Time for Some Insurance? Reserve Bank Printing $1 Billion a Week

Adrian Orr, Govenor Reserve Bank

Did you know the Reserve Bank is printing about $1b a week? Newsroom Managing Editor Bernard Hickey has put together a thoughtful piece about the huge rise in government debt funded by Reserve Bank money printing.  I highlighted this earlier and agree with Hickey it should be a key election issue. Why is it not?

Hickey points out that once people begin to understand what the government and Reserve Bank are doing it could further undermine the credibility of the NZ dollar.  The Reserve Bank’s money printing is:

like having your a son or daughter living in the basement who is able to print the money you need to buy the house off the landlord.

Not only can the scale of the money printing make people lose confidence in the NZ dollar, it also increases the gulf between rich and poor:

 money printing has had the effect of increasing asset prices and inequality.

This is due to what is known as the Cantillon Effect. 

New Zealand is already experiencing the worst recession in living memory.  Will the Reserve Bank’s actions add inflation to the mix? The RedPill Ready program is designed for those who want to stay one step ahead of whatever comes next.