Economic Communication To The Public At Large On Monetary Policy

The Green Party leader Russel Norman has wandered into monetary policy again.

This press release has so much derp it is disturbing that this man could be a key figure in a coalition government that would fetishise manufacturing.

We know that forecasting is nigh on impossible.

We also know that over time, the Reserve Bank’s inflation targeting policy has led to price stability in areas where there are not crazy supply side restrictions like housing.

Furthermore, we also know that pretty much no one understands what the Reserve Bank of New Zealand actually does, how the banks actually fund their balance sheets and why foreign exchange volatility is a good thing in terms of rapid adjustments in response to adverse shocks.

I think that because Russel Norman is engaging in so much derp, it would not be inappropriate for a senior Reserve Bank staffer to be seconded to his office until the next election.

It really is the level of derp that could damage central bank independence and set the New Zealand economy on a path away from the silent recovery.

While the Governor has full accountability for the Official Cash Rate decision, there are more than 1 employees at the Reserve Bank last time I checked.

Economic communication to the public at large on monetary policy must be crystal clear. The influence of derp must be stopped at all costs. I mean, surely there is a Green-leaning economist in Wellington who can calmly educate Russel Norman on second-order effects of monetary policy derp?

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