Printing money doesn’t create jobs

“Directing the Reserve Bank to focus on employment ignores the basic fact that printing money doesn’t create jobs”, says ACT Leader David Seymour.

“Monetary policy doesn’t affect employment in the long-term.

“Jobs are created when we have a world-class education system, a flexible labour market, and a sound welfare system, none of which is related to monetary policy.

“If central banks were able to increase employment by printing money, Zimbabwe would be a thriving economy. Instead, it is a basket case.

“Forcing the Reserve Bank to focus on both inflation and employment will put it in an impossible situation.

"When inflation starts to increase as a result of the Government’s massive spending plans, the Reserve Bank will face a difficult choice: raise interest rates and therefore short-term unemployment, or accept higher inflation with all of its damaging consequences.

“New Zealand’s employment rate is high compared with other developed countries. If we want to keep it that way, fighting inflation should be the sole focus of the Reserve Bank. Low inflation is an absolutely necessary condition for strong economic performance.

“These changes are economic vandalism of the highest order”, says Mr Seymour.

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