If we want more economic growth of a permanent kind we need to have products and services to sell that the world wants, says Gareth Morgan. Printing money will undermine that. Your view?

If we want more economic growth of a permanent kind we need to have products and services to sell that the world wants, says Gareth Morgan. Printing money will undermine that. Your view?

By Gareth Morgan*

Printing money is silly.

The US and Europe are printing money to dig themselves out of a hole. Therefore we should do the same.

Wrong.

The difference between both of those giants and New Zealand is enormous.

Let’s take the easy one first. The US is the world’s reserve currency.

Despite best efforts by the Euro and prior to that the Japanese Yen, and that both in hindsight look laughable, the USD remains undisputed king of the reserves with very occasional but ephemeral competition from gold bars only. That gives the US policymakers an edge over every other policymaker on earth.

They can print money and there’ll still be a demand, people have to hold it for international transactions purposes. And contemporary co-conspirators of this monopoly are the Chinese and every other mercantilist regime that wishes to control its foreign trade by pegging its currency to the USD.

No matter how much money the US prints the Chinese and others will buy it in order to keep their currencies from appreciating against it. What a luxury for the US – it has financiers of infinite resort. While that lasts the US is different.

Now to Europe. As we all know the bloc is in the dock because it forgot to enforce fiscal unity upon its members when it embarked on monetary union in 1999. Instead, after the GFC the governments stepped in to take over the bad loans of their banking sector thus compounding the track record of fiscal imprudence they’d already established over the previous decade.

Junk bond status was accorded some members’ government bonds. Unable to pay the interest, and unwilling to enforce sufficient austerity and higher taxes, those members won their campaign to have the ECB “print” money by buying their crap bonds for euros, and lending directly to enfeebled banks that remain. This is all in the name of “saving the euro” and in the short term it has bought time. But that is all.

Until Spain and Italy can recapitalise their banks without adding to their already massive sovereign debt then economic growth and fiscal balance will be out of the question and the risk of significant further contraction of those economies is high. Their denial is being funded by Europe printing money but that is a stopgap only, their economies need capital inflows to stabilise, and that’s most unlikely given investors realise insufficient fundamental adjustment is being undertaken.

If we want more economic growth of a permanent kind we need to have products and services to sell that the world wants

So let’s come to a small and pretty irrelevant economy like ours. Say we unilaterally decide that economic growth just isn’t strong enough so we enter into the race to the bottom by printing NZD and lowering our exchange rate. Foreign creditors and potential investors look at our external debt ratios and simply see they’re of similar proportion to those of Spain, Ireland and Italy. Why would they line up for more? The only reason would be if they thought that by extending our debt we would enhance our ability to service it and pay it back.

Now look at what we did with the last dollop of external debt raising. Into property it went in the main, lifting NZ property prices to some of the highest in the world compared to income. And what are we all aware of again right now in our economy? Isn’t it that the property market is champing at that bit to get going again, the only thing holding it back is our banks can’t get access to easy offshore loans like they once could. Their masters require higher collateral on mortgages.

For us there is little to no credibility in a policy to achieve growth from printing money. It will simply lower our credit rating and raise our interest rates as creditors extract the required reward for largesse.

No, if we want more economic growth of a permanent kind we need to have products and services to sell that the world wants. Only that way will investment or loans from abroad be more forthcoming.

Every time this comes back to policies (tax and financial) that don’t discriminate in favour of housing speculation, and that do encourage capital inflows because we have rising sales of products to the world. Remember the commodity boom we had recently?

After 30 years of economic growth fixes being gerrymandered by politicians ordering up the printing presses, global investors with governments around the world owing them trillions, now recognise a sham, a scam, and an also-ran.

Economies with intelligent policy settings targeted to deliver better deals for the global customers of their firms will reap the most rewards over the next decade.

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Gareth Morgan is a businessman, economist, investment manager, motor cycle adventurer, public commentator and philanthropist. This opinion piece was first published on his new blog garethsworld.com and is reprinted here with permission.

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Garath, if we were to borrow money to fund the Chch recovery, would it not be preferable to borrow it off yourselves rather than offshore banks?

Exactly. Government or private banks, both are potentially inflationary. Banks more so because of the high interest. Also banks are pro-cyclical, amplifying booms and busts with their credit creation and their driving of the economy by determining where the credit flows eg Auckland property rather than infrastructure or social housing. Don't like the government - vote it out. Only self interested shareholders can vote out a bank's directors.

...  For a basic fella like me that sounds like a brillaint idea...  I'm off to the pub...I'm out of cash...never mind, I'll borow some off myslef!!   Wish I'd thought of that sooner.........cripes I'm stupid...

The phrase "borrow it off yourselves" hides the true nature of printing money, which is that it is a transfer of wealth to those who get first access to the new money.  It is also taxation by stealth, a dishonest way for governments to finance projects and an alternative to actually telling people "we're going to increase your taxes by X".

I am with you all the way on the inflation thing Kleefer, just being the devils advocate.  Thinking out loud here, it makes less sense borrowing new money off commercial banks at interest, than it does creating the equavilent by decree.  I have yet to hear a credible means to restrict the issuence of new money however.

" Perhaps the most cogent exposition of the Public Credit concept is a paper by Joseph Huber and James Robertson for the UK think tank New Economics Foundation. They don’t propose either the legislative or executive arms of government have the right to create non-cash money but rather the increase or decrease of the money supply is controlled by a non partisan panel, in New Zealand’s case at the Reserve Bank. An inflation target would remain but at any given time they determine how much money the economy needs to maintain this target.
 The government of the day gets to decide how the money is spent rather than loaned into circulation and would have to determine its spending priorities accordingly.
 Thus the Reserve Bank rather than relying on the indirect and often slow acting process of interest rate setting to influence the level of credit demand in the economy would instead have a more direct lever via government spending. Governments could still determine taxes but this Reserve Bank panel would adjust the level of additional funding to keep inflation in check. Because the Reserve Bank is creating money for the government to spend directly and it is not an interest bearing loan, the theory is more money can be put into circulation and/or taxes lower as the government does not have to worry about interest repayments"
 
http://unframednz.wordpress.com/2012/06/17/debt-jubilee-for-new-zealand/

some truth in what you say

If you expand credit, you expand the supply of NZD, that drops it’s price (which is what the protaganists want of course) but the reaction will be our interest rates rising higher than overseas as people move to protect their NZD exposure

But we have expanded credit and that hasn't seen the NZD$ fall. Fx rates have long lost the ability to re-price according to economic fundamentals, which essentially is the root of the problem.

