Granny says – you can’t do that

Written By: - Date published: 9:30 am, September 21st, 2012 - 16 comments
Categories: economy, exports, jobs - Tags:

The ever forward looking and even-handed Herald devotes its editorial to attacking Labour for supporting Winston Peters’ Bill to make some small changes to the Reserve Banks’ objectives to bring them more in line with Australia’s. Leaving aside the fact that the Herald hasn’t attacked NZF or the 3 other parties who support this, only Labour, isn’t it time Granny got with the programme?

You only need read the business and business opinion pages in the Herald itself to get what is happening. Of the 10 most-traded currencies in the world (and it should ring alarm bells that we’re in that grouping at all), New Zealand has the narrowest monetary policy. Our Reserve Bank considers just one thing in making its interest rate decisions – the impact on inflation. None of the other currencies have such narrowly-focused monetary policy.

Granny heartily approves. But Granny, like National, is fighting yesterday’s war. Inflation in general isn’t a problem any more. We have 1% inflation at the moment, and it won’t get above the 3% top of the Reserve Bank’s target bracket in any of the forecasts for many years. In fact, if big economies weren’t printing money like crazy and inducing some global inflation, we would probably have deflation now.

Now, lets look at those other largely-traded currencies again. These are the currencies with which ours is predominantly traded. The most-traded – US, Euro, Yen, Pounds – are all engaged in forms of quantitative easing. That means that their central banks are creating more of those currencies (decreasing their value/causing minor inflation) – which they then to buy their government’s own bonds, which lowers interest rates in their countries. Both actions decrease their exchange rate and increase ours in turn.

The rest of the top ten have wider objectives for their Reserve Banks than just inflation – they have to consider jobs and growth too. Some are also involved in forms of quantitative easing. The net effect: all these governments are attacking to keep their currencies low so their manufacturers can compete (and it certainly seems to be working for the US, which is seeing manufacturing grow to China’s cost).

Of course, when their currencies go down, ours goes up. They’re running beggar thy neighbour strategies – and we’re the neighbour.

So, what should we do? Well, we’ve got to play the game too. We could undertake quantitative easing – everyone else is doing it and the sky isn’t falling. At the very least, we should lower our official cash rate to make it less attractive for foreign ‘hot money’ to invest here. That would help bring our currency down and let our businesses compete on the export markets and against importers. But to do that, the Reserve Bank would have to be allowed to consider more than inflation – it should have to look at the whole economic impacts of its choices. We should also bring in policies to stop a housing bubble, which is bad, inflationary, and draws in hot money from overseas – policies like capital gains tax. That would allow further reductions in the OCR.

Right now, the Reserve Bank is like a doctor confronting a patient with a range of maladies. But it is only allowed to worry about whether or not a patient is hyper-ventilating – and its only remedy is strangulation. Meanwhile, other countries are giving their doctors the skills and tools to really fix their patients. And (this is where the metaphor breaks down) as they make their patients healthier, it makes ours sicker.

For some reason, Granny Herald thinks that’s just fine. Maybe because Granny Herald isn’t an exporter. Maybe because the Herald isn’t a paper that gives a damn about the 40,000 manufacturing workers who have seen their jobs disappear in the last 4 years.

16 comments on “Granny says – you can’t do that ”

  1. tc 1

    WTF would granny know about Finance and economics except rabbiting from a supplied script !

    The manufactured ACC crises should leave no-one in doubt they’re part of the CT NACT spin machine, this is further evidence.

    JA and Fo’S with probably give the same telling off to labour if they haven’t already.

    I don’t bother with it anymore, plenty of other high quality stuff online like this blog…was it an unsigned editorial which effectively means it’s usually signed by A. Hollowman.

  2. Lanthanide 2

    Here’s a policy to help fight the housing bubble while also helping out businesses and directing investment towards them. This idea isn’t mine originally.

    Reduce the OCR by 1% and apply a 1% tax to residential mortgages; both owner-occupied and investment.

