"Printing Money". Banking. Part Two.

Kia-ora

The Greens talk about Necessary Changes to Monetary Policy.
"Time to stop fighting Yesterday's war."

Gareth Morgan.

And why I do not agree with him this time.

Borrowing money, "printed money" from foreign banks, and paying 14 billion extra a year for the privilege, is sensible?
http://kjt-kt.blogspot.co.nz/2...
Do I detect a bit of self interest here?


In fact "printing money" worked very effectively for NZ in the 30's. So well it was copied by other countries.
All the howls about Zimbabwe and the Weimer
republic forget that their productive sectors were first destroyed,
before they started printing money, When there was nothing to buy with
it.

Not a lot different from Nationals present efforts!

A lot different from lending to ourselves to invest in paying our
under-utilised and capable construction industry to rebuild
Christchurch.
Vital infrastructure which will return the investment many times in future.

Also we did exactly the same thing from 1935 until the 60?s. Called the
Development finance corporation for a long time.
Worked well for us. Got us out of the depression before the US and UK for a start.
We are still using a lot of those assets. Apart from the ones our idiot
Governments sold, so someone else could profit from them.

National still seems to want to follow the USA, UK, Ireland and Greece down the tubes.

Signs of Hope.

Kia-ora

Signs that some of our Government have learnt from their mistakes.

The plan so far. NZ Labour Party.


""Labour will introduce a capital gains tax. It’s predicted the tax will raise $26 billion over 15 years that can be used to pay off
debt, cut taxes for most New Zealanders, save our assets and prepare for the mounting cost of our aging population.
Labour will also put the top tax rate back up to 39 cents for income earned over $150,000.
That’s likely to affect around 2% of the country’s top earners.
A CGT is already in use in nearly all developed countries, including Australia, the United Kingdom and United States"".

I wonder if the money people will allow so big a departure from Neo-Liberal dogma.

They are already trying to smear the leaders of Labour.

Some glimmerings of hope.

Kia-ora


At last Labour (NZ's, until now, slightly left  Neo-Liberal party) are showing some signs of offering real visionary alternatives.
Comment from Labour.

Good on them.

Some thoughts.

The reaction shows that sensible people have been waiting for alternatives from the present voodoo economics.

CGT should be universal on any appreciating asset.
Without a CGT PAYE payers are subsidising speculators .

It expands the tax base in a way that also discourages unproductive speculation and borrowing.

Capital gains income should be treated the same as any other personal income for tax purposes.
Why should you pay up to 33% on your work income and a speculator or someone who does up a house for sale pay only 15%.

It has to be retrospective to have any real affect.

The family home will probably have to be exempt to make the policy politically palatable, but I see no real reason to complicate CGT by doing so.
Like GST, I believe tax systems are much harder to rort if they are kept simple.
I can see a lot of single children of wealthy people suddenly acquiring a family home.

If it is, there are several ways to make it less distortionate (Suggestions only. There are more).
1 The family home could be exempt up to say, twice the mean price.
2 First homes only could be exempt from CGT.
3 More State housing both to rent or buy keeps prices within reach of ordinary people and puts a further downward pressure on house prices.
4 Only charge CGT on the gap between selling a house and buying the next one.
5 Allow for inflation and normal maintenance.

Now we need to look at the bonanza for banks and speculators and nightmare for manufacturers and workers. The reserve bank act.

We wait with anticipation, the official announcement.