Gareth - could their fears be allayed if we also supported the OCR approach with the supplement of ratio based tools to restrict private credit creation?
 
http://www.johnwalley.co.nz/193-imf_paper_on_macroprudential_i.aspx
 
Would we be having this discussion if we accepted the flaws in the 'vanilla' OCR approach and used such tools, specifically to restrain the root-cause of 'inflation', that is, non-tradeables inflation?
 
Cheers, Les.
www.changenz.co.nz
 

 
Thank you so much for putting time aside to reply to these comments Gareth.

I expect what some here are thinking is;  For projects like the Christchurch rebuild, were we would otherwise have to borrow new money into existence from commercial banks who issue it as interest bearing bank credit, why wouldn't we allow new money to be created and loaned out interest free by the state?
 
In the senerio were the state offers an interest free loan from money created by decree, once the loan is paid back it the money supply returns back to where it was.
 
When we allow banks to create new money through the issuance of bank credit, ultimately at some point further money must be bought into existence expanding the money supply to pay for the interest portion the banks demand.
 
 
So I do not get your logic that public credit money is inflationary and bank credit is not, when clearly the opposite is true?

"If we want more economic growth of a permanent kind we need to have products and services to sell that the world wants"
 
He's quite correct, and he's telling anyone capable of thought - that growth is a goner at some point. Why? Simply because those other folk have to trade products/services in a growing way, to pay for yours.
 
But he's wrong about the printing.
 
All 'money' starts out as 'printing'. Morgan is well aware that the planet can't underwrite growing demand (I've heard him saying so, although qualified, If I remember aright, with the phrase 'It's been said'. ) so the question is: What then?
 
The expectation has to be an overshoot - fiscal vs underwrite - , long-term debts needing repaid etc. Surely that will have the same effect - inflation via bidding-wars? This is about the ability to purchase bits of the planet, that's all wealth is. Less bits coupled with more people, demanding more per-head, equals lesser-valued dosh.
 
But you can't have economic growth of a permanent kind. Interesting, then, that 10-year caveat.........

in the trade we call it “socialising the debt” – aka screwing the taxpayer. They print money until at last they get inflation. That erodes the creditors’ loans  and the debtors go free. The world would love some inflation right now so the creditors will take more of the pain the indebted are feeling. Problem is they can’t get inflation. Because you and I know that printing money will lead to inflation eventually so we demand more on our loans now, before the inflation emerges. In the 1930’s Keynes gave up printing money and the government actually went out there and employed people on the roads etc. Then eventally they got the inflation they’d all coverted.

More products and services agree, that requires a competitive exchange rate - how do we do that again?
www.johnwalley.co.nz

More products and services agreed, that requires a competitive exchange rate - how do we do that again?

www.johnwalley.co.nz

You are right,John.
Gareth falls into the same trap as all of the others.
1. He is prepared to criticize the idea. That is fine if his argument stands up.
2. Not prepared to offer even a glimpse of a solution of his own to get those new products or more of the old ones.
I still await just one idea from the status-quo crazies that will help us dig NZ out of its mire of debt.

Gareth has been an orthodox economist for decades and although his tax and welfare ideas are slighty unorthodox the rest of his economic beliefs are very conventional. Tinkering at the edges.... Be interested to know if he has read Minsky, Keen or Hudson

Let's not kid ourselves; the adjustment now required to get our current account out of the red is massive. That's why the PTB don't even want to discuss it. We've had forty years of it. The result of an indulgent, services dominated, welfare addicted, low saving, speculative and inwards looking economy all serviced with foreign debt. I don't think many realize the seriousness of the situation but, in fairness to GM, he has put forward some worthwhile ideas to , at least try, and correct some of the imbalances -  "The Big Kahuna".
We have become so addicted to rising debt that, if we were to even reduce it's growth to equal gdp growth (stabilized in nominal terms), the economy would collapse and mass unemployment would result.
I recall Michael Cullen saying re the CA deficit "It doesn't matter till it does". True that, the only question; will it happen slowly - a grinding down of our living standards - or a sudden collapse followed by a desperate government printing money. Argentina anyone?  

Unfortunately there is a lot of mythology about globalisation and free trade, much of it derived from Ricardo's simplistic theory of comparative advantage producing the most beneficial outcomes for economies. NZ's only comparative advantage is agriculture because of a benign climate and hardy farmers. Even then there is the insurmountable issue of distance from markets and limits to the environments ability to sustain intensification. Yes there are some clever manufacturers with world class products but they still have to be price competitive (currency) not too threatening to other nations corporate interests (lobbying) and able to defend their intellectual property from duplication. The odds are heavily stacked against them so the success stories are truly amazing.
 
For all the talk about Knowledge Economy, Weta workshop etc foreigners will not readily pay a premium for anything of substance that NZ produces. It has to be cheaper or get tax breaks. Yet all the while imports flood in from countries that only pay lip service to free trade and money flows out to banks and other corporates who are allowed carte blance to buy assets here. How can you possibly get a balanced current account?

If the real (inflation adjusted) exchange falls then you’re worse off (lower global purchasing power). I haven’t noticed that for NZ.

Gareth - inflation is often decoupled from the export supply chain. House prices / rents etc may lift inflation, but the flow on effects to the cost of production for exports is small. In addition consider this from a dynamic, not a classic equilibrium persepctive. The fact that the exporter will made cash enough to encourage investment in higher-value process and products, results in higher incomes that negate the inflation effect - but mean capapability is maintained and built, not lost, which is what happens if we continue to take an aggregate view about real exchange rate.

read the Big Kahuna and then tell me I don’t have any ideas

I dont see why we need a more competitive exchange rate for more products and services.  If they have the margin because they are good or better than the competition all else being equal (ie within reason) the exchange rate doesnt matter.   Consider as BE says we already have the advantage of cheaper than most of the other developed world's labour.  The developing world's labour cost though is a fraction of ours so making the same goods as say china makes, makes no sense.
If you look at it from the other side, what we could have by having an artificially low rate is we keep un-competitive products and services going when they should really go out of business and move on to goods and services that are better.
regards
 
 

I dont see why we need a more competitive exchange rate for more products and services.  If they have the margin because they are good or better than the competition all else being equal (ie within reason) the exchange rate doesnt matter.   Consider as BE says we already have the advantage of cheaper than most of the other developed world's labour.  The developing world's labour cost though is a fraction of ours so making the same goods as say china makes, makes no sense.
If you look at it from the other side, what we could have by having an artificially low rate is we keep un-competitive products and services going when they should really go out of business and move on to goods and services that are better.
So someohow you have to determine a "natural" or fair exchange rate...printing to get it down is artificial and at best has a short term impact as other continue to print.
regards
 
 

J.L.Walley : Our pockets aren't deep enough to fend off foreigners wanting to buy the Kiwi dollar ( and in any case , demand for our dollar is a vote of confidence in our economy ! ) ......
 
