Message from @NewRogernomics
Discord ID: 649093647140257812
Basically, the last government raised sales taxes, and cut healthcare and social welfare spending.
So now the current govt is having to pay for the gaps that resulted.
that's what happens when you try to balance the budget
there is no free lunch, aggregate demand is going to come from somewhere(or you will get a deep recession/depression)
Well, it is more problematic than that...as NZ has a house price boom, and general costs of life are high.
GG @NewRogernomics, you just advanced to level 8!
yea im watching the housing down there
that's another problem you instigate when you dont use fiscal policy, bank reserves tend to end up in speculative areas
QE in the US is doing that almost as a goal, for same but outsized reasons
it comes from a belief in monetary policy to do things it simply cannot do
Mostly, NZ is doing well due to exports and foreign investment, but that has its problems.
Housing is built that is not affordable for residents and is more of an investment for foreigners, and never lived in.
Residents can't afford housing, and the government tries to help by subsidizing housing for the poor.
But there is still not enough to go round and there are state housing waiting lists, as well as a lack of affordable private housing.
@Sh0t If you visit...you can see a lot of flashy apartments, but also you can see folks living in cars.
there is plenty to go around, kiwis just belief like somebody in this chat does about gov surpluses, yada yada
20% debt gdp ratio :/
Well, govt policy in NZ is to gradually decrease the ratio.
yea, that's why people are homeless lol
it's a bad idea
and it compounds because it also hurts aggregate demand and encourages private debt to make up the difference
Well, NZ used to build sufficient state housing, though over time governments slacked off, and the mood was to just leave it entirely to 'market forces'.
market can do it, but it's how the money enters the system. trying to do it via monetary policy just creates the very inequality they are trying to solve
Though...NZ went through a major economic transformation in the 1980s-1990s, as well as being cut off from the UK market and having the oil shock all at once in the 70s.
they are chasing a phantom going for budget surplus and austerity
NZ used to be an economy that was way more regulated and restricted.
you dont need to that
i'm all for laizzez faire, but you do have to be honest about monetary system
In NZ, policy tends to fluctuate by political party.
Labour is more willing to be flexible, though National has a major policy platform around running surpluses, low govt debt, and decreasing welfare spending.
Every election cycle, the govt debt and surplus level is brought up, as a measure of whether the govt is effective or not.
that entire conversation is a disaster
Both parties though tend to be consistent in policy to reduce the debt to gdp though.
Not the best site, but allows you to see it roughly.
they need to stop
It is hard to stop policy set by the reserve bank and political parties though.