... NZ as a whole suddenly has to send more money offshore. We shovelled an extra $750m per month offshore from May to July! It will be similar in September and October. That $750m is enough to cover the salaries of over 100,000 jobs. [2/2]

Weekend offcut. Monthly spend on imports of liquid fossil fuels (petrol, diesel, jet fuel mostly). Nothing predicts inflation better than the price of diesel - it fuels our economy (with credit, labour etc). When prices spike... [1/2]

Because our dominant business / economics journalists just print quotes from cookie cutter academic and bank economists (with filler content). Other views are ridiculed and suppressed.

Same! I worked on tech systems in banking / finance and it became very clear that the world does not work like they teach you in econ. Like soooo far from it - like sun revolves around the earth far.

yes, i have indeed.

About 150,000 is typically the right number - higher when oil prices go up. Important to create the right amount of misery and desperation.

Of course - the scheme would set the wage and conditions floor for the economy? I have some views on the challenges of implementation, and the settings required, but too much detail for here!

I am not saying a scheme like this is some kind of nirvana, but it is big cog in the wheel of running an economy for the 99% of people that just want to be able to live, love, work and play. The 1% can buy desert islands and knock themselves out with ket. We don't need their money. [Ends]

The pay and employment conditions for the guarantee scheme would also set a floor across the whole economy. Employers would have to match or exceed those conditions to attract workers. We might remember that employers used to have work a little bit to attract workers. Crazy times! [9/n]

Govt funding for the guarantee scheme would therefore increase into an economic downturn, providing stimulus to prevent collapse, and reduce into an upturn, lowering the stimulus. We could pretty much leave interest rates steady at 3%(?) and let the guarantee scheme act as the stabiliser. [8/n]

When the economy slows because of a global oil price shock (for eg), people would still lose jobs, but instead of dropping onto the dole, they would drop onto the job guarantee scheme. As the economy picked up again, and better paid jobs became available, they would move off the scheme. [7/n]

Imagine if we swapped that bufferstock of unemployed people for a bufferstock of people paid to do good things in their communities. Helping out at youth clubs, maintaining walking trails and playgrounds, climate mitigation schemes , helping kids to read. How would that help manage inflation? [6/n]

People with stacks of cash. The hidden (primary?) objective of monetary policy is to protect the real value of savings. When inflation outpaces interest rates, savers lose in real terms - and losses are proportionate to the amount of wealth they have stacked. Now, where was I? Ah yes... [5/n]

... monetary policy is fucking cruel! *Who* will you find in that bufferstock of unemployed people? Who serves in our conscripted army of poverty stricken inflation-fighters? Young people, people with disabilities & caring responsibilities, people with jail time etc. And, who benefits? [4/n]

Hiking or dropping interest rates takes 12 months to have a real impact and RBNZ are renowned for going overboard on the way up and on the way down. Couple that with lagging indicators and the whole thing is a shit show. It's just a *really bad* price stabilisation method, and... [3/n]

Conversely, when the economy is in a slump, we cut interest rates to increase disposable income of people with mortgages, and encourage businesses to borrow to invest and create jobs. Lower interest rates increase demand in the economy (in NZ at least). But, monetary policy is blunt & slow. [2/n]

Sorry, I'll explain. We currently react to inflation by reducing the disposable income of spenders so that demand falls and unemployment goes up. We use a bufferstock of unemployed people to keep workers desperate, so wages are suppressed and we don't get a feedback loop (wage 🔄 prices) [🧵 1/n]

Thank you.

Nothing to stop NZ doing something similar of course - state-backed mortgages with built in disaster insurance (for e.g.) - with attractive savings accounts. That would stop us haemorrhaging $ to the Aussie banks and prevent RBNZ destabilising the economy with their macho monetarist nonsense. [Ends]

The US Fed is the big boss of central banks, and RBNZ kinda has to move with it. But, US households are shielded from the pain of increasing mortgage rates by stable 30-year fixed rate govt-backed deals. So, as we follow the Fed up, our households and therefore our economy get smashed. [10/n]