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Farmers see light on OCR

Written By: - Date published: 10:35 am, September 15th, 2010 - 7 comments
Categories: Economy, monetary policy - Tags:

Federated Farmers is calling for the OCR to be held to keep the dollar low.

The problem is that, with the Christchurch rebuild on the horizon and GST set to rise soon, it’s likely that we’ll see some significant short term inflation.

But hiking the dollar won’t hold inflation back for long. In fact all it will do is increase the differential between our rates and the rates of other currencies.

And that will make us a debt target as investors seek the best returns they can get.

Which, ironically, leads to the kind of debt-driven inflation we saw with the last housing boom.

In the last few decades we’ve shifted our economy from benefiting the productive sector and working Kiwis to benefiting speculators, the finance sector and foreign investors shipping profits back home. And our strict monetarist policy has been a major driver of this shift.

It’s time we looked at better ways of targeting inflation in the sectors it occurs rather than relying solely on the cash rate.

7 comments on “Farmers see light on OCR ”

  1. Draco T Bastard 1

    Actually, it’s about time we started looking for a better socio-economic system than capitalism.

    • anarcho 1.1

      I agree.

      Capitalism has had its day. Time for something new.

      • Bill 1.1.1

        Seems that this country’s parliamentary representatives agree too! Kind of.

        Next time any of those clowns in parliament or their supporters, bang on about how precious social democracy is, I’d like to remind them that they thought it so fantastic that they threw it away in a twinkling ’cause they thought it inadequate and not up to the task when viewed beside the suggestion of vesting unaccountable authority in a single individual.

  2. prism 2

    But in the meantime let us have some rational system for controlling speculation on our hard won currency and give the finger to the quick buck-quick move finance addicts. If it costs more for imported goods because our currency is lower so that we have to pay more NZ$ when we want to purchase other currencies, then we are facing the reality of our level of wealth within the country, and the country within the world.

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