Looking at the RBNZ Statement of Financial Position when they print money and buy bonds there is a corresponding liability increase to the NZ Govt. I would need to look at the govt financial statements but this presumably is a growing asset on the govt books? Their bond liability increases but this is offset by an increase in what the RBNZ owe them? Would it work like off balance sheet financing?(i.e. it does not really show up in the govt financial statements) Much harder to understand when it is a b*llsh*t construct.
Putting banks between the govt and RBNZ when buying and selling NZ govt bonds with freshly printed money hardly makes it any better other than the taxpayer is unnecessarily paying the banks when they clip the ticket, so that the printing of money somehow does not look so bad.
https://www.nzherald.co.nz/business/...NJUKQNNITG4LI/
Adrian points out in the article that he does not have a clue;
However, in early 2020 at least, no one foresaw inflation - and therefore interest rates - rising by as much as they have. All the focus was on avoiding deflation.
Orr, in the August interview, acknowledged it was fair to question whether the Reserve Bank could've cut the OCR by another 25 basis points to zero, instead of printing so much money.
He acknowledged the Reserve Bank overcooked its response to Covid-19, but said it was hard to specify whether the bank cut interest rates too much or kept them low for too long. or both?
He just has to keep inflation going as the top half of society do well in an inflationary environment, in a deflationary environment with honest money the current monetary system collapses and is exposed as something a lot less than perfect.
Adrian also points out the benefits of the money printing far outweigh the current costs. The trading banks are making a killing buying back NZ govt bonds from the RBNZ at much lower prices after Adrian raised the OCR and now tries to reduce the RBNZ balance sheet so the next round of money printing does not look so bad. Adrian the illusionist hard at work for the people of NZ. Maybe just the 60% who own a house or have some sort of asset base.
I must be way off in my understanding because it seems insane and amoral to me.
But you know what they say, the alternative would always be way way worse.