web analytics

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

  • Government support for South Auckland community hit by tornado
    The Government is contributing $100,000 to a Mayoral Relief Fund to support Auckland communities impacted by the Papatoetoe tornado, Acting Minister for Emergency Management Kris Faafoi says. “My heart goes out to the family and friends who have lost a loved one, and to those who have been injured. I ...
    BeehiveBy beehive.govt.nz
    11 hours ago
  • Celebrating World Refugee Day
    World Refugee Day today is an opportunity to celebrate the proud record New Zealanders have supporting and protecting refugees and acknowledge the contribution these new New Zealanders make to our country, the Minister of Immigration Kris Faafoi said. “World Refugee Day is also a chance to think about the journey ...
    BeehiveBy beehive.govt.nz
    17 hours ago
  • Face to face meeting delivers significant progress on NZ-UK FTA
    New Zealand and the UK have committed to accelerating their free trade agreement negotiations with the aim of reaching an agreement in principle this August, Trade Minister Damien O’Connor announced. “We’ve held constructive and productive discussions towards the conclusion of a high-quality and comprehensive FTA that will support sustainable and inclusive trade, and ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Government taking action to protect albatross
    New population figures for the critically endangered Antipodean albatross showing a 5 percent decline per year highlights the importance of reducing all threats to these very special birds, Acting Minister of Conservation Dr Ayesha Verrall says. The latest population modelling, carried out by Dragonfly Data Science, shows the Antipodean albatross ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Adoption laws under review
    New Zealand’s 66-year-old adoption laws are being reviewed, with public engagement beginning today.  Justice Minister Kris Faafoi said the Government is seeking views on options for change to our adoption laws and system. “The Adoption Act has remained largely the same since 1955. We need our adoption laws to reflect ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Wider roll-out of cameras on boats to support sustainability and protect marine life
    Up to 300 inshore commercial fishing vessels will be fitted with on-board cameras by 2024 as part of the Government’s commitment to protect the natural marine environment for future generations.  Minister for Oceans and Fisheries David Parker today announced the funding is now in place for the wider roll out ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Plan for vaccine rollout for general population announced
    New Zealanders over 60 will be offered a vaccination from July 28 and those over 55 from August 11, Prime Minister Jacinda Ardern announced today. The rollout of the vaccine to the general population will be done in age groups as is the approach commonly used overseas, with those over ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • New Zealand introduces Belarus travel bans
    New Zealand has imposed travel bans on selected individuals associated with the Lukashenko regime, following ongoing concerns about election fraud and human rights abuses after the 2020 Belarus elections, Foreign Affairs Minister Nanaia Mahuta has announced. The ban covers more than fifty individuals, including the President and key members of ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • NZ economy grows driven by households, construction and business investment
    The Government’s efforts to secure the recovery have been reflected in the robust rebound of GDP figures released today which show the economy remains resilient despite the ongoing impact of the COVID-19 pandemic, Grant Robertson said. GDP increased 1.6 percent in the first three months of 2021. The Treasury had ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Milestone 250th tower continues to improve rural connectivity
    The Government has welcomed the completion of the 250th 4G mobile tower, as part of its push for better rural connectivity. Waikato’s Wiltsdown, which is roughly 80 kilometres south of Hamilton, is home to the new tower, deployed by the Rural Connectivity Group to enable improved service to 70 homes ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Quarantine Free Travel pause with Victoria to lift on Tuesday
    Following a further public health assessment of the COVID-19 outbreak in greater Melbourne, New Zealand’s Quarantine Free Travel pause with Victoria has been extended to 11.59pm on Tuesday 22 June, COVID-19 Response Minister Chris Hipkins says. It has been determined that the risk to public health in New Zealand continues ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Prime Minister mourns passing of Dr Sir Ian Hassall
    Prime Minister Jacinda Ardern is mourning the passing of Dr Sir Ian Hassall, New Zealand’s first Children’s Commissioner and lifelong champion for children and children’s health. As a paediatrician Sir Ian contributed to a major world-first cot death study that has been directly credited with reducing cot deaths in New ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • APEC structural reform meeting a success
    APEC ministers have agreed working together will be crucial to ensure economies recover from the impact of COVID-19. Minister of Commerce and Consumer Affairs David Clark, chaired the virtual APEC Structural Reform Ministerial Meeting today which revolved around the overarching theme of promoting balanced, inclusive, sustainable, innovative and secure growth ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Digital hub to boost investment in forestry
