with the debt written off, instead of by bonds and tax as it is today. Tax would be used primarily to take money out of the system to control inflation, not primarily to “fund government”, and government/Treasury would stop selling bonds to banks and other private lenders to make up the remainder of its funding.

The RBNZ is the government, it is not a separate entity. Did you listen to Steven Hail? I cannot really add any more than that to the conversation.

Now this really is semantics, but for the purposes of monetary policy RBNZ is a separate and independent entity from Government, even though RBNZ is entirely owned by Government. See below diagram from RBNZ website, with Government and RBNZ represented separately.

https://www.rbnz.govt.nz/-/media/ReserveBank/Images/Diagrams/covid-19/Ca...

I did listen to Steven Hail. I don't disagree with much that he said, other than that MMT is a good idea. If you put your original assertion to Steven, he will unequivocally confirm that the NZ monetary system does not "already operate just as MMT describes".

Yes parliament has given an undertaking not to interfere with the operation of the bank and it has given it directives to control inflation and unemployment. The banks purpose is also to create money for the treasury as required and on demand and to finance spending. Treasury advises the government and parliament then authorises the spending. The RB is in charge of monetary policy, setting interest rates and so forth but fiscal policy is set by parliament with an annual budget.

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Just another reason not to vote National, its leader doesn't even know where money comes from. She must think that NZ Dollars are manufactured in China much like everything else these days.Why do we even need a central bank in that case.

Maybe she can swing some business her husbands way again...kauri logs (sorry coffee tables) ..milled into kiwi bank notes. The Kauri dollar and give straight to the 1% who will trickle it down to the pour.. promise.

Maybe she realizes that politicians who believe money printing is a free lunch, will behave like kids let loose in a Lollie shop, if they are given control of the "printing presses."

When u strip all the semantics and funny logic. ( eg Govt spends before it taxes ..etc ) out of the MMT story, it is essentially a story about Money printing. ( the only modern thing about it is that it is electronic money creation ).

The idea that every dollar that Govt spends is a New dollar , is an example of the use of semantics and cloudy logic. ( one can argue that every electronic dollar is newly created and destroyed in the process of transaction ).
just my view..

Neither party are addressing what is cascading over all out heads.

Both are attempting to kick the can further down the road, just to the benefit of a slightly different cohort.

And growth-requiring finance, as a regime, is on life-support. Doesn't matter what acronym you attach, it's gone.

Just out of curiosity PDK, what field are you employed in and how do you make your money? I'd be very interested to know.

Y

Days to the General Election: 21
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