Reserve Bank Announcement: Deep Economic Pain, TOP Advocates For A 'debt Reset' As QE Stimulus

Published: Tue 25 Aug 2020 10:14 AM
The Opportunities Party (TOP) is calling on the Reserve Bank to divert its Quantitative Easing programme into wiping out personal and household debt through the introduction of a universal basic income (UBI), following the shocking Reserve Bank figures released this afternoon.
 TOP leader Geoff Simmons says the figures reveal the deep economic pain caused by Covid-19 is still unfolding, and with Reserve Bank interest rate at close to rock bottom, the Government needs to give the Bank new levers to stimulate the economy back to life.“Today’s figures by the Reserve Bank show that their loan loss provisions are five times higher than pre-Covid levels in December 2019, which tells us that the economic pain caused by the virus is far from over. The only lever that the Reserve Bank has in toolkit is to drop the official rate of interest, and it’s pretty darn close to zero right now, with plenty of economic pain to come. Also, dropping interest rates just encourages individuals and households to take on more debt at a time when we need to avoid increasing personal debt if at all possible.”
“Desperate times call for new ways of thinking and we are calling on a fundamentally new approach to Quantitative Easing. The Reserve Bank should continue to pump cash into our economic system, but in a way that doesn't push up asset prices and debt for households. TOP proposes providing a universal basic income (UBI) of $250 per week to every adult in the county. As a way to push down individual debt levels, TOP would institute a 'Debt Jubilee' policy where by individuals and households with any form of personal debt – overdue mortgage payments, rent in arrears, credit card debt, hire purchase agreements in arrears – would have to divert the UBI to this first, until out of debt. Those individuals without any debt would receive the UBI as per TOP policy and because of their low debt levels could use the additional income to spend and stimulate the economy.”
“The RBNZ has committed to buying up to $100 billion of Government bonds in the form of Quantitative Easing, and we’re still relying on the old ‘trickle down’ effect to see that stimulus passed down to Kiwi individuals. Instead of the RBNZ following failed overseas approaches that benefit a few, why don’t they pass on that money to Kiwis in the form of debt resets and a universal basic income? This would see real economic stimulus as Kiwis pay off debts and spend their UBI however they’d like to.”

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