Damien Grant, www.stuff.co.nz, 6 September 2020
OPINION: Last week the Reserve Bank printed $1.4 billion. That’s the equivalent of 116 Green Schools at the prevailing rate. This was a typical week.
No one cared. There were no headlines. No one asked for Adrian Orr to resign.
$1.4b is the equivalent of $280 for every New Zealander. In a single week.
Did you see any of that money? Probably not. So you may wonder, where is all of this cash going?
Orr hinted at the effect of this spend-up at a speech to the Victoria University School of Government last week.
“We acknowledge that lower interest rates inflate asset prices, which is a transmission mechanism that monetary policy works through. Higher house prices, for example, make people feel wealthier, more inclined to spend, which supports the economy.”
Orr’s money-printing programme is making the rich richer in the hope that they will spend some of this cash on frivolities like restaurant meals and herbal supplements, thus benefiting those minions who provide such services who are able to retain their jobs.
This is trickle-down economics.
By printing cash, Orr is allowing Wellington to spend money without the irritating detail of taxing or borrowing it. $1.4b on an annualised basis is $72b, about 80 per cent of pre-Covid government spending.