    This way banks will be more encouraged to lend to businesses. The government will get more tax revenue. Residential investment won’t be as attractive: at the moment you can write off your interest costs against your income; this change will reduce the interest portion that can be written off but the cost will remain the same, with the difference going direct to the government. The OCR will be lower so foreign investors will gain less return on their deposits.

    This also has the advantage over capital gains tax in that the revenue streams are immediate, based on present capital value (via the mortgage) and there’s no distortion around ring-fencing in or out specific types of assets.

    • deano 2.1

      variable mortgage levy was supported by cullen in 2006 but the Nats and the Herald shourted it down.

      Better (because it applies to all consumers, not just those with mortgages – and it makes them save rather than taking their money and giving it to banks and savers) would be complusory Kiwisaver with a variable contrbiution rate

  3. captain hook 3

    granny has become senile just like armstrong and venal like sullivan and is turning into an alltogether nasty thing.

  4. BernyD 4

    If their workers were in a Union they’d be able to do something about it 🙂
    If the editorial policies make us sick, imagine actually working there …. ick

  5. BernyD 5

    Y’know I recall sometime in the 80’s when they were discussing a “Hypocratic” style oath for Reporters to live by, Ultimately the response was “Don’t put your evil censorship/contraints on us buddy”, but today I can see why the civilised people of the 80’s pushed for it.
    Holding a grade average of A++ in the mathematics of nuclear fission doesn’t make them good people nor does it inspire confidence.

  6. All the Herald says is –
    You cannot go back to Muldoonism, because that is what the proposal means.
    He stuffed the economy, by taking control of the Reserve Bank and manipulating it (very badly) – hence the 1986 Reserve Bank Act.
    Douglas had to sort it out.

    • BernyD 6.1

      If Muldoon was alive today he would most likely have sworn off politics.
      No one wanted him to regulate, so he stole our pensions instead, bad for his heart, but necessary.

  7. captain hook 7

    bullshit.
    when douglas realised that the Labour Party would never make him him PM he decided to do as much damage to the country and the party that he could because when it came down to it he was personally financially secure.
    He swallowed the 80’s reagan ideology whole and thought he could make up rules that would last forever.
    not so.
    the essence of being a human being is the ability to adapt to the environment and at the moment New Zealand is not adapting at all. and in fact is compounding error upon error by trying to rely on someone elses rules instead of generating new alternatives.

  8. millsy 8

    The Reserve Bank 1989 has succeeded at elimintating double digit inflation but at huge social costs.

    The reduction and slow growth in wages and conditions (esp during the so-called ‘boom’ years — that is what happens when you loosen credit — people burrow to the hilt to buy houses and imported goods), the consistent erosion of social spending starting from Ruth’s cuts back in 1991 and the consequent reduction in edcuation and health services (ie hospital closure) and reductions and pay and conditions for education in health staff.

    Thanks to the RBA, the entire post war 1935-84 welfare state has been dismantled so the rich can enjoy lower mortgages and tax cuts.

  9. mike e 9

    Fortran if we keep importing fuel in the amounts we are ,we are going broke sooner or later we will pay the price!