..... which leads to the opposite side of the coin ; encouraging Kiwis to sell their own currency , to invest off-shore .....
 
The simplist solution would be to strip away the ludicrously complicated " fair dividend rate " tax on overseas investments .... and , quite the opposite of that tax , allow Kiiwis to invest in foreign jurisdictions under the same tax liability as if they were investing locally .......
 
..... this would open up the ASX to Kiwis , allowing them dividends tax-free , as they currently receive on the NZX  ....... and give them reason to look further than just at the Auckland housing market ...
 
Let's exact our revenge , buy purchasing Aussie companies , buying up Chinese noodle manufacturing plants , investing in Dutch cheese producers , adding California redwood forests into our portfolio , nip in and nab a Tokyo hotel or a CBD office block ... let's get " international " , and acquire good assets in foreign countries ...

demand for our dollar is a vote of confidence in our economy ! 
In the same way that Gummy's need to malign shout down every proposal by Labour and Green politicians is a vote of confidence in that policy.
 
 

I don't get it.  Gareth says this:
 
Foreign creditors and potential investors look at our external debt ratios and simply see they’re of similar proportion to those of Spain, Ireland and Italy. Why would they line up for more? The only reason would be if they thought that by extending our debt we would enhance our ability to service it and pay it back.
 
But Russel Norman says this:
 
By creating more money and using it to reduce the need for the government to borrow overseas and to buy overseas assets, the exchange rate would be lowered and our businesses would be better able to make a living.
 
So what is it?  Does the Green proposal reduce the need to borrow overseas - or does it extend our overseas debt as per what Gareth implies?
 
 

Im not aware we need to extend our debt so Im wondering why thats seen as an issue (Im missing something?)  I do think that if we print even if its for a "deserving project"  (there are lots of those, right?) its the thin end of the wedge and it will cost us more in interest.
RN is making the assumption the exchange rate would lower enough to offset the increase in interest, yet he shows no model or formulae to support that assumption. So really he is plain guessing IMHO.   Against his idea  foreign investors might exit or charge us far more...and if the rate doesnt drop it will have been pointless and probably damaging.
My problem or concern is RN is advocating a dangerious game that we dont know what all the rules are....or the land mines until we step on them.
Um, our external debt v spain's well for us its private debt, our govn is in little (relative debt) and in good shape. I suppose our Govn could have to step in and support the banks, that could cause us billions in loss....the tax payers who are not bankrupt anyway.
regards
 

correct. If you are relatively highly indebted as NZ is and you print money you are playing with fire. We are not Switzerland.

Kate, we have an entrenched balance of payments deficit and household spending is 60% of all spending. You expand credit as Russel advocates and the import bill will blow, withi the external debt and our foreign creditors will push our interest rates up. Unless of course Russel is going to decree who can and can’t borrow – remember Muldoon? I don’t think he’s saying that.

Good morning Gareth : If you have time , I'm sure that a few of us here would appreciate your opinion of Prof. Steve Keen's " Debt Jubilee " theory .
 
.... Thanks : Gummy

And Minsky who underpins a lot of what Keen believes. Gareth are you an orthodox economist who believes in rational markets and rational market participants who have full knowledge, that markets tend to equilibrium not instability and that banks are the best conduits for entering money into the economy via credit.
 
I bought and have read the Big Kahuna several times and like its innovation but feel if you still persist with the core of conventional neo-classical economics that your tax and welfare reforms will not have the full desired effect in transforming the economy.

Well said.
 

If our foreign creditors push our interest rates up - households won't borrow - those who are already highly leveraged will have to either make it (the borrowed capital) work for them, or re-think the type of asset class they have borrowed on (and as we know the highly leveraged households have most of their debt tied up in property).  So, isn't that the effect you are looking for - folks to invest in something other than property?
 
As you said here, Gareth:
 
Our issue is we have more folks wanting to spend more than they earn..
 
And the main reason we can do that is because credit is so freely available and so cheap (i.e. 30 months interest free and so on..).  If interest rates rise, then consumer spending (largely on imported goods .. i.e. electronics, whiteware, furniture, overseas holidays) will be curtailed.  So, household spending will go down - and again that's what you're looking for.
 
As for the import bill blowing out - well, if we spend the (interest free) printed money directly into the economy on the Chch re-build - it's money that is going to be spent anyway.  Much of the cost of the re-build will be labour and that's not an import.  So, I don't understand your argument there either. 
 
 
 

This is a good article Gareth however saying
 
"If we want more economic growth of a permanent kind we need to have products and services to sell that the world wants"
 
That's what they all say, but nobody has any idea who or what is going to do it.

Agree, there is no way of knowing what we should make, grow, sell, etc. So what do we do? We let 1000s of New Zealand companies try, we let 1000s of experiments in business loose to give it a go. If there is one single thing that I know in my heart New Zealanders are really god, at, maybe better than anyone else in the world at. It is giving it a go. Free markets and compeition will create our future, not planning, not efficiency. Free markets are not planned, they are only efficient at one simple thing- generating expirements- some will succeed , some wil fail- who ill do which is not knowable. So let New Zealanders loose to try. One aspect of this is to stop rent seekers ripping us off- using talk of efficiecy to efficiently rip us off through user charges, high rents, crazy phone bills and all the other ways they have of bluding off the work of others.

Mike, Don’t get too depressed. I know heaps of guys producing great products and selling them here and abroad. They’re very happy. Our issue is we have more folks wanting to spend more than they earn – so that makes our economy overall fragile and susceptible to shocks. For instance after the GCF credit dried up, and despite a major fall in interest rates nobody wants to borrow any more. Reason is their asset prices are no longer soaring to the heavens. They actually have to depend on the income from their day jobs, not the fruits from property speculation. So sad.

The thing is with printing is that the big boys like the US are going to be printing trillions for years to come, so its not a one off - therefore (assuming that printing would reduce the exchange rate) we would be comitting to print billions for years... not a race we want to win.
 
