Orr challenged to prove he's right on housing
13 December 2020
by Chris Leitch, Leader
Social Credit leader Chris Leitch is calling for Reserve Bank governor Adrian Orr to prove he’s right in his claims the Bank is not responsible for the staggering 20 per cent boom in house prices.
“He could do that by stopping the flow of newly created money the Reserve Bank is shovelling into the vaults of the commercial banks who are using it as a base to create new money to lend for housing”.
He should take the advice of Winston Churchill who said “No matter how beautiful the strategy, you should occasionally look at the results” and the results of the Bank’s actions are plain to see.
“Redirecting its $28 billion Funding for Lending programme straight to the government would provide it with a debt-free, zero-interest line of credit to do things for Kiwis – like boosting incomes for people struggling with poverty, a plea made last month by seventy four organisations working to support those people”.
“It would be as simple as flicking the points on a railway system and sending a train down a different track, and we would soon see what effect that had.”
That money could then be spent by people in the supermarkets and at retailers across the country, boosting jobs, generating profits, likely reducing debt, spreading the effects widely with renewed economic activity and maybe generating the little boost in inflating Orr is looking for, or though
goodness knows why.
By sticking stubbornly to his current track Orr is doing the exact opposite – starving the real economy of much needed spending, boosting house prices instead of employment, and massively increasing the profits of the Aussie banks and the debt of Kiwis.
The Reserve Bank is directly boosting those bank profits by not only providing the banks with interest free money (because it pays them interest on money in their settlement accounts), but also buying government bonds on the secondary market that they bought from the Treasury in some cases just a few days earlier.
That’s costing $11.1 billion over the next three years - depriving hospitals, schools, the homeless and those in poverty of much needed money.
Nurses, doctors, teachers, social workers, emergency housing providers, food banks, and charities supporting hundreds of thousands of Kiwis should be up in arms over that action and demanding
Orr channels that money and the $28 billion to the government instead.
The Reserve Bank has already provided the government with a report showing how Direct Monetary Finance could be used to “meet specific funding needs of the Government”.
It now needs to advise the government it has the funding available and recommend it be taken up.