Hell yes.

@Daniel Twaddle

Yar, if I had to discuss monetary policy in itself I would say that stability of price level growth is the way to go for all the aims – and that is the way the RBNZ will take it, and why any change will “effectively” be ignored by RBNZ policy makers.

The key cost in this regard comes from a muddying up of transparency – it is harder for the Bank to describe what it is doing when it has to cover off a multitude of aims. This confusion makes expectations harder to anchor, which has a welfare cost.

On the plus side at least they aren’t coming out and saying they’ll set up anything particularly negative – like a military junta.

LOL

I’d like the Reserve Bank to use monetary policy to fix my twisted knee – it is really pissing me off.

The RBNZ should use the money supply to control immigration, standards in education, hospital waiting lists, and the impact on our economy from global warming.

Good points Miguel.

@Rob Salmond

Hi Rob,

I agree that we should definitely sit down and try to understand what monetary policy is, and how it works, in context with how it works in other countries.

My main concern is that this constant focus on growth etc from monetary policy misses a key component of what monetary policy is – it is policy regarding money. It is a “nominal” issue, not a real one.

The Reserve Bank is neither a benevolent despot or a democratically elected group – it has no role in trying to change the structure or behaviour in the economy. It is solely a body that is tasked with running the printing presses – with the mandate to do so in such a way that the average price level grows at a predictable rate.

If we think that structural policy is appropriate (which is a whole debate in itself) we should do it outside of monetary policy – that way we can be at least show some transparency with what we are trying to fiddle with and why.

I would also note that monetary policy in Aussie and the US has effectively been the same as it has been here … they both either explicitly or implicitly following inflation targets. Hence why I was calling Labour’s policies simply rhetoric rather than anything else 😉

Sparing the pretence that there’s even a hint of merit worth discussing in these proposals, I think the saddest part is how obsessed they are with fighting old battles. They’re railing against a housing market that’s already on the bones of its backside. (Even worse, the line about “restraining house price bubbles in Auckland” suggests they’re not even fighting the last housing boom, but the one before it – perhaps because it happened under a National government, rather than a Labour one?) The incentive to use rental properties as a shelter against the top tax rate (Labour’s dismal attempt to punish the “rich pricks”) has pretty much been removed. Meanwhile, commodity exporters are getting record-high prices, and as today’s GDP figures show they’re just about the only part of the economy showing any growth. So excuse me if I don’t shed a tear for the poor widdle exporters, since I’m still subject to a wage freeze that was decided last year entirely for PR purposes; meanwhile, my costs of living keep rising and would rise even faster if Labour had their way with the exchange rate.