Recent Comments

Recent Posts

  • EV road user charges bill passes
    Transport Minister Simeon Brown has welcomed the passing of legislation to move light electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) into the road user charges system from 1 April.  “It was always intended that EVs and PHEVs would be exempt from road user charges until they reached two ...
    BeehiveBy beehive.govt.nz
    10 hours ago
  • Bill targets illegal, unregulated fishing in international waters
    New Zealand is strengthening its ability to combat illegal fishing outside its domestic waters and beef up regulation for its own commercial fishers in international waters through a Bill which had its first reading in Parliament today. The Fisheries (International Fishing and Other Matters) Amendment Bill 2023 sets out stronger ...
    BeehiveBy beehive.govt.nz
    11 hours ago
  • Reserve Bank appointments
    Economists Carl Hansen and Professor Prasanna Gai have been appointed to the Reserve Bank Monetary Policy Committee, Finance Minister Nicola Willis announced today. The Monetary Policy Committee (MPC) is the independent decision-making body that sets the Official Cash Rate which determines interest rates.  Carl Hansen, the executive director of Capital ...
    BeehiveBy beehive.govt.nz
    12 hours ago
  • Stronger protections for apartment owners
    Apartment owners and buyers will soon have greater protections as further changes to the law on unit titles come into effect, Housing Minister Chris Bishop says. “The Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Act had already introduced some changes in December 2022 and May 2023, and ...
    BeehiveBy beehive.govt.nz
    14 hours ago
  • Travel focused on traditional partners and Middle East
    Foreign Minister Winston Peters will travel to Egypt and Europe from this weekend.    “This travel will focus on a range of New Zealand’s traditional diplomatic and security partnerships while enabling broad engagement on the urgent situation in Gaza,” Mr Peters says.   Mr Peters will attend the NATO Foreign ...
    BeehiveBy beehive.govt.nz
    14 hours ago
  • Keep safe on our roads this Easter
    Transport Minister Simeon Brown is encouraging all road users to stay safe, plan their journeys ahead of time, and be patient with other drivers while travelling around this Easter long weekend. “Road safety is a responsibility we all share, and with increased traffic on our roads expected this Easter we ...
    BeehiveBy beehive.govt.nz
    17 hours ago
  • Cost of living support for over 1.4 million Kiwis
    About 1.4 million New Zealanders will receive cost of living relief through increased government assistance from April 1 909,000 pensioners get a boost to Superannuation, including 5000 veterans 371,000 working-age beneficiaries will get higher payments 45,000 students will see an increase in their allowance Over a quarter of New Zealanders ...
    BeehiveBy beehive.govt.nz
    17 hours ago
  • Tenancy reviews for social housing restart
    Ensuring social housing is being provided to those with the greatest needs is front of mind as the Government restarts social housing tenancy reviews, Associate Housing Minister Tama Potaka says. “Our relentless focus on building a strong economy is to ensure we can deliver better public services such as social ...
    BeehiveBy beehive.govt.nz
    18 hours ago
  • Kermadec Ocean Sanctuary plan halted
    The Kermadec Ocean Sanctuary will not go ahead, with Cabinet deciding to stop work on the proposed reserve and remove the Bill that would have established it from Parliament’s order paper. “The Kermadec Ocean Sanctuary Bill would have created a 620,000 sq km economic no-go zone,” Oceans and Fisheries Minister ...
    BeehiveBy beehive.govt.nz
    18 hours ago
  • Cutting all that dam red tape
    Dam safety regulations are being amended so that smaller dams won’t be subject to excessive compliance costs, Minister for Building and Construction Chris Penk says. “The coalition Government is focused on reducing costs and removing unnecessary red tape so we can get the economy back on track.  “Dam safety regulations ...
    BeehiveBy beehive.govt.nz
    19 hours ago
  • Drought support extended to parts of North Island
    The coalition Government is expanding the medium-scale adverse event classification to parts of the North Island as dry weather conditions persist, Agriculture Minister Todd McClay announced today. “I have made the decision to expand the medium-scale adverse event classification already in place for parts of the South Island to also cover the ...
    BeehiveBy beehive.govt.nz
    20 hours ago
  • Passage of major tax bill welcomed
    The passing of legislation giving effect to coalition Government tax commitments has been welcomed by Finance Minister Nicola Willis.  “The Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Bill will help place New Zealand on a more secure economic footing, improve outcomes for New Zealanders, and make our tax system ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Lifting economy through science, tertiary sectors
    Science, Innovation and Technology Minister Judith Collins and Tertiary Education and Skills Minister Penny Simmonds today announced plans to transform our science and university sectors to boost the economy. Two advisory groups, chaired by Professor Sir Peter Gluckman, will advise the Government on how these sectors can play a greater ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Government announces Budget priorities
