RBNZ set to pay banks $3.3b in interest on $53b-plus on cash balances in RBNZ settlement accounts; Robertson looked at cutting interest paid as type of bank tax; RBNZ & Treasury said no
Do you think the old man shouting to the clouds about Local Government and Auckland councillors deliberately held the vote on leaving Local Government NZ last Thursday - just before Posie Parker arrived in NZ - knowing media coverage of the pull-out would be subsumed by coverage of her (aborted) rally?
And yes, as the other David says, you should open this up.
That inflation-benefits chart reminded me of https://wtfhappenedin1971.com/ (Disclaimer: statistics (LDLaS); Bonus disclaimer: maybe run by Bitcoin and gold-standard enthusiasts)
Not sure if ‘corrupt’ tells us much. The critical thing is that at this point in the moribund stage of finance dominated capitalism the transfer of wealth from workers and small businesses is both systemic and unavoidable. The collapse in 2008 has never been resolved, cannot be resolved within the present framework. Insofar as the the whole system is morally bankrupt you could say the payment to the oligarchy is corrupt but it is not abnormal.
I am drowning in a wave of despair. Does ‘moribund stage’ mean you think this corrupt system will end anytime soon, if so, then how.? To the oligarchy, the rest of us are expendable and I fear they are consuming this planet to extinction.
- [ ] Dying, putrid, all its productive forces expended. I note, with Marx and others, that capitalism did have a youthful energy that overwhelmed the forces of feudalism and shifted production and social relations on to a new stage. A recent example is the moving of nearly a billion people in China out of poverty. That era is gone and leads to
- [ ] Every action is barbarous, deadly: child poverty, environmental destruction + is a direct result of banks etc bleeding others to feed themselves.
Our own interests lie in a bottom up complete rebuild. On marae, in trade unions, schools, churches, etc. initially. Then on to new social structures. Kia kaha.
For anyone able to switch banks there is an option to be part of change in the banking industry norms ie. switch to the Coop Bank of NZ. Co-benefit of reducing investment in fossil fuel perpetuation according to this 2022 summary https://350.org.nz/fossil-free-banks/
I'd have to agree with Treasury/RBNZ on this one. Artificially skewing the interest rates for banks away from the OCR overcomplicates things and creates an unnecessary schism.
If Government wants to tax/rein in bank profits, they should go about it in a more direct, transparent manner
Governments, pale stale blue and pale stale red, like to pass the buck if they think they can.
However, if they were a tad more vivid in their colouration they could pass a law matching the interest rate on the bank's settlement account balance to what the bank pays to depositors on their on-call account.
The current margin between the two is probably encouraging the banks to lend as little as possible as they're getting a higher profit without the risk of borrower default.
Where will the banks get their super profits from otherwise? They have successfully destroyed the real productive base of the economy in Aotearoa and left us with, as Bernard frequently notes, a real estate market with add-ons.
Agreed, but it was our government who destroyed our country because they are the ones who made the rules for the banks. “They” gave money to their mates. To find out who “they” are, just follow the money and who decided to give it. What’s it called when people in power give public money to their mates?
The current financial/monetary system in New Zealand is diabolical !!! Justice and morality require that the expansion/increase of the money supply in NZ must be by the NZ government only and they would loan to banks and others as required. The flow of money into and out of New Zealand would need to be carefully and thoroughly controlled.
Yes! Why would the government allow this state of affairs when it’s so destructive to this country? There’s only two possibilities. The people making the decisions are incompetent or corrupt. What other explanation is there?
Hi Bernard I liked your comment about corporate welfare and whether National or Act would be screaming from the roof tops how ever they are likely to say without the help this would impact on business and jobs. Yeah right.
This reminds me of Covid where Corporations were paid substantial dollars to keep workers employed where in fact some of them used the subsidies to increase the dividends to their shareholders. I don’t recall neither National nor ACT complaining about payment of the subsidies but I do recall the Auditor - General commenting on how the subsidies were implemented.
Excellent Bernard. Right down to the nitty gritty of why NZers have to suffer.Some more than others. Very deceptive and undemocratic and certainly not in our country or peoples best interests. It’s almost treasonous so no wonder they’ve taken that off the books. Far better our public funding facilities goes to the people than offshore banks.
When will you understand that raising interest rates is NOT going to effect inflation. Any hint of more raises should be strongly attacked, not withstanding whatever RBNZ does about IOR.
