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


Labour, National Experts Agree on Failed Approach


Thursday, 9 November 2006

Labour and National Experts Agree on Failed Approach

If anyone believes the ‘experts’ on the construct of the NZ economy have an answer to what causes inflation they just need to take note of the latest admission of failure from three of them.

Under the heading “Inflation conundrum unites unlikely threesome” Michael Cullen (Finance Minister) Don Brash (Former Reserve Bank Governor) and John Key (National Spokesperson on Finance) have revealed today in the NZ herald that none of them have a solution to the inflation conundrum and that “a search party of officials” sent out to look for a solution “came back empty handed”.

Well that is not a surprise, given that the territory where they looked is as barren as the surface of the moon and any solution sought within the framework which led to the inflation issue, without changing that framework, simply can’t work.

Inflation is inherent in the mechanism used to create the interest bearing debt which forms the ‘monetary’ foundation on which all economic activity is built. Using that mechanism to provide virtually all the money in circulation inevitably means that more interest bearing debt must be created to accommodate the interest component. That results in added costs to the entire infrastructure around economic activity that can only be recovered in increased prices for goods and services. In other words inflation is built into the system by the mechanism. It is that mechanism which drives the problem.

What is needed to address the issue is to use a mechanism that injects ‘money’ into the system which does not have an orthodox debt component. Such a mechanism used to provide interest free capital for designated essential infrastructure would enable interest bearing debt to be backed out of the economy, thus reducing inflationary expectations and leading directly to reduced taxation and charges, without any loss of service quality or quantity in sectors such as education, health or disability support. Seems fairly simple to me!

As long as the incumbent ‘experts’ have their hands on the lever of economic power the best future generations can expect is more futile debate around how best to band aid the issue of inflation, when what is needed is a cure. The comment by Don Brash that “there is no simple solution” doesn’t mean that none exists. What Brash, Cullen and Key are really saying is there are no simple alternatives they will consider if they don’t fit in within the framework of the orthodox economic mythology they subscribe to and defend.

That is treating New Zealanders like mushrooms and Democrats believe we deserve better than that –much better.


© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On Budget 2022

At base, the political biffo back and forth on the merits of Budget 2022 comes down to only one thing. Who is the better manager of the economy and better steward of social wellbeing – National or Labour? In its own quiet way, the Treasury has buried a fascinating answer to the “who’s best at running an economy during a crisis?” question, at page 57 of the Fiscal Strategy section...


Budget 2022: A Secure Future In Difficult Times
Budget 2022 will help build a high wage, low emissions economy that provides greater economic security, while providing support to households affected by cost of living pressures... More>>


Budget: Climate Investments Provide Path To Economic Security
The Government is investing in New Zealand’s economic security by ensuring climate change funding moves away from short-term piecemeal responses and towards smart, long-term investment... More>>


Budget: Updated My Vaccine Pass For Those Who Want It

New Zealanders who are up-to-date with their COVID-19 vaccinations will be able to download an updated My Vaccine Pass from 24 May, COVID-19 Response Minister Chris Hipkins said today... More>>

Classification Office: Following Decision To Ban Manifesto The Buffalo Mass Shooting Livestream Is Now Banned
The livestream video of yesterday’s mass shooting in the United States has now been banned, Acting Chief Censor Rupert Ablett-Hampson announced this morning. The decision follows on from his decision yesterday to call in and ban the ‘manifesto... More>>

Borders: New Zealand Poised To Welcome International Students Back
New Zealand is fully reopening to international students and the Government is committed to help reinvigorate and strengthen the sector, Education Minister Chris Hipkins said today... More>>

Inland Revenue: Commissioner Appointed
Deputy Public Service Commissioner Helene Quilter QSO has today announced the appointment of Peter Mersi to the position of Commissioner and Chief Executive, Inland Revenue Department... More>>




InfoPages News Channels