    The Budget will deliver urgently-needed tax relief to hard-working New Zealanders while putting the government’s finances back on a sustainable track, Finance Minister Nicola Willis says.  The Finance Minister made the comments at the release of the Budget Policy Statement setting out the Government’s Budget objectives. “The coalition Government intends ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Government to consider accommodation solution
    The coalition Government will look at options to address a zoning issue that limits how much financial support Queenstown residents can get for accommodation. Cabinet has agreed on a response to the Petitions Committee, which had recommended the geographic information MSD uses to determine how much accommodation supplement can be ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Government approves extension to Royal Commission of Inquiry into Abuse in Care
    Cabinet has agreed to a short extension to the final reporting timeframe for the Royal Commission into Abuse in Care from 28 March 2024 to 26 June 2024, Internal Affairs Minister Brooke van Velden says.                                         “The Royal Commission wrote to me on 16 February 2024, requesting that I consider an ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • $18m boost for Kiwis travelling to health treatment
    The coalition Government is delivering an $18 million boost to New Zealanders needing to travel for specialist health treatment, Health Minister Dr Shane Reti says.   “These changes are long overdue – the National Travel Assistance (NTA) scheme saw its last increase to mileage and accommodation rates way back in 2009.  ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • PM’s Prizes for Space to showcase sector’s talent
    The Government is recognising the innovative and rising talent in New Zealand’s growing space sector, with the Prime Minister and Space Minister Judith Collins announcing the new Prime Minister’s Prizes for Space today. “New Zealand has a growing reputation as a high-value partner for space missions and research. I am ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Concerns conveyed to China over cyber activity
    Foreign Minister Winston Peters has confirmed New Zealand’s concerns about cyber activity have been conveyed directly to the Chinese Government.     “The Prime Minister and Minister Collins have expressed concerns today about malicious cyber activity, attributed to groups sponsored by the Chinese Government, targeting democratic institutions in both New ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Independent Reviewers appointed for School Property Inquiry
    Independent Reviewers appointed for School Property Inquiry Education Minister Erica Stanford today announced the appointment of three independent reviewers to lead the Ministerial Inquiry into the Ministry of Education’s School Property Function.  The Inquiry will be led by former Minister of Foreign Affairs Murray McCully. “There is a clear need ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Brynderwyns open for Easter
    State Highway 1 across the Brynderwyns will be open for Easter weekend, with work currently underway to ensure the resilience of this critical route being paused for Easter Weekend to allow holiday makers to travel north, Transport Minister Simeon Brown says. “Today I visited the Brynderwyn Hills construction site, where ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Speech to the Infrastructure Funding & Financing Conference
    Introduction Good morning to you all, and thanks for having me bright and early today. I am absolutely delighted to be the Minister for Infrastructure alongside the Minister of Housing and Resource Management Reform. I know the Prime Minister sees the three roles as closely connected and he wants me ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Parliamentary network breached by the PRC
    New Zealand stands with the United Kingdom in its condemnation of People’s Republic of China (PRC) state-backed malicious cyber activity impacting its Electoral Commission and targeting Members of the UK Parliament. “The use of cyber-enabled espionage operations to interfere with democratic institutions and processes anywhere is unacceptable,” Minister Responsible for ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • NZ to provide support for Solomon Islands election
    Foreign Minister Winston Peters and Defence Minister Judith Collins today announced New Zealand will provide logistics support for the upcoming Solomon Islands election. “We’re sending a team of New Zealand Defence Force personnel and two NH90 helicopters to provide logistics support for the election on 17 April, at the request ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • NZ-EU FTA gains Royal Assent for 1 May entry to force
    The European Union Free Trade Agreement Legislation Amendment Bill received Royal Assent today, completing the process for New Zealand’s ratification of its free trade agreement with the European Union.    “I am pleased to announce that today, in a small ceremony at the Beehive, New Zealand notified the European Union ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • COVID-19 inquiry attracts 11,000 submissions
    Public consultation on the terms of reference for the Royal Commission into COVID-19 Lessons has concluded, Internal Affairs Minister Hon Brooke van Velden says.  “I have been advised that there were over 11,000 submissions made through the Royal Commission’s online consultation portal.” Expanding the scope of the Royal Commission of ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Families to receive up to $75 a week help with ECE fees