    A new website has been launched at Fieldays to support the forestry sector find the information it needs to plant, grow and manage trees, and to encourage investment across the wider industry. Forestry Minister Stuart Nash says the new Canopy website is tailored for farmers, iwi and other forestry interests, ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Government continues support for rangatahi to get into employment, education and training
    Over 230 rangatahi are set to benefit from further funding through four new He Poutama Rangatahi programmes, Minister for Social Development and Employment Carmel Sepuloni announced today. “We’re continuing to secure our economic recovery from COVID by investing in opportunities for rangatahi to get into meaningful employment, education or training ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • NCEA subjects up for consultation
    The education sector, students, their parents, whānau and communities are invited to share their thoughts on a list of proposed NCEA subjects released today, Education Minister Chris Hipkins says. This is a significant part of the Government’s NCEA Change Programme that commenced in 2020 and will be largely implemented by ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Major investment in plantain forage programme aims to improve freshwater quality
    The Government is backing a major programme investigating plantain’s potential to help farmers protect waterways and improve freshwater quality, Acting Agriculture Minister Meka Whaitiri announced at Fieldays today. The Sustainable Food and Fibre Futures (SFFF) fund is contributing $8.98 million to the $22.23 million seven-year programme, which aims to deliver ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • America’s Cup decision
    The Minister responsible for the America’s Cup has confirmed the joint Crown-Auckland Council offer to host the next regatta has been declined by the Board of Team New Zealand. “The exclusive period of negotiation between the Crown, Auckland Council, and Team New Zealand ends tomorrow, 17 June,” said Stuart Nash. ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Food and fibres sector making significant strides towards New Zealand’s economic recovery
    The Government is backing the food and fibres sector to lead New Zealand's economic recovery from COVID-19 with targeted investments as part of its Fit for a Better World roadmap, Forestry Minister Stuart Nash said. “To drive New Zealand’s recovery, we launched the Fit for a Better World – Accelerating ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Speech to He Whenua Taurikura – New Zealand’s annual hui on countering terrorism and violent...
    Check against delivery Can I begin by acknowledging the 51 shuhada, their families and the Muslim community. It is because of the atrocious violent act that was done to them which has led ultimately to this, the start of a dialogue and a conversation about how we as a nation ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Cost of Government Southern Response proactive package released
    The Government has announced the proactive package for some Southern Response policyholders could cost $313 million if all those eligible apply. In December, the Minister Responsible for the Earthquake Commission, David Clark announced a proactive package for SRES claimants who settled their claims before October 2014. It trailed the judgment ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • New support to reduce emissions from public building and construction projects
    Government agencies are getting new support to reduce carbon emissions generated by construction of new buildings, with the release of practical guidance to shape decisions on public projects. The Ministers for Building and Construction and for Economic Development say a new Procurement Guide will help government agencies, private sector suppliers, ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • He Whenua Taurikura: New Zealand’s first Hui on Countering Terrorism and Violent Extremism
    The Prime Minister has opened New Zealand’s first hui on Countering Terrorism and Violent Extremism, which is being held in Christchurch over the next two days. The hui delivers on one of the recommendations from the report of the Royal Commission of Inquiry into the terrorist attack on Christchurch masjidain ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Speech to inaugural Countering Terrorism Hui
    E aku nui, e aku rahi, Te whaka-kanohi mai o rātou mā, Ru-ruku-tia i runga i te ngākau whakapono, Ru-ruku-tia i runga i te ngākau aroha, Waitaha, Ngāti Mamoe, Ngai Tahu, nāu rā te reo pohiri. Tena tātou katoa. Ki te kotahi te kakaho ka whati, ki te kapuia, e ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Campaign shines a light on elder abuse
    A new campaign is shining a spotlight on elder abuse, and urging people to protect older New Zealanders. Launched on World Elder Abuse Awareness Day, the Office for Seniors’ campaign encourages friends, whānau and neighbours to look for the signs of abuse, which is often hidden in plain sight. “Research suggests ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Farewelling sports administrator and philanthropist Sir Eion Edgar
    Sport and Recreation Minister Grant Robertson today expressed his sorrow at the passing of Sir Eion Edgar – a leading sports administrator and celebrated philanthropist who has made a significant impact both within and beyond the sport sector. “Sir Eion’s energy, drive and generosity has been truly immense. He leaves ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Government to apologise for Dawn Raids