Better that NZ impose tariffs on the countries that print. The WTO will kick up a stink but we will just argue in court that by printing other countries are doing the same thing in essence and like exporting into australia NZ apples we can tie it up for years while we appeal and drag it out. Years pass by and NZ then attracts the overseas investment looking for a sane currency environment to invest in.... and we win the currency wars... the sane way - having not destroyed our currency in the process and attracted much of the world's savings to our shores...

Can you really see Key or any other PM standing up to the US in the WTO over QE? The US likes nothing better than making examples of small countries.
 
If the floating currency mechanism no longer works like its supposed to or is being manipulated by others, why persevere with it? Look for alternatives.

Actually I can. The US is keen on being our friends, given our influence across the Pacific and proximity to untapped resources - they don't want to wave goodbye to us. If we impose a tariff on chinese goods it makes it easier for them to do so too. They could even be supporting us as a test case - we take the risk and they see what happens... Can you really see the US not imposing tariffs on China eventually if they refuse to revalue their currency and the WTO falling apart anyway? Some congressmen are already talking about it. That would bring thousands of jobs back into the US (and stop thousands more leaving). Then tax off shore profits when they are made - not when they are brought back into the country - there is another trillion into the treasury - instantly. The reason they are not talking more about it is because unemployment isn't that serious in the US yet...
 
You can either float or fix - there isn't a third option... and fixing would be a disaster...

US won't do anything to China while its corporates are so involved there. They might impose trade restrictions after the jobs come back to the US but the jaw boning in Congress is just for show. At the moment Apple et al are not going to let their politicians crimp their profits.
 
US would sacrifice us in the blink of an eye if it was in their national interest. They are no better or worse than any other imperial power in history. They've been dining out on rose tinted good will here since WW2

I dont think the chnage even needs to start from the US government or corporates. It could just start from the consumers not buying chinese stuff. The Chinese have long been preparing for a war against the US.... (and the Pentagon knows this)... once that goes ahead... I can easily see consumers doing just that...

 NZ impose tariffs on the countries that print.
 
Nice idea.  Always in favour of mouse-that-roared proposals - and particularly appropriate that NZ does it given we've long been the lone voice of non-protectionist, non-interventionist free market regimes.
 
PLUS and here's the BIG bonus - that would be the end of the US (or the end of NZ) in the TPP.  Either way, we win.
 
 
 
 

Economist, Kate – protectionism and self reliance is what the DPRK practices. Go there some time.

GM - Actually I have been to Korea but just to the DMZ (my brother has gone over into DPRK).
 
Socialism is actually what they practice more - and protectionism is what all currency manipulators practice.... I think its a long stretch comparing NZ to DPRK.... Currency manipulation is just another form of protectionism that gets around the WTO... that's my point and its been going on for years.... Socialism is also what Spain and Greece practice (to a lesser degree)  - go there sometime.
 
At teh end of the day tariffs are a better idea that Russell Norman's print idea, and they can be specifically imposed not accross the board - (like a currency devaluation).

Currency manipulation is just another form of protectionism that gets around the WTO
 
Exactly - and the US criticised China (lol).
 

We already pay over the odds for imports that "we need" ie real productivity tools, software and products.  So a carte blanche import duty damages the economics of the above we need as well as the toys we'd like.  So really we'd need a luxury tax to deal with that more fairly...(oh god), even on a per country basis.....practically impossible and expensive to do....
 
regards

I've been trying to avoid entering this debate but here goes! 
Bankster basher:
My Monetary Dialysis proposal deals with the issue of controlling the money supply. On one hand, the government creates new fiat currency, whilst on the other, it restricts the issuance of new bank credit. 
Since the Greens made their proposal, which has plenty of holes in, I have seen no mention of the actual level of the money supply in the debate. This is the key issue (just as the current account deficit is the key issue in the currency debate).
It would take too long to list all the factually incorrect statements made but the idea that printing money will be inflationary is complete nonsense. It may well be inflationary in certain circumstances, but it depends on many factors, the main one being the size of the output gap in the economy. 
The PM noted that this "whacky" idea of increasing the money supply would be highly inflationary, like Zimbabwe and Germany. 
He must have missed the money supply doubling in the last 10 years :-)
It will be interesting when we start to debate the facts and then we can weigh properly the pros and cons, and possible consequences.
 
 

Entertaining post.
"PM suggested increasing the money supply like Zimbabwe and Germany  would be inflationary -- he must have missed the money supply doubling.. (stupid PM)."
 
Interesting fact - Germany DID actually increase money supply.
 
Interesting fact - Germany DID actually experience hyperinflation as a result.

Why mar a wonderful fantasy that the Red-Greens are conjuring  up , with the brutal reality of the consequences to their actions .....
 
.... stupid PM , raining on the Red-Green Show's parade with the truth ..... party pooper !

So banks create money and lend mostly on property, with interest which flows offshore good, government or RB create money with little or no interest that all gets spent in NZ on infrastructure bad

Ralph,
You neatly avoided the main point: Our money supply has doubled in 10 years. Has that caused hyperinflation? 

But the RBNZ would argue that inflation has been well contained since the inflation targeting was introduced.
So which is it? 
Supplementary question: Who has been responsible for that increase in the money supply?

Answer to supplementary question - the private sector banks - and they did very nicely thank you - taking the profit from the operations offshore.
 
It's all going swimmingly across the Tasman, that is.
 
 
 

If you want to class less packaging as inflation (which is strange, is it not the good itself you are buying after all) then you should also consider things like less energy use plus ease of use.  My new fridge is significantly more energy efficient than my old one and its a little bigger.
$2000 15 years ago would be (at 2%)  $2600 today...I paid $2100 and its stainless steel and not white, and its a bit bigger....and uses less energy...
Housing is in a ponzi scheme bubble, so trying to use that as a base for your inflation calc is a silly as using gold, its not a reference point. What will you say if BH's prediction eventuates and houses drop 30%?   Take holland as a case point for that, we will be going there btw.
Sure rates go up....and in fact my rates have over 15 years averaged 5%, that cannot continue.
Insurance is interesting, for the first 10 years the change was negligable, only since chch has the house insurance gone up 100%+.  Contents etc are still about the same...
Ive mentioned power tools, here is another one, I just bought a Bosch compound saw, reduced from a silly $1699 to $1245.
A TV, my top of the range 29inch CRT was $1200 15 years ago...that would be almost $1600 today. Of course a good replacement 32inch LED TV is <$700, effectively less than half the cost, not including less energy use and a better picture.  (rough guess $273 kwhs v 500kwh, saving about $50 a year)
So consider that over say 10 years....$500 saved in energy and $900 in first cost.
regards
PS that saw is $700US which at 0.8 is $875NZ so I still over-paid.

