Former Australian Treasurer, Paul Keating, is backing Social Credit’s call for New Zealand’s central bank to buy government bonds directly from Treasury instead of on the secondary market.
In a letter to Australian media, he criticised Australian Reserve Bank officials for lacking the courage to break with economic orthodoxy to allow monetary financing of deficit spending, and said they are too concerned about what other central bankers would think if Australia went down that path.
That’s exactly the same thing political party Social Credit has been criticising New Zealand’s Finance Minister Grant Robertson and Reserve Bank over.
Keating said it would make Federal Government’s funding task “much easier and support for the country better” if the Reserve Bank bought whatever level of government debt was necessary and locked it away on its balance sheet.
“It has to be remembered, these are the high priests of the incremental,” Keating said.
“Making absolutely certain that not a Bank toe will be put across the line of central bank orthodoxy.”
“Certainly not buying bonds directly from Treasury — wash your mouth out on that one — what would they say about us at the annual Bank for International Settlements meeting in Basel?”
By buying government bonds on the secondary market NZ’s Reserve Bank is paying a hefty price to the bankers and pension funds who are selling bonds they bought from the Treasury just a few days earlier.
The cost to taxpayers of the Reserve Bank buying bonds that way comes to a total of $11.1 billion over the three years.
That money is going to wealthy investors, depriving hospitals, schools, the homeless and those in poverty of $11.1billion.
Nurses, doctors, teachers, social workers, emergency housing providers, food banks, and charities supporting hundreds of thousands of Kiwis should be up in arms over that action.
Taxpayers are footing the bill for this nonsensical money merry-go-round which will see profits for those investors increasing at taxpayers’ expense.
It’s time for that stupidity to end and for the artificial arm’s length Chinese wall between the government and the Reserve Bank to be pulled down in the same way the Berlin Wall was.
We challenge Grant Robertson to do that.