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  • rmacculloch

How the NZ Herald Manipulated You Again - this time about how Monetary Policy Works .. all designed to undermine the New Coalition

Let's maintain the Main Stream Media manipulation theme for a few more blogs. Why? Because its real. Yesterday the Herald ran an OpEd by an "expert" on monetary policy. Who is that "expert"? Its a guy called Toby Moore who is described as .. wait for it .. a student. Yes a student is going to lecture us on the theme of "Why the Governments New Reserve Bank Mandate May Lead to Worse Outcomes". The Herald describes Toby at the end of the article as being "a doctoral candidate at Te Herenga Waka, Victoria University of Wellington, and a former Beehive advisor". Why did the Herald not tell the full truth - and instead manipulate readers by not disclosing that this article may not be expert opinion from a trained monetary economist but a partisan, left-leaning piece of propaganda designed to get you to vote Labour? Because Toby Moore was a Senior Adviser to Labour Finance Minister, Grant Robertson.

What does he write? That "Unfortunately, the case that has been made for repealing the dual mandate does not stand up to the barest level of scrutiny. Had the Reserve been operating under a single inflation-targeting objective in recent years, it would not have led to any different outcome in current inflation levels".

A galaxy of the world's top monetary economists would disagree with him, including former Reserve Bank Chairman Arthur Grimes who told me that Labour's adoption of the dual mandate was a big mistake. There is a strong argument that "in recent years" the Bank printed $NZ 50 billion because it was concerned during Covid not only of deflation, but also of unemployment rising. I have proof. The Bank forecast early on in the pandemic that unemployment would go up & stated in writing how money printing (or "Quantitative Easing") was being done to avoid a deep recession & support higher employment. However, the Bank made a huge error of judgment which cost NZ dearly: because the government borrowed & spent $20 billion on the wage subsidy scheme, as well as billions on other programs to keep people in jobs during Covid, unemployment hit record lows. By mistakenly flooding the economy with cash at a time of full employment, runaway inflation ensued. (And this is coming from me, the person who, I believe, was the one who first proposed to the Labour Finance Spokesperson many years ago how the Party should adopt the dual mandate as a policy, not because I thought it was good, but at least was better than the awful alternatives it was considering at that time when David Cunliffe was leader).

The above explanation of stuffed-up monetary policy due to the dual mandate forms the basis of its repeal by National. So I have a problem with the Herald article - it is trying to influence people to have a negative impression of National and is written by an author who is a close associate of Grant Robertson which was not disclosed.



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