Wasn't this QE bond buying spree about fear during the first phase of Covid? Businesses were shuttered, would be drawing down their accounts in order to pay their bills. People would be drawing down their accounts in order to pay their bills. Nobody knew how far this would go, so inject a bunch of cash into the banks to provide liquidity.
This is exactly where SVB fell apart in one week. They had govt bonds and needed cash. No cash was to be had. Oops, gotta close the doors.
You pump out money so this doesn't happen. See: Fed discount window lending goes from $5B to $150B in a week. Perhaps it wasn't necessary in NZ to make the moves that were made. idk. We get the benefit of hindsight.
I don’t think anyone blames the initial decisions made when faced by unprecedented situations. It’s the decisions (inaction is also a choice) made to not fix problems for society (that were windfalls for vested interests) caused by those first decisions that are inexcusable.
Firstly, if the earnings on these reserves are cut to zero, the banks will just buy governance paper instead (these reserves count towards their liquidity ratios). This would drive down interest rates and work at odds to the RBNZs desired direction.
Secondly, if we don’t want the government spending money on interest expense, that paid to the banks is a triviality compared to the overall bill and the real crime is using interest rates as the tool to crush the economy rather than directly restricting private money creation in the commercial banking system through RBNZ directive.
Justice and morality require that in New Zealand the government must be the only entity that can expand/increase NZ's money supply, and loan to the banks and others as necessary.
The flow of money into and out of NZ would need to be carefully and thoroughly controlled.
yes you should open this up ...
Agree
Do you think the old man shouting to the clouds about Local Government and Auckland councillors deliberately held the vote on leaving Local Government NZ last Thursday - just before Posie Parker arrived in NZ - knowing media coverage of the pull-out would be subsumed by coverage of her (aborted) rally?
And yes, as the other David says, you should open this up.
That inflation-benefits chart reminded me of https://wtfhappenedin1971.com/ (Disclaimer: statistics (LDLaS); Bonus disclaimer: maybe run by Bitcoin and gold-standard enthusiasts)
I'm starting to think the entire banking system is corrupt.
Not sure if ‘corrupt’ tells us much. The critical thing is that at this point in the moribund stage of finance dominated capitalism the transfer of wealth from workers and small businesses is both systemic and unavoidable. The collapse in 2008 has never been resolved, cannot be resolved within the present framework. Insofar as the the whole system is morally bankrupt you could say the payment to the oligarchy is corrupt but it is not abnormal.
I am drowning in a wave of despair. Does ‘moribund stage’ mean you think this corrupt system will end anytime soon, if so, then how.? To the oligarchy, the rest of us are expendable and I fear they are consuming this planet to extinction.
Yes, moribund in two senses:
- [ ] Dying, putrid, all its productive forces expended. I note, with Marx and others, that capitalism did have a youthful energy that overwhelmed the forces of feudalism and shifted production and social relations on to a new stage. A recent example is the moving of nearly a billion people in China out of poverty. That era is gone and leads to
- [ ] Every action is barbarous, deadly: child poverty, environmental destruction + is a direct result of banks etc bleeding others to feed themselves.
How long will it last? Only until we destroy it. There’s no other timeline. Until then it can get exponentially worse than our experience in Aotearoa. For a taste see this report from Adam Tooze today on how the IMF and the merry band of banking oligarchs are literally bleeding every drop from war-torn Ukraine right now and for the foreseeable future. https://open.substack.com/pub/adamtooze/p/chartbook-205-does-ukraines-war-economy?r=d56cc&utm_medium=ios&utm_campaign=post
Our own interests lie in a bottom up complete rebuild. On marae, in trade unions, schools, churches, etc. initially. Then on to new social structures. Kia kaha.
Yes, I probably wouldn't say 'corrupt', but certainly 'on the same page'... even 'our own' Kiwibank's standard accounts offer 0% interest
For anyone able to switch banks there is an option to be part of change in the banking industry norms ie. switch to the Coop Bank of NZ. Co-benefit of reducing investment in fossil fuel perpetuation according to this 2022 summary https://350.org.nz/fossil-free-banks/
100%... Bring on account portability regulation!
Demonstrably corrupt.
the banking system in New Zealand is diabolical !!!
I'd have to agree with Treasury/RBNZ on this one. Artificially skewing the interest rates for banks away from the OCR overcomplicates things and creates an unnecessary schism.
