31 Comments

My understanding is that NZ banks have no reserve requirement ratio for lending (https://www.rbnz.govt.nz/hub/publications/bulletin/1985/rbb1985-48-04-02)... I may be wrong, but I gather the OCR is the principle thing used to control the amount of money supply here (NZ banks do have liquidity requirements, but that is a different thing).

This appears to be a very common misconception, and I expect the commercial banks are more than happy for Regular Joes to not fully understand it (not that I would put you, Bernard, in that box of course, so feel free to correct me!)

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Jun 22, 2022Liked by Bernard Hickey

Fun fact 1. You've forgotten all about the state taxes. They can vary from nothing to quite a lot. The California state petrol tax is about 50US cents per gallon.

Interesting concept about RB payments in place of payments to business. Unfortunately these too will be inflationary and will also not help businesses maintain staff in times of crisis. Still perhaps we could save our employment crisis by promising all new migrants a payment of several thousand dollars when they gain residency?

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Great plan.Along with proper wealth taxes to cool inflation and recycle all that money to wealthy people and entities (the tax system needs major reform like removing income tax for anyone under about $60k and based on number of dependents and costs). We know the private debt not Government debt presents the greatest risk to the collapse of an economy and the more of Governments obligations they privatise and offload into individuals the worse that risk becomes. A line of credit for each Kiwi could mortgages, direct government aranteed income over periods (or lifelong) when productive caring and reproductive work is being done but unpaid for example. Ut would also provide access to a decent quality of life for everyone (like homes)and be able to take repayments at lower interest and flexible terms over life events for example. Really the question is why not? The economy is meant to work for us not the other way round. A definite move away from inequity and sexism, racism and unnecessary suffering and disadvantage.

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Really interesting post today. I hope you develop it further especially as you're someone who has the credibility and insight which might encourage the more conventional to think harder. NZ, being small, socially-minded and pragmatic, has the advantage that it can do new things and has a long history of doing so.

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The Gib crisis is just the tip of the iceberg. I’m in Construction and have been for 25 years, there are cost effective alternatives to the Gib bracing system. Ask yourself this: Who is selling Gib board (and other products) and to whom? Then ask, who specifies what systems are used in building? When you realise that Fletcher Building is selling it’s products and systems to the consumer via architects and designers, and using councils to enforce it, you’ll see why alternatives aren’t used and all of a sudden the crazy cost of building houses here starts to make sense.

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Is Central Bank Digital Currency heading in the direction you suggest?

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What's wrong with a good old fashioned one off "windfall tax" on al those companies and household investors that made a excessive profit in 2020-2021?

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Re Matariki cards, Matariki apps & e-táras, tū meke e hoa!

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Wow Bernard. Great Idea. I doubt whether the Bald headed boardroom bandit or the man in short pants would agree. You cant give money to “ unworthy citizens” who dont “work hard” like middle class asset owning white people,

Patrick Medlicott

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Annual trade deficit close to $10 billion. Then there are the banks taking $5 billion or so out a year. Throw in the insurance profits as well. Are Netflix, Disney+, etc counted in the trade deficit or are they a service?

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Definitely a good idea to have something already set up and tested before the next mega crisis arrives. Even if not used at least it would give the government options

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Jun 23, 2022·edited Jun 23, 2022

An interesting idea, sounds fine for the helicopter payment scenario, but digital currency for benefits has my dystopian sci fi reader alarm screeching (not sure why though)

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Love this e-taara idea. Could you please give it freely to any interested Political Party to implement or campaign on to implement? It is about time government agencies/government stepped into the Digital age... it would be great to be able to participate in our democracy in a low-effort digital way as well (vote and do regular referendums, etc).

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Hi Bernard, I see a few biases here. I'm not sure why businesses are the richest: ("Why not pay it to everyone, not just the richest") I'm sure you know of business owners whose income went from 100 to 0 overnight when we went into lockdown. I do. Some didn't make it. The government did an excellent job of getting cash to these businesses in a quick, non-bureacratic way, that would have been the envy of covid business loan applicants in other countries. Would they have been better served by having a $1000 one size fits all payment go out to every man womand and child? I don't think so.

Yes, there are examples of organisations that took the subsidy and didn't need to. Some of them thought they'd need it, and didn't. There are probably some who took it cynically, knowing full well they didn't need to. Sad.

In my own case, I neither got any of the subsidies, nor did the company I work for. I worked straight through pretty much BAU. For that matter, a helicopter $1000 wouldn't have been appropriate here either. As a question of efficiency, how well did government do, in selecting those people who needed a subsidy? It wasn't perfect, but one can certainly argue that they did a better job than helicoptering. We did not experience a huge gap up in unemployment, so again we see some success at keeping staff on payrolls. Is it better to stay employed, or to lose your job and get $1000?

It may look like a tidy balance sheet to say money printed = increased money into savings. But again, using my own example, I suddenly found myself unable to eat out, unable to go on holiday, unable to buy much of anything. OF COURSE my savings went up! That would hold true, I'd think, for anyone who kept working. There's nothing sinister in it, and it wasn't the result of government handout or money printing. It was just what happens when you don't spend.

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And we need to remember NZ hasn’t had good abortion (it was literally a crime until very recently and male prophylactics and vasectomies aren’t exactly promoted )or destigmatised reproductive education and services for women and girls so we’ve been oppressed and left doing all the work and paying all the bills, then BLAMED, to take the heat off so called men and the establishment (which was and is still, embarrassingly male) for far,far too long. Poor guys.

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Not sure that I follow you on cars - they too can be luxury items sometimes even more so than boats and planes! Also not sure of your rationale for not paying tax since it is the price of civisied society!

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