Over the coming decades taxpayers will spent 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.