Media Release
Friday 24 October 2008
Bollard should not be so predictable
“The Reserve Bank Governor, Dr. Alan Bollard, should not be so predictable”says John Pemberton, Finance spokesman for Democrats for social credit (DSC). “Every orthodox economist and their unthinking hangers-on, the media, had the one percent OCR drop sussed weeks ago.
“When it is obvious to thinking New Zealanders that the current financial meltdown has been caused by economic
orthodoxy, then it should have been obvious to Bollard that orthodox solutions are bound to fail – at best a one percent
drop is but another stop-gap measure,” Pemberton says.
“Bollard should have announced:
‘The Reserve Bank has established a credit facility for the Finance Minister to use on behalf of the Crown. This
facility is of a similar nature to that recently established to assist Trading Bank liquidity but will be accessible at
the cost of administration only - less than 1% interest.
‘The Government would be able to borrow from this facility to fund or refinance any of its current borrowing
requirements. Funds would also be available for any of the Government’s proposed infrastructural development projects.
It is also envisaged that the Government would share this facility to satisfy Local Government infrastructural
development.
‘All principal, interest, and other money that is payable in relation to money borrowed by the Crown or Local Authority
is a charge on, and is payable out of, the revenues of the Crown or Local Authority.
‘In addition the Reserve Bank has decided to extend its liquidity facility to the trading banks. This increase will
cover all the advances trading banks currently make available to their customers. It will be made available at the cost
of administration only – less than 1% - and trading banks are able to add their margin (approx. 2.50%) on top when it is
on-lent. The trading banks will be given formal directions to cease advancing any monies to their customers unless it is
sourced from their Reserve Bank facility.’
“The above announcement would not have been predictable,” Pemberton continues. “The Governor would have seen immediate
evidence of a reduction in domestic cost pressures, and New Zealand’s economic activity would not be further
constrained.”
ENDS