Govt rejects call to print money

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Govt rejects call to print money

3News NZ

Economic Minister Steven Joyce says printing money would lift the cost of living for all New Zealanders

Economic Minister Steven Joyce says printing money would lift the cost of living for all New Zealanders

By Emma Jolliff

The Greens are calling on the Government to act to ease the pressure on manufacturers and exporters caused by the high New Zealand dollar.

They say our trading partners are manipulating their currencies to protect manufacturers while the National Government here does nothing.

Forty-thousand jobs have been lost in New Zealand’s manufacturing sector in the four years to June.

The International Monetary Fund estimates our dollar has overvalued by 15 percent and the Greens say it's time the Government intervened to bring it down. They want the Reserve Bank to expand the currency supply or, in old terms, print money – money, to buy assets.

“We're proposing that the assets they should purchase are earthquake recovery bonds issued by the Government, which means the Government has to borrow less from overseas, which reduces the pressure on the New Zealand dollar,” says Greens co-leader Russel Norman.

Dr Norman also suggests using that Reserve Bank credit to invest in the Natural Disaster Fund.

But the Government says printing money would lift the cost of living for all New Zealanders.

“All that would do is make the international market look at New Zealand and say ‘no, you're losing the plot’, and we need to continue to work hard to grow the New Zealand economy,” says Economic Minister Steven Joyce.

But BERL chief economist Ganesh Nana agrees the Government needs to act.

“It's a market failure that we've got a New Zealand dollar that is so inappropriate for the New Zealand export sector,” he says.

“It's a bit tough for some exporters but it's actually a vote of confidence in the New Zealand economy,” says Mr Joyce.

Dr Nana says China, the US, Europe, the UK and Japan are all manipulating their currency to their benefit.

“We in little old New Zealand are left high and dry trying to abide by a text book that's way out of date,” says the economist.

The Labour Party says the Reserve Bank should focus less on inflation and more on the exchange rate.

“The National Party is ignoring international trends and we're losing jobs in New Zealand as a consequence,” says Labour Finance spokesman David Parker.

The downside of printing money is of course inflation, but Dr Nana says inflation is yesterday's problem and we're facing a much scarier problem – the prospect of deflation.

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Comments

14/12/2012 2:23:47 a.m.

Isaac wrote:

Just print it! Those who are refusing are just disillusioned into thinking that things will get better. Surely they know that unless the American economy isn't diluted into the North American Union (USA, Canada & Mexico) in the formation of the Amero dollar and subsequent TPP deals everyone's currency will be strangely reduced to the worth of the paper it's printed on. We can all rest assured that one day everybody will be in so much debt it won't mater and the system will collapse. Print it I say, at least we will have an enhanced infer structure to see us through until the next global con comes along.

9/10/2012 9:05:19 a.m.

Greg wrote:

Anybody notice that they have stopped rabbiting on about saving for retirement. I suppose thats all good now. Kiwisaver is taking millions out of the local economy and just making the recession worse. If they want to devalue the dollar then take make it a non floating one like the Yuan. China still has 3 trillion of U.S. toxic debt, they wont be happy with the value dropping. Wait till they start dumping that.

8/10/2012 10:50:34 a.m.

mongreldog.co.nz wrote:

The US is in a bit of an paradox because it holds the current status of "reserve currency", they are debasing their currency through QE and if done for long enough reserve banks around the world will stop holding USD as reserve. We have already seen many major commodities to stop trading in USD. And the American public can see this. Part of this paradox is that printed money has a stimulus effect in USA toward consumption and spending, most of that goes to imported goods and if you look at the job numbers they are actually adding more service and retail jobs than manufacturing. Essentially increasing the speed their economy will gain debit and fail. To say that QE (printing) is a stimulus is a bit of a misrepresentation, it is actually a transfer of wealth from those holding deposits to those who hold debit. It encourages irresponsible decisions to recklessly spend, and therefor not invest. Remember Savings = investment. And Investment is what creates more efficient workplaces where people can earn a higher wage. A man with a spade can only do soo much, but a man skilled in using a Digger can do much much more work in the same space of time and earn a far higher wage. This is what the greens want to destroy. They may wish to force the minimum wage up with legislation but their policies will make it impossible to save and purchase the capital goods required for an hourly rate they talk about.

8/10/2012 1:53:12 a.m.

G C Cameron wrote:

I disagree with Dr Nana who says 'inflation is yesterdays problem' and also Labour's Finance spokesman David Parker's comments on New Zealand losing jobs due to supposedly 'ignoring international trends'. Since 2008 the global trend has been for economies to contract. The application of austerity to Greece, the near Euro Collapse, the United States are introducing QE3 and the Arab Spring. These countries have unemployment rates that makes New Zealand's 6.8 percent unemployment look acceptable. New Zealand expands the money supply through the factional reserve banking practice where every bank-loan made is expanding the money supply. Labour's idea of basically printing cash (expanding money supply) by selling government bonds would devalue the dollar. However this I believe would not be a good thing. The NZ Dollar is like a boat, not a glamorous boat but a sturdy boat taking NO water on-board. The Green Back is a glamorous boat but taking on-board water (bad debt). As the Green Back boast takes more and more water on-board the NZ Dollar Boast seems higher. Why would we want to sick our boat, silly Labour Party. Anyway, the NZ Dollar will go down, even just for a short time so the banks can move into their second phases in currency trading.

7/10/2012 9:37:43 p.m.

R. Shapero wrote:

I'm an American who loves NZ, and all I can say is, "Don't trash your currency just because other countries are doing it." America is bankrupt--a sinking ship. Don't let it happen in NZ. Please.

7/10/2012 9:06:53 p.m.

helen time wrote:

this guy is a bigger lair than mr key , the usa is just printing money , the British government and the opposition do not at all want the government to print money . see they killed manufacturing no body makes anything and sells it anymore so they are lost for creating wealth . and mr propoganda above wants to steal the nations wealth instead . mr joyce capitalists used to make a thing sell it and get rich whats wrong with that ? . morons that's all plain morons freemanites .they go for the flash shiny thing but traditional capitalism has stood for thousands of years mr Joyce it works try it . under mr joyce corporate socialist government we go bank rupt .he advovates welfare for big business and the rich , course he gives it another name .he is all for tax payers picking up the losses of big business. they are gone in 2014 i don't think the media can even save them.