- #1719799paulinem May 20, 2019 at 2:12 pm
It was interesting in the discussion today on RNZ national of the re-election of Scott Morrison to Australian leadership/government. There was mention of a move in various election of the elections of far right governorship. Including ( from memory ) Brazil Italy Israel and of course starting with Trump being elected in 2016. Also mention was made that the Australian coalition won seats where there was mining and the opposition was suggesting they be closed down. Basicly they were saying there is world wide movement to elect far right governments. Makes you wonder if NZ will go this way in 2020 elections. I dont think so as MMP governments will help to ensure it wont happen in NZ#1719805paulinem May 20, 2019 at 2:48 pm
Subject: Robertson’s Budget $6 Billion Short
Finance Minister Grant Robertson’s budget later this month could have contained an additional $6 billion in spending without costing taxpayers a single cent more, Social Credit Party Leader, Chris Leitch told the party’s Canterbury Regional conference yesterday.
But it won’t, Mr Leitch said, because the Finance Minister doesn’t understand that he could save that amount every year on interest payments on the government’s borrowing.
Finance Ministers in Japan and China access funding from their central bank at no interest and use the money saved on interest payments to benefit their citizens.
! challenge him to explain why he would rather pay $6,000,000,000 dollars every year to overseas bank shareholders and PPP scheme financiers, rather than New Zealand’s teachers, doctors, and mental health patients. Environmental projects, building roads, rail, and other infrastructure are all desperately in need of funding.
Mr Robertson’s understanding of how the money system works is patently paper thin, and he’s relying on what advisers in Treasury, who have been sourced from the private banking industry, are telling him.
Commercial banks create money every time they grant a loan – to individuals to buy houses or to the government.
This has been confirmed by leading figures in the banking industry like Mervyn King, former governor of the Bank of England, and Graham Towers, former governor of the Bank of Canada, as well as local commentators like Bernard Hickey, Bryan Gaynor, Raf Manji, Shamubeel Equab, and Bryan Gould.
The country’s central bank, the Reserve Bank, also has that power, so Mr Robertson could, and should, be accessing funding from that source.
That would give him an additional $6 billion dollars every single year to spend on New Zealanders.
The people of Canterbury and Kaikoura would have recovered for the natural disasters much faster had National also used the Reserve Bank to fund their recovery programmes.#1719814Hero42MemberMember since: July 18, 2008
Replies: 12018Hero42 May 20, 2019 at 4:13 pm
To be fair I would say it is Chris Leitch, Social Credit Party Leader, that doesn’t understand government and international finance.
At a basic level he is probably correct in that the NZ government has to pay that much interest each year but to stop paying that interest Grant Robertson would have to find the money to repay all the money National borrowed while in power in one fell swoop which is more than the tax revenue we get each year so he wouldn’t have anything left to pay the government’s bills so he would have to borrow again.
As it is the current government are repaying the debt in a controlled and sensible manner to reduce the interest the government has to pay but it will take time to reduce the debt burden National left us with, of which over half is estimated to be from the unaffordable tax cuts they gave to get elected in the first place.
Cheers 🙂#1719816Hero42MemberMember since: July 18, 2008
Replies: 12018Hero42 May 20, 2019 at 4:20 pm
In addition it is worth noting that as the borrowing is done through Government Bonds that some of that money will have been borrowed from NZ superannuation funds that wanted to have a secure section for their conservative investments. It isn’t all from overseas banks etc.
As to how much is borrowed from NZ investors and how much from overseas investors I do not know if we can find that information easily.
Cheers 🙂#1719828paulinem May 20, 2019 at 4:55 pm
Hero what Chriss is saying is that the money asked for by the teachers, doctors mental health does not have to come from public funds, which you correctly said was all mostly borrowed overseas by National. Robertson can use the Reserve Bank and create the funds required. With no interest from taxpayers funds to repay this money created. As he correctly said this is how the Australian banks get the money to lend to NZers for mortgages on their over valued homes. Sadly the money to the banks has to be paid back with real earned money, not created as the banks did to lend it to them.
