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Economists' Quotes

“The government can borrow from the Reserve Bank. To be technical, it’s literally
borrowing from itself. We should not close off any [options] just because somebody
told us 30 years ago that it was bad.” Ganesh Nana, Senior Economist and Research
Director of BERL - Radio NZ Morning Report 16.04.20.

Dr Nana describes the Reserve Bank’s suggestion that it could finance government
debt directly as a "no-brainer". "It’s been in the textbook a long time ... It’s just
another tool in the toolbox to use when sensible. And now is the time to use that,
very definitely." Ganesh Nana, Senior Economist and Research Director of BERL -
Otago Daily Times 04.05.20


“There’s no reason why you don’t get the Reserve Bank to effectively print the
money and lend it to the government, just as [it] did in 1935, when it lent money to
the government to build state houses.” Bernard Hickey, economic commentator, financial journalist - Radio NZ National 19.03.20


“Issuing money in the current circumstances has impeccable support from
mainstream economic thinking. In the current context it is the correct, most
efficacious way to proceed. [Govt] should not be prisoners of outmoded, arch-
conservative political doctrines.” Dr Geoff Bertram, former Senior Lecturer in
Economics at Victoria University - BERL website 06.04.20; & NZ Herald 13.04.20

“What the Reserve Bank needs to do now is to make clear that it can and will
purchase government bonds directly from the Treasury at 0%. These funds should be
used to fund the current and forthcoming economic support packages.” Raf Manji,
former investment banker, strategy and risk consultant - 23.03.20


“A sovereign country need never be short of money. We may, in particular instances,
be short of the materials, skills, and labour needed for production, but governments
can create money whenever we want and wherever it is needed.” Bryan Gould,
Rhodes Scholar, UK diplomat, Oxford law don, former vice chancellor, Waikato
university - Blog 21.03.20


“There is an alternative to a strategy based on higher taxes and/or more government
debt - namely, direct, unrepayable funding by the central bank. A transfer from the
central bank to the government.”
“Central banks have the ability to create money.......and credit the government’s
account. Money-financed fiscal interventions are a powerful tool. If ever, the time
for helicopter money is now.” Jordi Galí, Macroeconomist, Research Professor
Barcelona School of Economics 17.03.20


“We are going to simply say we want $40 billion this year, and $20 billion next year
of direct fiscal stimulus to the economy, which, we, the central bank, are printing the
money to provide. It doesn’t have to be borrowed money.” Adair Turner,
businessman, former chairman Britain’s Financial Services Authority

“Direct monetization, I know, has been heresy, taboo for a long time, but it’s only a
long time in our lifetime.” “It’s not a mysterious issue. It’s just not how we’ve run
business.” Adrian Orr, Reserve Bank Governor 21.04.20

“I don’t see why we don’t jump straight to the RBNZ buying bonds from Treasury
direct. Central banks will have to step in and buy these bonds.” Shamubeel Eaqub -
economist, author and media commentator 31.03.20 & TVNZ Sunday
Programme 19.04.20

Experts' Quotes

"What's absolutely clear is that what everybody used to call unconventional
monetary policy is now front and center of the monetary policy of most countries,"
Mr. Robertson said.


"So things like helicopter money, as it's sometimes called, is part of a potential
package. “There are upsides and downsides to all of these options, and that's what
we have to work through." Grant Robertson 24.04.20


"Literally just cash out to poor people," Shamubeel Eaqub "If you give poor people
money, they will spend it." 19.09.19


"The other option is "helicopter money" which you somehow get out to people"
Infometrics Economist Brad Olsen 22.07.19

"I'd say a good $1500 per adult and $500 per child would cover a few months of
bills for struggling households. Let's support local businesses with a shot of
adrenaline in the economy and try and kick-start some momentum." Kiwibank
chief economist Jarrod Kerr says. 24.04.20


“Being able to do the helicopter kind of money concept would be around being able
to inject cash into the system. That sounds quite exciting”. Reserve Bank Governor
Adrian Orr 23.08.19

“Helicopter money” is therefore a valid and viable policy option. It has solid
credentials in the economic literature and the time to implement it is now. Dr
Geoff Bertram 06.04.20

“I do think the time is right for monetary finance. There would be a clarity of
assuring people that there is no limit on the money available.” Adair Turner

Paul Keating, former Australian Prime Minister and Treasurer:

The RBA should be funding the "mountainous sums" of government spending required to support the corona-ravaged economy, and it should not rule out the policy option of buying government bonds directly from Treasury to do so. In an economic emergency that means breaking with orthodoxy and "doing what is sensibly required".

It would make Federal Government's funding task "much easier and support for the country better" if the Reserve Bank bought whatever level of government debt was necessary and locked it away on its balance sheet.

He criticised RBA officials for lacking the courage to break with economic orthodoxy to allow monetary financing of deficit spending, or to even support a larger traditional bond-buying program, and said they are too concerned about what other central bankers would think if Australia went down that path.

It has to be remembered, these are the high priests of the incremental," Mr Keating commented "Making absolutely certain that not a Bank toe will be put across the line of central bank orthodoxy". "Certainly not buying bonds directly from Treasury — wash your mouth out on that one — what would they say about us at the annual Bank for International Settlements meeting in Basel?

Treasury & Reserve Bank Aide Memoir

An Aide Memoir jointly written by Treasury and the Reserve Bank, was presented to Finance Minister Grant Robertson in May 2020.

The aide-memoire, titled “Quantitative Easing and Monetary Financing Compared” lays out the benefits of monetary finance (the Reserve Bank providing finance direct to the government) compared with quantitative easing or QE (the Reserve Bank buying bonds previously purchased by the commercial banks).

The report says that Monetary Finance could be used to “meet specific funding needs of the Government at lower cost and with greater certainty than QE”.

Download it here

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