    Hardworking families are set to benefit from a new credit to help them meet their early childcare education (ECE) costs, Finance Minister Nicola Willis says. From 1 July, parents and caregivers of young children will be supported to manage the rising cost of living with a partial reimbursement of their ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Unlocking a sustainable, low-emissions future
    A specialised Independent Technical Advisory Group (ITAG) tasked with preparing and publishing independent non-binding advice on the design of a "green" (sustainable finance) taxonomy rulebook is being established, Climate Change Minister Simon Watts says.  “Comprising experts and market participants, the ITAG's primary goal is to deliver comprehensive recommendations to the ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Chief of Army thanked for his service
    Defence Minister Judith Collins has thanked the Chief of Army, Major General John Boswell, DSD, for his service as he leaves the Army after 40 years. “I would like to thank Major General Boswell for his contribution to the Army and the wider New Zealand Defence Force, undertaking many different ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Minister to meet Australian counterparts and Manufacturing Industry Leaders
    25 March 2024 Minister to meet Australian counterparts and Manufacturing Industry Leaders Small Business, Manufacturing, Commerce and Consumer Affairs Minister Andrew Bayly will travel to Australia for a series of bi-lateral meetings and manufacturing visits. During the visit, Minister Bayly will meet with his Australian counterparts, Senator Tim Ayres, Ed ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Government commits nearly $3 million for period products in schools
    Government commits almost $3 million for period products in schools The Coalition Government has committed $2.9 million to ensure intermediate and secondary schools continue providing period products to those who need them, Minister of Education Erica Stanford announced today. “This is an issue of dignity and ensuring young women don’t ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Speech – Making it easier to build.
    Good morning, it’s great to be here.   First, I would like to acknowledge the New Zealand Institute of Building Surveyors and thank you for the opportunity to be here this morning.  I would like to use this opportunity to outline the Government’s ambitious plan and what we hope to ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Pacific youth to shine from boost to Polyfest
    Minister for Pacific Peoples Dr Shane Reti has announced the Government’s commitment to the Auckland Secondary Schools Māori and Pacific Islands Cultural Festival, more commonly known as Polyfest. “The Ministry for Pacific Peoples is a longtime supporter of Polyfest and, as it celebrates 49 years in 2024, I’m proud to ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • 2024 Ngarimu VC and 28th (Māori) Battalion Memorial Scholarships announced
    ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Speech to Breast Cancer Foundation – Insights Conference
    Before moving onto the substance of today’s address, I want to recognise the very significant and ongoing contribution the Breast Cancer Foundation makes to support the lives of New Zealand women and their families living with breast cancer. I very much enjoy working with you. I also want to recognise ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Kiwi research soars to International Space Station
    New Zealand has notched up a first with the launch of University of Canterbury research to the International Space Station, Science, Innovation and Technology and Space Minister Judith Collins says. The hardware, developed by Dr Sarah Kessans, is designed to operate autonomously in orbit, allowing scientists on Earth to study ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Speech to the New Zealand Planning Institute
    Introduction Thank you for inviting me to speak with you today and I’m sorry I can’t be there in person. Yesterday I started in Wellington for Breakfast TV, spoke to a property conference in Auckland, and finished the day speaking to local government in Christchurch, so it would have been ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Support for Northland emergency response centre
    The Coalition Government is contributing more than $1 million to support the establishment of an emergency multi-agency coordination centre in Northland. Emergency Management and Recovery Minister Mark Mitchell announced the contribution today during a visit of the Whangārei site where the facility will be constructed.  “Northland has faced a number ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Celebrating 20 years of Whakaata Māori
    New Zealanders have enjoyed a broader range of voices telling the story of Aotearoa thanks to the creation of Whakaata Māori 20 years ago, says Māori Development Minister Tama Potaka. The minister spoke at a celebration marking the national indigenous media organisation’s 20th anniversary at their studio in Auckland on ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Some commercial fishery catch limits increased
    Commercial catch limits for some fisheries have been increased following a review showing stocks are healthy and abundant, Ocean and Fisheries Minister Shane Jones says. The changes, along with some other catch limit changes and management settings, begin coming into effect from 1 April 2024. "Regular biannual reviews of fish ...
    BeehiveBy beehive.govt.nz
    7 days ago

Page generated in The Standard by Wordpress at 2024-03-28T14:41:23+00:00