    The Government will make a formal apology for the wrongs committed during the Dawn Raids of the 1970’s. Between 1974 and 1976, a series of rigorous immigration enforcement policies were carried out that resulted in targeted raids on the homes of Pacific families. The raids to find, convict and deport overstayers ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Humanitarian support for Bangladesh and Myanmar
    Foreign Affairs Minister Nanaia Mahuta today announced that New Zealand is providing NZ $8.25 million in humanitarian assistance to support refugees and their host populations in Bangladesh and to support humanitarian need of internally displaced and conflict affected people in Myanmar.  “Nearly four years after 900,000 Rohingya crossed the border ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Poroporoaki: Dame Georgina Kamiria Kirby
    E Te Kōkō Tangiwai, Te Tuhi Mareikura, Te Kākākura Pokai kua riro i a matou. He toka tū moana ākinga ā tai, ākinga ā hau, ākinga ā ngaru tūātea.  Haere atu rā ki te mūrau a te tini, ki te wenerau a te mano.  E tae koe ki ngā rire ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Feedback sought on future of housing and urban development
    New Zealanders are encouraged to have their say on a long-term vision for housing and urban development to guide future work, the Housing Minister Megan Woods has announced. Consultation starts today on a Government Policy Statement on Housing and Urban Development (GPS-HUD), which will support the long-term direction of Aotearoa ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Clean car package to drive down emissions
    New rebates for electric and plug-in hybrid vehicles start July 1 with up to $8,625 for new vehicles and $3,450 for used. Electric vehicle chargers now available every 75km along most state highways to give Kiwis confidence. Low Emission Transport Fund will have nearly four times the funding by 2023 ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Progress towards simpler process for changing sex on birth certificates
    The Government is taking the next step to support transgender, non-binary and intersex New Zealanders, by progressing the Births, Deaths, Marriages and Relationships Registration Bill, Minister of Internal Affairs, Jan Tinetti announced today. “This Government understands that self-identification is a significant issue for transgender, non-binary and intersex New Zealanders, and ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Crown speeds up engagement with takutai moana applicants
    The Crown is taking a new approach to takutai moana applications to give all applicants an opportunity to engage with the Crown and better support the Māori-Crown relationship, Treaty of Waitangi Negotiations Minister Andrew Little says. Following discussions with applicant groups, the Crown has reviewed the existing takutai moana application ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Alcohol and Other Drug Treatment (AODT) Court opens
    The Minister of Justice, Kris Faafoi, and the Minister for Courts, Aupito William Sio, have welcomed the opening of a new Alcohol and Other Drug Treatment (AODT) Court in Hamilton. The AODT Court (Te Whare Whakapiki Wairua) addresses situations where substance abuse and offending are intertwined. “New Zealanders have told ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • EU and UK FTAs top of list for first ministerial trip since COVID-19
    Trade and Export Growth Minister Damien O’Connor today announced details of his planned visit to the United Kingdom and European Union next week, where he will hold trade and agriculture discussions to further New Zealand’s economic recovery from COVID-19. The visit will add political weight to ongoing negotiations with both the EU ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Arihia Bennett to chair Royal Commission Ministerial Advisory Group
    Te Rūnanga o Ngāi Tahu chief executive Arihia Bennett MNZM has been appointed chair of the newly appointed Ministerial Advisory Group on the Government’s Response to the Royal Commission of Inquiry into the terrorist attack on Christchurch mosques. “Twenty-eight people from diverse backgrounds across Aotearoa have been selected for the ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Speech to the New Zealand Medical Association General Practitioners' Conference, Rotorua
    Ki ngā pou maha o te whare hauora o Aotearoa, kei te mihiTo the pillars of our health system I acknowledge/thank you Ki te ope hapai hauora o roto o tēnei rūma, kei te mihi To our health force here in the room today, I acknowledge/thank you He taura tangata, ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Karangahape Road upgrades are streets ahead
    The upgrades to Karangahape Road makes the iconic street more pedestrian and cycle-friendly, attractive and environmentally sustainable, Transport Minister Michael Wood and Auckland Mayor Phil Goff said at the formal celebration of the completion of the Karangahape Road Enhancements project. The project included widening footpaths supporting a better outdoor dining ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Speech to APEC business event
    E ngā tumu herenga waka, ākina ā ngaru, ākina ā tai ka whakatere ngā waka ki te whakapapa pounamu, otirā, ki Tamaki o ngā waka Tena koutou katoa… To the great leaders assembled, who guided your waka through turbulent times, challenging waters and you continue to navigate your respective waka ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Pause on Quarantine Free Travel with Victoria extended
    Following an assessment of the COVID-19 outbreak in greater Melbourne, New Zealand’s Quarantine Free Travel pause with Victoria will continue for a further seven days, COVID-19 Response Minister Chris Hipkins says. There are now 93 cases associated with the outbreak in greater Melbourne, spread over four clusters. Contact tracing efforts ...
    BeehiveBy beehive.govt.nz
    1 week ago