Reserve Bank’s ‘unconventional Tools’ Needed Now
The Reserve Bank [along with the Federal Reserve, Bank of England and EU Central Bank] needs to dig into its arsenal of ‘unconventional tools’ now and start directly purchasing new government issued bonds.
That would provide the government with a source of debt-free zero-interest money that it could use to fund the needed economic rescue package for people who lose their jobs and businesses suffering economically due to coronavirus.
The [NZ] government’s proposed fiscal package of around $12 billion dollars will probably instead be funded by borrowing from the private sector which will mean taxpayers picking up the tab for the interest payments and the repayment of the debt.
The interest payments on existing government borrowing already amount to approximately $4 billion dollars every year.*
The move the Reserve Bank made today to cut…
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