The conduct of monetary policy these past 6 years has little to do with changes in legislation. For goodness sakes, our dual mandate is the same as a country called .. the United States. When Labour was determined to change the original legislation, I advised them that the best way of doing so in order to avoid the bonkers proposals that they were considering at the time, was simply to adopt the US Federal Reserve's approach. Which they did.
So why have we had terrible monetary policy these past years? In Central Banking circles, there is recognition that not only do laws and rules affect the conduct of such policy, but discretion also plays a huge role. The single reason behind the disastrous decisions (like to print $50 billion of cash and fuel rampant inflation and mortgage pain and cost-of-living problems throughout the country) came down to the personal descretionary decisions of one man - Governor Adrian Orr. They were his choices - the Monetary Policy Committee is nothing but a rubber-stamping puppet - and the decisions would have been the same regardless of the legislation Orr was operating under.
Even under the old Reserve Bank of NZ 1989 Act, Adrian Orr still would have had huge discretionary powers to adopt exactly the same monetary policy that he has done so these past six years.
Sources:
https://www.nzherald.co.nz/business/david-seymour-calls-for-sweeping-changes-to-make-the-reserve-bank-more-accountable/ZOCRWJJTBZFWXC47M6HNDXSFKI/
So why have we had terrible monetary policy these past years? In Central Banking circles, there is recognition that not only do laws and rules affect the conduct of such policy, but discretion also plays a huge role. The single reason behind the disastrous decisions (like to print $50 billion of cash and fuel rampant inflation and mortgage pain and cost-of-living problems throughout the country) came down to the personal descretionary decisions of one man - Governor Adrian Orr. They were his choices - the Monetary Policy Committee is nothing but a rubber-stamping puppet - and the decisions would have been the same regardless of the legislation Orr was operating under.
Even under the old Reserve Bank of NZ 1989 Act, Adrian Orr still would have had huge discretionary powers to adopt exactly the same monetary policy that he has done so these past six years.
Sources:
https://www.nzherald.co.nz/business/david-seymour-calls-for-sweeping-changes-to-make-the-reserve-bank-more-accountable/ZOCRWJJTBZFWXC47M6HNDXSFKI/
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.
4 comments:
In a Swiss -style system where expertise is the qualification for office, this person could be Minister of Finance.
Also the US follows this rule: Larry Summers, Ben Bernanke, Janet Yellen.....
The current debt-based system, which is run by central banks, who also run the world economy, world markets, and the financial system, demands ever increasing debt IN MULTIPLES.
The current central bank debt-based system operates in a perpetual, ever increasing debt black hole- which can never ever be made whole. Nor is it ever meant to be made whole.
War allows central banks to keep the system liquid. But it will not stop its inevitable end. In fact, war will only serve to exacerbate the current liquidity problem… and then they can “Blame the War” for the collapse of the entire monetary system.
And of course, they will have a solution… one which will serve their interests again, not ours.
Adrian's shared view with Robertson on what was important.
Two fools working in a vacuum with confirmational bias in play.
It is/was ridiculous that the rerve Bank was also charged with sustaining employment. Parliament was left with little to do except to advance maorification and the maori takeover generally.
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