Ideological purity costing taxpayer billions
12 April 2020
From Chris Leitch, Social Credit Leader
Over the coming decades taxpayers will spend billions of dollars paying off the government’s economic rescue package because the Reserve Bank and the Government don’t want to ”blur the lines between fiscal and monetary policy” according to RBNZ’s assistant governor, Christian Hawkesby.
That means funding of the rescue package will be done through an economic merry-go-round that will see a massive transfer of wealth from citizens to the mainly overseas shareholders of the country’s banks and investment funds.
The result will be kiwis saddled with massive additional debt and interest payments when it could have cost nothing – freeing up tax dollars to be spent on health, education, housing and infrastructure.
The Reserve Bank could directly fund the $52 billion package without incurring any cost to taxpayers – something called for in recent days by former Senior Lecturer at the School of Economics and Finance at Victoria University Dr Geoff Bertram.
That call has been echoed by economists Raf Manji and Shamubeel Eaqub and economics commentators Bernard Hickey and Bryan Gould.
“This is not wild radicalism. It is mainstream, even conservative, economics,” according to Dr Bertram.
The Bank of England has just announced it will directly fund some of the British Government’s rescue package and there’s no bar on our Reserve Bank doing the same.
Instead the government is borrowing that $52 billion dollars through the sale of bonds to banks and other financial entities and investors. Those purchasers buying the newly issued government bonds are the very same people who are now flush with funds because the Reserve Bank is spending $30 billion dollars to buy from them bonds they previously held.
Those wealthy investors will make a substantial profit from ‘clipping the ticket’ on both transactions, and taxpayers will foot the bill.
$5 billion dollars of taxpayers money already goes every year to pay interest on existing government debt – money that could be spent on health services, solving the housing crisis by building rent to own homes, providing free dental care, or a multitude of other possibilities.
Finance Minister Grant Robertson wants to add even more to that figure. “New Zealand is in a position to continue to be able to take on debt’, he is quoted as saying.
The self imposed appearance of the Reserve Bank not directly financing the Government is sheer economic madness in these unprecedented times.
Canada’s central bank purchases approximately 20 percent of government bonds issued every year on a regular basis.
The first Labour government financed the building of thousands of state houses with Reserve Bank money.
The Commonwealth Bank (Australia’s central bank at the time) supplied the Australian government with funding for major infrastructure development.
China finances the majority of its government owned companies and major projects like its Belt and Road projects from its central bank.