Raf.....
U talk about output gaps....U also mention the current acct deficit......And u mention how money supply doubling in 10yr has not resulted in hyperinflation.
I think the model u use to make ur conclusions does not take into acct the impact globalization has had.... particularly on how money supply growth manifests in an economy.
Sure .... nontradeble inflation is affected by the output gap... BUT... with anything imported if the money supply doubles, prices do not  necessarily go up....  rather the QUANTITY of goods imported goes up...    ( u can see how the CPI might not be the best proxy for measuring inflation).
The current acct deficit is impacted by the quantity of goods imported...
If u look outside of the CPI to see the effects of money supply growth.....  u can see the damage done to the farming sector...  ( high farm prices... very low yields).....House prices......  (high prices by most measures.)
Growth in the public sector ( eg,. rates, public sector salaries, user pay fees...  University fees....   Power prices....etc ..etc )
 The way I see the world ..... the doubling of money supply over the last few yrs has been VERY damaging to our economy..... AND ...the "death blow" has been the " wage rate arbitrage" of globalization....where Wages  have failed to keep up with real living costs because of the Global deflationary pressures of wage rates in countries like China.
By any Measure.... in real terms , wage rates have been declining since the 1970s'. SO....  even thou we have had no "hyperinflation"...  I would argue that the doubling of money supply has still been very detrimental. ... ( and this is even without taking into acct the subtle transfer of weath that happens with money supply growth )
If money supply growth has been averaging 6% over the last 20 yrs... and house prices have been averaging , say,... 5% over the last 20yrs....But wage growth has averaged ,say, less than 3%...   then after 20 yrs we start to have a BIG problem, simply based on the principles of exponential growth rates.
Very low interest rates have mitigated the pain..somewhat...  but the game goes on and it looks like NZ may go thru another credit based growth cycle ( thou weak.... like an overdosed drug addict..)  which will just put us in a more vulnerable position.
Because money supply growth manifests thru the Banking system (ie. banks create credit )...  it becomes a HUGE cost... ( ie. part of the current acct deficit is bank profits flowing back to parent companies.. This can be more than $4 billion in a good yr )
To summarize.... I think the doubling of money supply in the last  10 yrs has been destructive , even thou it has been mute in regards to the CPI. ( which in a Global world is a lousy way to measure the impact of money supply growth )
ALSO... the Deflationary tsunami that has been Globalization over the last 20 yrs is coming to an end....  YET.. policy makers will respond to the future as if it is "business as usual". (ie. CPI inflation is dead).... there is a saying that Generals are always fighting the last war.
If the world gets thru this debt deflationary/deleveraging phase ( and I think they will ) ...in my view Global inflation will become the " new enviroment"  ( particularly in food prices )
The fact that we are having this money printing debate at a political level.... kind of confirms it ..for me...
It would not surprise me if Labour wins the next election and changes monetary policy.
Just my view.
Cheers  Roelof
 

Hi Roelof,
Thanks for you comment, most of which I agree with. I posed those two conflicting questions to test out people's understanding of the situation. The conflict is between a doubling of the money supply, at a time when inflation is supposed to be under control.
So John Key's assertion that increasing the money supply causes hyperinflation is clearly false. But there is no doubt that it has been destructive, as more of our earnings have gone in to supporting inflated house prices, funded by new bank credit (THE BANKS PRINTED THE MONEY!!) and a serious claim on our future wealth. 
So an increase in the money supply that is diverted into purchasing financial assets can be somewhat disguised. It's clearly bad news and has created a very nasty problem aka the current account deficit. 
Printing new money (new fiat, new RB credit or new bank credit) and spending it directly into the real economy is not going to be inflationary, as long as it is in appropriate amounts 1-2% of GDP. 
The hysterical response is just that....but it's good that we are having the debate and over time this will start to come down to a proper discussion of the minute details and facts, which are often ignored at the political level. 
I think for NZ, if we don't get this sorted very quickly, then we are leaving ourselves open to a very nasty financial shock.

"The claims of hyperinflation awaiting the US or the UK [or NZ] seem hyperbole at best, misinformation and deception at worst.  Hyper-inflation has very specific pre-conditions in foreign currency obligations and a loss of tax revenue and productive resources. ‘Printing money’ alone doesn’t get you there. So, it simply isn’t credible to claim that Hyperinflation in the US or the UK is in the offing now or anytime in the immediate future."

Read more at http://www.nakedcapitalism.com/2010/05/mmt-fear-of-hyperinflation.html#b5VmEJg1FsC6aOhV.99

I will read that article...
I'd rephrase it....   U can't have hyperinflation WITHOUT Money Printing........
When it comes to economics nothing is black and white.....   cause and effect....   
I've heard the FED talk about ..."the unmooring of inflation".
What they mean by this .... is the psychological moment when everyone starts to lose confidence in the integrity and ability of Money to act as a store of value..... where peoples 'expectations create a self-reinforcing cycle, in regards to inflation.
 At that point things are "ripe" for money printing to result in hyperinflation....... but of course .Central Bankers would see all that coming ...and act wisely...    :)
 my point of view ... of course.
Cheers  Roelof

Ok, I look forward to your thoughts Roelof.  Just to reiterate though, printing money DOES NOT mean U have to have hyperinflation.
 
As for "the unmooring of inflation", that does seen a fearful prospect - with the kind of vanilla, lender friendly monetary regulation and policy most run today. However, if we used volume ratio based approaches to supplement price (OCR) based methods, might that improve confidence to allow us to restrain private money creation in preference to replacing such money volumes with public money creation?

I read the article PPT presentation les...
I agree... printing money does not have to result in hyperinflation... ( not to sure about that MMT stuff thou)
BUT...I would argue that the GFC was a result of excessive credit creation and all the distortions that come with that....AND
History might show the the GFC ranks up there with the Great Depression and the Weimer inflation..( well ..not quite).
If we doubled money supply again in the next 10 yrs the effects would be quite different than we had in the last 10 yrs.
The main point I'd make is that increasing money supply is a subtle transfer of wealth... whether by the private sector or the Govt.
In my view it is a large reason why most of the Western worlds wealth is concentrated in fewer and fewer hands.....
If I had it my way I would have full reserve Banking, where banks could only relend time  deposits and not demand deposits..
 http://en.wikipedia.org/wiki/Full-reserve_banking
Only the Govt./reserve bank could increase the money supply.
In my view... the only equitable and fair way to increase the money supply would be to create new money and give it equally to everyone ( like gareths big kahuna).
AND... that money creation and distribution would only be done in special circumstances.
( one of the biggest problems with money creation is that the benifits radiate outwards in a diminishing way....  Imagine u could counterfiet money and how u would benefit from creating money...and next would be the people u spent ur money with...etc..etc. The direct losers are the ones who used their money as a "store of wealth"  )
I would actually try to keep money supply constant....and as prices came down due to productivity gains... we would bring back the 5 cent piece... the 1 cent piece.... call it benign deflation.
In that world... no one would want long term debt...  and the "financialization" of the western world would be reversed.
maybe I'm dreaming...  :)
 
 
 

Roelef,
Dreaming is good. It's how all change starts :-)
Agree with everything you say above. 

