ADVANCE New Zealand
A new political design for our economic future
MEDIA RELEASE
Date: 12/06/07

Back to the future with our Reverse Bank

Nearly a quarter of a century ago a Labour government took a number of measures that dramatically realigned our economy. Included were the removal of consumer and agricultural subsidies, deregulation of the financial market, imposition of GST at 10 per cent, removal of controls on foreign exchange, surtax on superannuation and the floating of the NZ dollar.

Now in 2001 we see our economy in a parlous situation where, on top of causing NZ to have the highest interest rates in the developed world, the Reverse Bank is forced to intervene in the financial market to reduce the impact (political?) of what is seen as an overvalued dollar.

The question that needs to be addressed is what will Bollard and his merry bunch of monetary bandits target when the markets ignore the Reverse Bank and inflation and an overvalued dollar and high interest rates continues to impact on the ability of the economy to meet the aspirations of all NZers, rather than just those with the opportunity and the money to go for a ride on the speculative money-go-round.
Already the dollar is increasing in value again and the Asian markets are poised to jump on board.

The primary driver of the inability of our economy to deliver the goods and services we need to succeed is inflation. Inflation is inherent in the foundation of our economic system and until the mechanism that injects nearly all our money into circulation as debt is changed, the Reverse Bank will continue chasing historic economic mirages or mythology.

ENDS

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