Welcome to our November 2020 newsletter (issue 113). Here is a link to previous newsletters.
The Labour Government is expected to gain another one to two seats, once the special votes are counted, and with the clear mandate from the people of New Zealand in the 2020 election, we ask for bold action in managing the Covid19 debt burden.
The Government is facing multiple challenges though our failing health system, unaffordable housing, child poverty and a welfare system that is not providing a dignified life for kiwis.
Even in good times, this would be a challenge and we ask the Government to follow the lead of the First Labour Government and have the Reserve Bank provide funding from its balance sheet to pay for infrastructure projects and to pay down the Covid19 debt.
In a separate development The Central Bank of Japan has published their approach to a Central Bank Digital Currency (CBDC).
It is a clearly laid out roadmap and consistent with our submission to Parliaments Finance and Expenditure Committee in March of this year.
They note the desirability of a two-tier system, incorporating private banks/Payment Service Providers to be the front end to connect to consumers/business, and the importance of the central bank in the payment system.
Our submission pointed out that this is currently outsourced to Private Banks but needs to be core to the Reserve Bank’s operation.
Finally, in a surprise move, David Seymour from the ACT party wants to have a look at the Reserve Bank Act to see how it could be changed to incorporate inflation in the prices of assets, including houses.
We have been saying for some time that the inflation rate the Reserve Bank has been tasked to manage is the CPI and does not represent the true rate of inflation. By including increases in the cost of land and buildings, the Reserve Bank will need to look beyond controlling interest rates to reign in inflation and look at some of the core issues.
Cheers
Don Richards
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