Raf – yes output gaps matter, but all that is, is a timing issue. It took Keynes’ expansionism in the 1930s, almost 30 years to turn into entrenched inflation. Then it took 30 years to tame it. If investors and lenders perceive an inflation risk, they will price it in interest rates now, prolonging the output gap. High debt economies are far more sensitive to these factors than creditor nations.
Also Raf don’t forget the RBNZ claimed there was no inflation during one of the biggest property booms we’ve ever experienced. The RBNZ under Bollard has been an unmitigated disaster.

Go Gareth.  Talking sense.  A welcome relief from Bernard and the social credit lookalikes thinking that if you manipulate the system in mysterious ways you can get a good outcome - when we are not producing what we consume.
In the end, you (NZ) have to produce stuff that you need yourself, or that other people want.  You can't just paper shuffle it into existence.
I see this as a 'back to basics' discussion. Magic mirrors don't work.
Now down to work at producing stuff that people want.  Not so easy.  Will take us a while to work out of the hole.  No other way.

How about we look at producing the stuff we want?

Pfffft, how the hell is that suppost work scarfie, I mean how would we pay for it, the countries in debt remember, got no money, debts like having negative money you know, if only somebody in NZ knew how to manufacture money to pay off the debt, but alas the country has to rent itself out, thats the only possible answer....

Lol, then perhaps we might just have to settle for wanting less :-)

Earth to Scarfie, Gareth Morgan called, and he said stop slacking off and arguing with me and get back to working harder. Bloody hippie, green scroungers, don't bother trying to deny it.
 

couldn’t have put it better myself

OK, here's my list.
- a quadrupoodle-processor CPU chip (which needs a chip fab)
- oranges in June (which needs a northward latitudinal adjustment to the NI)
- a kangaroo pie (which needs - er- kangaroos)
- solar PV for $1/watt (which needs a whole bunch of rare-earths)
-  zero-carbon nuclear power (which needs, oh, never mind)
 
I'm sure we can Produce all these.......

My bad, I should have said needs. Try the basics first like shoes and other clothing.
 
However we may regret not having some of that sort of production should protectionism rear its ugly head, which I do expect sooner or later.

It’s all about productivity, innovation and cost cutting. Don’t pause for breath

The interesting thing with people touting innovation Gareth, well particularly the pollies, is that they are all talk and no do. I have an innovation that has a potential market of $120M in NZ alone and perhaps $10B world wide. In the last year I have spoken to IRL, Ministry for the enviroment(its a green invention), written to a green MP, spoken to my local MP and locked into the business forum he sponsors, met with ATEED and written to a councillor on a local board in Auckland. But because there are a few legal difficulties no one wants to know. I went to my MP in the hope that he would get on the case of the Ministry for the Environment to get a regulation change.
 
Nothing is happening so my latest thoughts are towards simply selling offshore for a fraction of its value. If I do this then New Zealand will get very little benefit.

Gareth - all those can be lumped in as 'efficiencies', in physics terms.
 
All will follow a track of diminishing returns (like Scarfie, I'm directly involved, my thing is energy efficiency - but I still know that my contribution will slow, then cease) and all will have been low-hanging-picked first.
 
Globally, exporting requires real wealth having been generated o/seas. They expect the same of us. It all comes back to energy being expended (work done) and a dinishing efficiency factor.
 
Which means that global growth was always stuffed at some - predictable - point.
 
I think you know that. The question is: what fiscal system fits non-growth? What happens, for instance, to 'investment'? (I'm talking 'on average globally' - clearly there will be winners-losers on the sinking platform).

Hey Gareth,

1) Do you still stand by your economists explanation of how new money is bought into existence below?

http://www.youtube.com/watch?v=_OHZr8j2ung&feature=player_embedded
 
 2) Is money creation produced sustainible?

 
3) Big fan of TBK, got a few of your books, a bit pissed when you stopped doing your weekly thing in the Dom.

regards. 

Money is a means of exchange to avoid direct barter
 
If private banks couldn't create electronic money in the form of interest bearing credit, where would the money come from to conduct transactions, remembering 95% plus of the "money" in bank accounts started life as a loan? Would companies and individuals create their own universally accepted forms of exchange. Unlikely. The government/RB would have to create and distribute enough money for the transactions to initiate and to continue to lubricate the system. It has to come into existence and start circulating from somewhere.
 
The question is are private banks or elected governments the preferred creators and administrators. Does it get spent or loaned into existence? As Raf said above, any government injection can be matched by a reduction in permissable bank lending.
 
Yes there have been instances of government created hyper inflation but these came about because of a set of political and economic circumstances where the massive printing was a symptom not cause of political and economic breakdown, in Germany's case being destitute and trying to make unpayable reparations.

What a silly article by Gareth. I would have expected better.
And contemporary co-conspirators of this monopoly are the Chinese and every other mercantilist regime that wishes to control its foreign trade by pegging its currency to the USD
Exactly the point; every other country is doing it, so we are losing to everyone. By definition he is saying that if we wish to be a mercantilist (or trading) country we have to get the currency right.
On Europe, Gareth doesn't get to the nub of the problem for most countries at all. e.g. Spain was perfectly fiscally prudent as was Ireland. They had huge private property bubbles. Now their currency is overvalued for them (but not for Germany) but they cannot do anything about it. He offers no solution for Europe. (Mine would be to break up the Euro zone, if they can't agree to underwriting the sovereign countries). he notes we are close to the debt levels of Spain, so by definitiion, he has no solution for us.
Foreign creditors and potential investors look at our external debt ratios and simply see they’re of similar proportion to those of Spain, Ireland and Italy. Why would they line up for more? The only reason would be if they thought that by extending our debt we would enhance our ability to service it and pay it back.
That sounds like a dig a deeper hole solution. We can't pay back our debts, so lets borrow more to pay the interest.
Foreign investors in real productive capability would welcome some certainty that their investment would not be knee capped by their costs being inflated by a 20% currency appreciation. 
 Isn’t it that the property market is champing at that bit to get going again, the only thing holding it back is our banks can’t get access to easy offshore loans like they once could. Their masters require higher collateral on mortgages.
Morgan seems to be championing another property bubble. In my view, we don't want total focus on property investment leading to a bubble. So don't let this foreign money in; or at least discourage it, and no property bubble. Encourage productive investment instead.
 
