Media Release

Monday 3rd February 2014

Graeme Wheeler’s out of touch

Reserve Bank governor Graeme Wheeler has sounded the death knell to the country’s weak economic recovery by foreshadowing a lift in the OCR in the very near future, Democrats for Social Credit Leader Stephnie de Ruyter said in an address to a party meeting in Petone yesterday.

His plan to use higher interest rates as the only tool in an effort to hold down any increase in inflation proves that he is out of touch with modern economic thinking.

The move is akin to a prehistoric caveman wielding a large club to beat a mouse into submission, she said.

At a time when the country’s economy is starting to drag itself out of the doldrums, he is proposing to increase interest rates and send it plunging back into recession.

Higher interest rates will be passed on by businesses into higher prices, with the only winners being the Australian owned banks who will see already obscene profits skyrocket through bigger margins.

Mr Wheeler should take a lead from the Federal Reserve, and central banks in Europe, Japan, China, and numerous other countries, and use the Reserve Bank he heads to provide low interest loans for local and central government infrastructure projects.

Such action would result in significant job growth and put real money in the hands of consumers to fund increased retail sales rather than them being funded by credit card debt.

Despite dire predictions by economists, and the scare tactics of politicians over many years, increases in the money supply implemented by overseas central banks have not flowed into higher inflation, rather they have resulted in the reverse.

A recent report by the International Monetary Fund backs up this approach.

It’s time Mr Wheeler dragged our central bank into the 21st century and started using its capability as it should be used.

ENDS

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