Chris is critical of the money we pay back in interest to overseas banks as this money was all created by overseas banks to lend to English/Joyce National, which was borrowed just to make the economy/books look good. As Chris correctly said National should have used the reserve bank, created funds to find the money they needed and thus we would not have to spend so much of taxpayers funds, repaying interest on money ie the created money we borrowed over seas.
As long as it is done responsibly ( ie not irresponsibly like Mugabe Zimbarbwee) using created funds by the reserve bank has and is today a legitimate way of raising necessary INTERNAL funds without hurting or damaging the economy.
US gets away with creating money this way as the US dollar is a desirable money in most parts of the world. By the way this is the reason US is doing so well at present , they create money considerably to assist their economy.#1719833halcyonMemberMember since: May 4, 2014
Replies: 4951halcyon May 20, 2019 at 6:09 pm
Hero, maybe you can answer a couple of questions in respect of the Social Credit idea of the NZRB creating money as suggested by paulinem.
1) What effect would this have on the value of the $NZ?
2) What effect would this have on NZ’s credit rating, and there by on our current interest rates?
It's ok if you disagree with me. I can't force you to be right.#1719837paulinem May 20, 2019 at 7:21 pm
Halycon the Australian banks are enjoying record profits, creating money has had no problem on their credit rating so why should effect our own economy if we did the same as the bank and responsibly created credit for our internal expenses and costs.
Micky Savage did this back in the 1930s and got the country out of the depression and paid for the costs of sending a military support to England in 1939 Since then successive govt did this as we operated an economy of hands on Govt control.
Unfortunately in 1984 Roger Douglas took the Govt controls off the economy and gave it to private people like Bob Jones and Micheal Fay and thus our now privatized trading Banks like ANZ ASB have started making record profits, while our propertys values have started rising and rising to record values. Along with the mortgages which have got higher and higher to buy the over priced property.#1719842halcyonMemberMember since: May 4, 2014
Replies: 4951halcyon May 20, 2019 at 9:50 pm
Thank you for that information paulinem. However, it does not provide answers to my questions.
The reason I asked those questions is due to a belief that to implement the method of creating money as you suggest would have costs for the country. I seem to remember that during the period you refer to the NZ Government devalued the NZ Pound by 29%. That could be wrong but there was definitely a serious devaluation.
Secondly, NZ had a protected market. One could only buy locally made goods that were dearer in price than what was available overseas and were of a shoddy nature.
I also noticed that when the Fed started Quantitative Easing during the last economic down turn that the $US softened markedly against the $NZ. Therefore I wonder if that would happen to our dollar if we increase the money supply.
That is why I was hoping someone could answer those questions.
Remember, the world is a different place than in Micky Savage’s day.
It's ok if you disagree with me. I can't force you to be right.#1719846paulinem May 21, 2019 at 7:33 am
Halycon in a protected market we repaired etc ( vehicles etc )what we had instead of spending valuable overseas funds on new goods we wanted overseas. Today is a throw away society and we have large areas of land taking up unwanted disposed vehicle graveyards These vehicles could have been repaired instead of being thrown away. These overseas vehicle we purchase today is the reason we borrowed billions, of debt for our future generations.
I have no problem getting overseas funds for modern equipment vehicles etc required in industry and agriculture. But do we really need the overseas purchase of so many other private use recreational vehicles. Could we not instead encourage a society that repairs and fixes what we have. Surely the employment this would create alone in repairs is worth fixing up what we have already.#1719847paulinem May 21, 2019 at 7:42 am
As far as devalued NZ dollar not pound we changed in 1967 to dollar? ( I think)…bit long ago Halycon to try and remember the economic problems of that time etc, Such as why etc you think thee NZ dollar devalued seriously -there could have been a good and important reason why it was allowed to drop re exports and imports. So Halycon we cannot criticise really when or IF this occurred as neither of us remember all the circumstances of the economy at that time in our lives.
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