No, if we want more economic growth of a permanent kind we need to have products and services to sell that the world wants. Only that way will investment or loans from abroad be more forthcoming.
Gareth, we have no shortage of foreign money; we have too much of it' all here for the wrong useless purpose. Even Bollard has made that clear. I'm sure it's maybe occurred to our manufacturers and other industries to have products that the world wants. It's just a bit harder to deliver in a cut throat world than Gareth implies, especially if your cost base is structurally 20% higher than everyone else's.
 
 

"we need to have products and services to sell that the world wants"
The assumption being that we currently produce crap that people only want because we can provide it for cheap because our currency has been so low?
I think there would be thousands of businesses from 2-man operations to the likes of Rakon that would have a few 4 letter words to say to you about that.

you infer wrong I’m afraid. We don’t produce crap, but we do buy far more crap from abroad than revenue we generate from what we sell. Simple arithmetic.

Gareth : A second question ( or two ) if I may : What do you think of the " Fair Dividend Rate " tax on overseas investments , which Sir Michael Cullen introduced  ?
 
...... and if you were able to tweak it , or to scrap it entirely , what changes would like  you make ?

As to the question of inflation or hyper inflation and so on. About two and a half years ago i expresed my veiw on this site, and i havent changed my mind, which is.
If you look at supply and demand.
On the demand side we have the NZ dollar
On the supply side we have everything NZ has for sale plus everything our trading partners have to sell us
Therefore, nomatter how much money we have our trading partners will just keep supplying us more and more so we will never have enough NZ dollars to cause inflation. Because supply will ALWAYS outweigh demand.
What actually happens is the banks just keep lending us more and more until we are up to ouyr eyballs in debt. That is what has happenned to the Western world and we are all in recession until we can start the process all over again.

Mist42NZ - very good post and explanation. You just reminded/highlighted a very important point on why it is imperative to structure one's business in a certain way - Thanks. That last paragraph sums it all up.

mist42nz you completely misunderstand me.
the fact is, can you honestly see a situation in which everyone has money to spent but productive capacity can't keep up so we run out of supply? Well i can never see that happening. Only when a monopoly does it on purpose to push up the price (price gouging)

Good article Gareth, fully agree.   Printing money like the USA or Europe is pointless for New Zealand. Further both Europe and the USA do not know what they are doing. At some point in the future the whole financial system could collapse if countries continue to print money that becomes worthless. 

Gareth C-  Could try harder.
Print to lend at low, very low interest rates on infrastructure and housing.  And in Christchurch the Government should buy the land (an asset) and lease it for 999 years with the right to purchase.  This should be done with housing and in the CBD so that commercial buildings can be built at a price that permits small shops to be tenants.  Who wants a Convention centre that covers two blocks and a Stadium the same size.  Christchurch will not work with those two monsters in the CBD.

"Britain's £375bn money printing programme has run out of steam and new ways must be found to stimulate the economy, according to Lord Turner, one of the leading candidates for the Bank of England governorship."
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9602720/Bank-of-England-frontrunner-says-QE-not-enough-to-get-growth-going.html
err....ummm...maybe Norman and Shearer should have waited before shoving both feet in their gobs.

There is an old Red/Green named Norman
Who's eager to print up a Storm in
A great little Land
and with some Sleight of Hand
Pass it all off to some foreign Mormon

Th article misses out a lot of relevance. "The Chicago Model Revisited" is a Working Paper of the IMF dated August 2012, discussing the government versus private ownership of the money supply and its effect on the economy and inflation. Needless to say the former is highly desirable and easily achievable in the finding of the paper.
Gareth needs to get his chops around that and then we'll be able to have an informed discussion on how we make the system suit our needs not the other way round.
I'd recommend having a read of this paper. It has a very good pedigree with plenty of bright minds supporting the concept.
Here is the link for the document: www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf
 

Agree that's the crux of it around which everything else revolves. Are private banks or elected governments the preferred creators and administrators of the money supply. Does it get spent or loaned into existence? Do interest payments (rent) stay in NZ or go offshore?The money supply has to originate somewhere. 

Don't worry. I have just invented a way of making gold out of dirt.
Production of 100 square meters of gold per hour will start tomorrow! Every one of us here in NuZillund will be a gazillionaire within a month as long as the price of gold stays above US$1500 per ounce.
Well, why wouldn't it?

The problem is not borrowing vs printing as much as compound vs simple interest. If we print money ouselves in our own currency, which by the way is a claim on future taxes anyway, then the interest payable is a tax on NZ'ers for NZ'ers. 
Losers are creditors collecting interest compounding exponentially. Greens plan can work and has worked for centuries. The system we have now is a shambles.

Brilliant logic splineman..let's get rid of the creditors..who needs them. Make them losers and they will go away.

Gareth,
It's clear we are in completely uncharted territory vis-a-vis the monetary expansion of the last 15 years. The more I examine the global situation, the more I think we are beyond the limits of what the system can tolerate. 
However, NZ is in a unique situation. It does have a commodity base underpinning its debts and ultimately that is why we have not experienced a Euro style crisis. The reality is that we have pre-sold $150b worth of our assets, whether land, businesses or future trade surpluses (not much chance of that at current exchange rate).
The root of the problem for NZ is that recycled trade deficits for 30 years have allowed us to splurge on imports we could not really afford, with much of this debt going into housing, leaving us with inflated house prices and a weighty debt. The only way out of that is to run a huge trade surplus or sell assets. It's very simple. 
in terms of the printing money issue, I believe we can inject new fiat currency directly into the economy (via Christchurch rebuild) and this will be non-inflationary. However, to make sure, we should, at the same time, put limits on new bank credit, so as to limit or control the overall money supply. In case you haven't read about this, here is a short article on the proposal. 
http://sustento.org.nz/wp-content/uploads/2012/07/NZ-Investor-Piece-Mone...
This won't automatically cause the currency to fall but it may help lower the demand for overseas debt. A Foreign Transactions Surcharge may be what is needed to the balance of payments to properly adjust.
http://sustento.org.nz/wp-content/uploads/2007/05/FTS-paper-version-3.pdf
 

