Norman storm

ANDREA VANCE is right: Russel Norman is the best opposition politician we have but she and Norman are both wrong about quantative easing.

My question for opponents of quantative easing is, how can it be so right for the world’s largest economy, yet so wrong for us? Every month now the US Federal Reserve prints around $US 40 billion, to pay the interest on its debt. It has become so central to stability that any suggestion they might stop creates alarm across the financial world. I believe our case for quantative easing is far better than the United States.

Over there, the Fed issues its creditors this new money each month but little ever reaches the average citizen. Banks and finance houses suck it up, targets are met, and bonuses flow, just like the old days. The easing is for debt repayment only, so there is no new spending. Bankers get richer and for the rest the financial crisis continues, creating the rapidly widening gulf between America’s rich and poor.

But in New Zealand, bonds from our Fed, the Reserve Bank, could go straight to the institutions rebuilding Christchurch. The insurance companies, the banks, even Fletchers. Unlike in the USA, this money would feed directly into the local economy bringing real benefit to us all.

There is no absolute reason why our government needs anyone offshore to stand behind such a bond issue. They are fully entitled to say, ‘‘we’re good for it’’ just like the Fed is doing.

Norman stood up for this logical approach before being shouted down by the economic orthodoxy. I still don’t see why they are right and this argument is wrong.

Chris Clarke, Wellington