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In a bunch of radio interviews these past weeks, I've argued that the RBNZ should not have over reacted to inflation (having under reacted in 2021) by hiking the Official Cash Rate by 75 basis points in order to "engineer a recession".

When asked on Radio NZ what would have been the best policy, my view was to go for a 25 basis point rise, 50 at most. The reason is that inflationary pressures from oil & supply chain problems have been easing, so there is no need to throw the Kiwi economy into a recession and cause untold pain to those with large mortgages when that situation could've been avoided. Now other commentators have picked up on this line - and our position has been bolstered today by the Reserve Bank of Australia (RBA) increasing its Cash Rate by 25 basis points. Inflation in Australia in running at similar levels to NZ.

The wiser move by the Reserve Bank of Australia simply reflects how its senior management team is qualified to do its job. It includes four PhDs in economics, two of which are from the Massachusetts Institute of Technology (MIT), arguably the best department in the world, as well as graduates from the likes of the London School of Economics.

Our RBNZ Senior Management Team, by comparison, doesn't include a single person with those kinds of qualifications and not a single PhD. When you don't choose the best people for the job, the end result is bad monetary policy and mortgage misery for millions. Are there local Kiwi economists who could have been chosen who match the kinds of qualifications of the Reserve Bank of Australia team? Yes, but they don't have friends in the right places.

MP Willie Jackson belittled claims that there's a link between public funding and media bias a few days ago. Speaking to Q + A's Jack Tame, Jackson said there would always be a perception that additional public funding for the media would result in reduced editorial independence, "We've got that type of complaint - doesn’t matter what we say .. 'Oh, this is about Willie Jackson paying off Jack Tame. I get that. But you're never going to change some of those perceptions," he said.

Why won't one change those perceptions? Because they're based on truth! As we reported in a previous blog, in a paper called "Government advertising and Media Coverage of Corruption Scandals" by a Harvard Business School economist, it was found that the more media outlets depend on the government for money, like from advertising revenues, the more those outlets refrain from criticizing the government.

The paper quotes a non-government organization (NGO) which wrote a report on the issue, saying: "We found an entrenched culture of pervasive abuse by provincial government officials who manipulate distribution of advertising for political and personal purposes … The effects of such abuses are especially insidious when public sector advertising is critical to the financial survival of media outlets".

Given the vast amount of Kiwi government advertising placed in media outlets throughout this country, it's hardly surprising folks are concerned. So yes, Willie - you got one thing right - it is about you paying off Jack Tame!?


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Robert MacCulloch

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