No, there is a third probable option, you miss, default.  and I suppose a, 4th print but which is default really.
Consider,
1) A "huge" trade suplus demands more growth in the world which which means demand, this demands more energy, therefore it cannot happen.  Not only that the producers of wealth I assume have productive debt.  Just how can that return be expected to pay for the un-productive borrowing which is substantially bigger eludes me.  This is classic Mutton Head economics, we'll grow our way out of the problem.....and thats been said for 30 years....its failing, if not failed.
2) Sell assets, well the few Govn assets left are worth a few billions against a housing market worth 150billion?  Even if you said that the real or fair value of that debt is $75billion as we are in a 2x bubble I cant see where we would get 15 lots of SOE's to sell....and especially not 30..
You believe we can inject money for chch but you have no proof, in fact there is much economics that says you cant do that and not have inflation except when up againstteh zero bound and NZ isnt.  On top of that I actually I dont agree because some aspects such as building labour will be in short supply (if nothing else), so they will charge more...that is a big part of the build cost so inflationary.
regards
 
 
 
 

Steven,
1) We will never grow our way out of this but we can certainly import way less and export more, in price terms at least. 
2) Remember that government only owes 25% of our overall debt. I'm talking in terms of NZ as a whole. 
3) The injection of new money into Christchurch is very easy. If you read the actual proposal it might make more sense. I have not, as yet, seen a proper critique of this proposal in the last 18 months. I think that's because people are still getting their heads around the fact that it is banks who currently print money :-)
This debate requires extreme precision over use of terms and understanding of the mechanics. That's going to take some time to develop. 

 
Inflation in the domestic economy has not responded to pressure from interest rates and has run above of the target band for most of this century; fortunately the deflation (via the exchange rate mechanism) in the tradeable sector has brought the headline inflation inside band. 
Inflation targeting only worked by ruining the real economy, unnecessarily killing firms and capability in New Zealand – when they gone they are likely gone for good.
We want exports to grow, why not recognise that three things matter to exporters – exchange rates, exchange rates and, oh yes, exchange rates.  
History will bag the last 30 years and the economists that lead it.
 
www.johnwalley.co.nz

 

Except everyone is also in the same boat they want to export their way out of the mess they are in. So destroying the value of our currency would at best get us a short term advantage...meanwhile the extra costs we'd bear would be significant.
We should also be considering what we are exporting, if its our one off wealth that is just stealing from our children and grandchildren and even our own old age.  If its renewables or services, yes OK.
NB you cant keep growing for ever, maybe you should consider how we will get by without "growth".
regards
 
 
 
 

Steven - if we submit to the idea of low to no growth future, how will we grow capability? Put another way, I respect the view that so called 'growth' cannot go on ad infinitum, however a defeatist, sit on hands view about this will not see our productive enterprises develop, multiply and broaden our export mix to counter reliance on the sparse dimensions of our, particular economy, when we consider the likely much resource constrained world of tomorrow.
 
As for, "the extra costs we'd bear ... " There are ways to mitigate this, as we've discussed elsewhere I believe eg. reduction of various taxes largely borne by the many and increase taxes that would be shouldered by a few who take little if any of the burden, that is, reduce fuel excise duty, repeal GST on sustinence, reduce income and corp tax - and introduce a cgt and land tax to replace the revenue. That said, another way to look at it is:
 
"It's choice, cheap flat-screen tvs for us today, or an expensive  flat-lining economy for our children tomorrow."
 
Noting, that we've never had it so good, with an exchange rate that reflects our demand for credit, the banks profligate eagerness to create debt for us  - rather than an exchange rate that reflects our earnings.   

While New Zealand has a stronger currency this is when New Zealand should to purchase farms in South East Asia and South America for long term growth. Instead of controlling the currency we should try to diversify our overseas presence and find new markets. Domestically we should be pleased we have a strong currency as our houses are worth more with a strong currency than with a weak currency.  If for example our currency dropped by 30% against most currencies in relative terms our house prices would be worth 30% less even if the house prices in NZ dollars had not dropped at all.  If the Kiwi is worth less then our assets are worth less.  For example in the UK house prices have been pretty stagnant for the past 5 years accept for parts of London, yet the currency has dropped by 40%. In the USA they have had both currency depreciation and house price depreciation (double wealth destruction).  Having a strong currency is not always a bad thing.

Despite best efforts by the Euro and prior to that the Japanese Yen, and that both in hindsight look laughable, the USD remains undisputed king of the reserves with very occasional but ephemeral competition from gold bars only. That gives the US policymakers an edge over every other policymaker on earth.
you hit the...nail ..on the head there Gareth, but as many neglect to include the USD economy as a much bigger entity that the U.S. economy itself
No matter how much money the US prints the Chinese and others will buy it in order to keep their currencies from appreciating against it. What a luxury for the US – it has financiers of infinite resort. While that lasts the US is different.
And that has been the case to date despite both Bernard and China talking up their (China's ) position as the usurper....
For us there is little to no credibility in a policy to achieve growth from printing money. It will simply lower our credit rating and raise our interest rates as creditors extract the required reward for largesse.
While I'm not a fan of QE at all, it is interesting to note Gareth, that it indeed will be our credibility that will lead to softening of the currency, even in the abscence of printing, the potential for revaluation of our exposure to Foreign Lenders may bring this scenario about .
I share the frustrations of Les Rudd and many others that something by way of intervention or the very real threat of  regulatory interference in the currency would have some impact on the overvalued portion of the currency.
I do not support printing as proposed by Mr Norman, but I would support the percieved threat of it's likelyhood as an initial step. Further while FTT's are recieved like excrement sandwiches around here.....I would support the notion of building regulatory framework  to target length and volume transactions.
In short , I do believe the RBNZ has been a captured organisation for a least Bolly's tenure, with his captors in turn having their testicles gently reminded ,the position may become precarious at a moments notice.
That said I have a new cause I'm interested in promoting..which may help relieve our currency constipation....it's called  SOCAIT or Scare Off Commie Investors Today.....I just posted my first newsletter to Maurice Williamsons office...for er a bit of feedback.
maybe  it needs a little more pizzazz like POCIT.....
Do you think Maurice might like to be in The POCIT....?

Aaaaaaaaaand 100 Gareth,....there you go matey , couldn't leave you on 99 with your wicket hanging out there.