Bernard Hickey wonders why New Zealand is not printing money and thinks we are being severely disadvantaged by not following the crowd.
The New Zealand dollar seems set to rise towards US$1 if the current trends continue.
He then went on to explain what is happening around the world, including:
- The US Federal Reserve announced an essentially unlimited plan for money printing on Friday morning.
- Economists are now expecting the Reserve Bank of Australia will cut its interest rates through 2013.
- This month the European Central Bank unveiled its own programme of unlimited bond buying.
- The Bank of Japan, which has been printing and stimulating with 0% interest rates for almost 20 years, is considering fresh money printing to try to drag its yen lower.
- The Swiss National Bank has been printing francs in unlimited fashion for months to cap a rise in its currency against the euro.
- The People’s Bank of China is also on the verge of its own fresh stimulus.
In the meantime New Zealand doesn’t even fiddle while the world’s economies burn money like it’s going out of fashion.
Yet we are standing aside from this giant game of musical chairs and scratching our chins, wondering why the world is so unfair. We point to the skies and say there is nothing we can do about this bad economic weather.
Outgoing Reserve Bank Governor Alan Bollard reiterated in his valedictory news conference and parliamentary appearance that there was nothing New Zealand could do about these acts of economic gods.
And our manufacturing sector shows signs of more strain.
All this chin-scratching and finger waving in the air is having very real world consequences. In recent weeks we have seen hundreds of job losses at Tiwai Point, Spring Creek, Huntly, Kawerau and at a fish processing plant in Tauranga. The Reserve Bank’s own Monetary Policy Report noted a slump in manufacturing, particularly the import-competing type in the last year.
I guess we could print more money.
But we can’t print more aluminium, coal or newsprint markets. I put that to Bernard on Twitter (where he was discussing the issue with Fran O’Sullivan).
As yet he hasn’t responded.