Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 

Democrats Describe OCR Increase As Dumb Move


Thursday, 27 October 2005

Democrats Describe OCR Increase As Dumb Move

The Democrats today attacked the move by the Reserve Bank to bump interest rates to reduce inflationary expectations and suggested the government should consider renaming it the Reverse Bank.

The increase in the OCR will simply add cost onto an existing inflationary spiral, being caused partly by the spike in oil prices, partly by the growing current account deficit but mainly by respective governments using interest bearing debt as the foundation of economic activity.

It was amazing to hear an economist on Morning Report today saying there is a real need to reduce the amount of discretionary spending available to individuals in order to increase the ability of the economy to create jobs and increase prosperity in the future. In other words he is saying the economy has to be killed in order to save it.

The real need is actually for people to be aware the increase in interest rates will not only NOT get rid of inflation but will actually add to the cost of virtually everything that they purchase.

There is a growing awareness that the orthodox wisdom in regard to the debt based foundation of economic activity is actually a pretty dumb way to run the show. Every time there is any sign of growth in the economy leading to an ability to build wealth, orthodox wisdom dictates that prosperity will be bad for us and it is snuffed out, along with jobs and incomes.

What is needed is a real reform process which will enable growth in the economy, based on backing the debt driver of inflation out of the economy and thereby giving the productive sector the wings it needs to fly.

That can only be achieved by recognising conventional economic theory is outdated and therefore largely irrelevant when the monetary base on which economic activity is dependent consists almost entirely of interest bearing debt and increasing the interest rate will add cost to every aspect of that activity.

The Treasury/Reserve Bank single lever solution of fiddling with the OCR will lead directly to a reduction in economic activity and simply reinforce the declining confidence that is currently showing up in the performance of the economy.

ENDS

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Scoop 3.0: How You Can Help Scoop’s Evolution

Entering into its third decade of operation, the Scoop news ecosystem is set to undergo another phase of transformation and evolution.

We have big plans for 2018 as we look to expand our public interest journalism coverage, upgrade our publishing infrastructure and offer even more valuable business tools to commercial users of Scoop. More>>

 
 

Speaking Of Transport: Public Engagement On Wellington Scenarios

“Our work on possible solutions for Wellington’s transport future is ongoing, but has progressed to the stage where we’re ready to share our ideas with the public and seek their feedback to help guide our next steps...” More>>

ALSO:

Parental Leave: National's Time-Sharing Change Fails

National has proposed a change to the Parental Leave and Employment Protection Amendment Bill that would allow both parents to take paid parental leave at the same time, if that is what suits them best. More>>

ALSO:

Train Free Thursday: Workers Strike To Defend Terms Of Employment

"They signed up to these conditions a year ago when they got the contract for Wellington's rail services. Now they're trying to increase profits by squeezing frontline workers." More>>

ALSO:

Seclusion: Ombudsman Emphasises Importance Of Monitoring

Disability Rights Commissioner Paula Tesoriero says that while there have been changes to the Education (Update) Amendment Act 2017 to prohibit the use of seclusion, the report is an important reminder of the importance of regular monitoring of schools. More>>

ALSO:

United Future History: "All Good Things Must End"

'We’re extremely proud of what we’ve achieved over the past 15 years, working alongside the government of the day, both National and Labour.' Mr Light told members on Monday. More>>

Gordon Campbell: On The TPP Outcome, And The Hobbit Law

Somehow the Trans Pacific Partnership trade deal has come lurching back from the dead – and as predicted in this column last week, the member countries gathered in Vietnam have announced a deal in broad principle, shunted aside until a later date the stuff on which they don’t agree, and declared victory. More>>

Agreeing To Differ: Greens Maintain Opposition To TPPA
“The Green Party has long opposed the TPPA. The new proposed deal, which came out of the weekend’s talks, still contains key ISDS concessions to corporations that put our democracy at risk, so our position remains the same,” said Green Party trade spokesperson Golriz Ghahraman. More>>

ALSO:

Monitoring Report: A New Chapter For Children’s Rights In New Zealand?

The Children’s Commissioner is calling on the country to embrace children’s rights to ensure their overall well-being. More>>

ALSO:

 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

Featured InfoPages

Opening the Election