If Government wants to tax/rein in bank profits, they should go about it in a more direct, transparent manner
Governments, pale stale blue and pale stale red, like to pass the buck if they think they can.
However, if they were a tad more vivid in their colouration they could pass a law matching the interest rate on the bank's settlement account balance to what the bank pays to depositors on their on-call account.
The current margin between the two is probably encouraging the banks to lend as little as possible as they're getting a higher profit without the risk of borrower default.
How would that settlement account rate relate to the OCR? Would seem to risk undermining the RB independence.
Currently the same as OCR. Yes on independence, but that was sort of blown anyway with QE
The OCR becomes irelevant. The legislation sets the new terms: - matching deposit rates to settlement account rates.
Where will the banks get their super profits from otherwise? They have successfully destroyed the real productive base of the economy in Aotearoa and left us with, as Bernard frequently notes, a real estate market with add-ons.
Agreed, but it was our government who destroyed our country because they are the ones who made the rules for the banks. “They” gave money to their mates. To find out who “they” are, just follow the money and who decided to give it. What’s it called when people in power give public money to their mates?
the current diabolical banking system in New Zealand needs to be completely changed.
release please Bernard.
Patrick Medlicott
Happy to open this up. The more people who understand rorts like this, the better.
Issues like this deserve an independently moderated cross party discussion and resolution, in my opinion. Any precedents for that?
Thanks Dave, David and Alex. Will open it up.
Open this up Bernard
I've opened that up for reading, listening and sharing in public now.
The current financial/monetary system in New Zealand is diabolical !!! Justice and morality require that the expansion/increase of the money supply in NZ must be by the NZ government only and they would loan to banks and others as required. The flow of money into and out of New Zealand would need to be carefully and thoroughly controlled.
Yes! Why would the government allow this state of affairs when it’s so destructive to this country? There’s only two possibilities. The people making the decisions are incompetent or corrupt. What other explanation is there?
Gary Dyall
Hi Bernard I liked your comment about corporate welfare and whether National or Act would be screaming from the roof tops how ever they are likely to say without the help this would impact on business and jobs. Yeah right.
This reminds me of Covid where Corporations were paid substantial dollars to keep workers employed where in fact some of them used the subsidies to increase the dividends to their shareholders. I don’t recall neither National nor ACT complaining about payment of the subsidies but I do recall the Auditor - General commenting on how the subsidies were implemented.
Excellent Bernard. Right down to the nitty gritty of why NZers have to suffer.Some more than others. Very deceptive and undemocratic and certainly not in our country or peoples best interests. It’s almost treasonous so no wonder they’ve taken that off the books. Far better our public funding facilities goes to the people than offshore banks.
When will you understand that raising interest rates is NOT going to effect inflation. Any hint of more raises should be strongly attacked, not withstanding whatever RBNZ does about IOR.
Wasn't this QE bond buying spree about fear during the first phase of Covid? Businesses were shuttered, would be drawing down their accounts in order to pay their bills. People would be drawing down their accounts in order to pay their bills. Nobody knew how far this would go, so inject a bunch of cash into the banks to provide liquidity.
This is exactly where SVB fell apart in one week. They had govt bonds and needed cash. No cash was to be had. Oops, gotta close the doors.
You pump out money so this doesn't happen. See: Fed discount window lending goes from $5B to $150B in a week. Perhaps it wasn't necessary in NZ to make the moves that were made. idk. We get the benefit of hindsight.
I don’t think anyone blames the initial decisions made when faced by unprecedented situations. It’s the decisions (inaction is also a choice) made to not fix problems for society (that were windfalls for vested interests) caused by those first decisions that are inexcusable.
Another good piece BH, but a few challenges.
Firstly, if the earnings on these reserves are cut to zero, the banks will just buy governance paper instead (these reserves count towards their liquidity ratios). This would drive down interest rates and work at odds to the RBNZs desired direction.
Secondly, if we don’t want the government spending money on interest expense, that paid to the banks is a triviality compared to the overall bill and the real crime is using interest rates as the tool to crush the economy rather than directly restricting private money creation in the commercial banking system through RBNZ directive.
Justice and morality require that in New Zealand the government must be the only entity that can expand/increase NZ's money supply, and loan to the banks and others as necessary.
The flow of money into and out of NZ would need to be carefully and thoroughly controlled.
The current system is diabolical !!!
Well that was a bleak listen, thanks for opening this one up Bernard