The Doctor
What could be worse than central bank incompetence? Central Bank Digital Currencies.
Seventy-five basis points. Wow! The biggest increase ever in New Zealand. Gosh. Four-point-two-five per cent. No way! That Reserve Bank of New Zealand sure is tough on inflation. Or is it?
If the cure for inflation is higher interest rates, does that imply that the cause of inflation was low interest rates? You know, when Covid ‘forced’ the Reserve Bank to cut rates? That is what you are supposed to believe.
But many Austrian-tradition economists (the ones you never hear from in mainstream media) argue that inflation is not caused by low interest rates but rather by excess currency creation. If you didn’t know already, the Reserve Bank is allowed to create bank accounts and add dollars to those accounts from nothing. This additional currency is then used to purchase assets such as government bonds, local government debts and commercial bank assets as part of their more than $55 billion Large Scale Asset Purchases and Funding for Lending programmes.
The currency in circulation (M1) in January 2020 was about $80 billion and that increased to $140 billion by January 2022. I’m sure it is just a coincidence that $80b plus $55b of asset purchases is close to $140b. But even if it isn’t, increasing the money supply by 75% over two years when GDP has only increased by 15% means that we have a lot more money chasing after only slightly more goods and services.
More importantly, it means that the dollar that you hold in your hand has been reduced in purchasing power by up to 75% if all that created currency is spent into circulation.
There are consequences. Inflation. The Reserve Bank and the government together, instead of being honest, blame Putin or climate change or some such nonsense.
It is a blame game because currency debasement by excess creation was always going to happen. It is a mathematical certainly. Our debt-based currency increase follows an exponential curve. And now, 55 years later, we are getting to the steep part of the curve. And at that point the currency will need to be replaced with a new one.
Now, as people are dying from the jab, the economy is going to shrink into a depression. The last thing that the Reserve Bank should be doing is raising interest rates. It will accelerate the destruction. Is it incompetence? Or do they want it to happen?
If I am right and the destruction of the NZD is inevitable, then what should we replace it with? Don’t worry, the Reserve Bank already has a plan. Being the sensible folks that they are, no doubt they would advocate for a gold and silver-based currency that couldn’t be debased like the NZD. Also, it would be private. And we could use bitcoin to enable electronic transactions at a distance.
But alas no. The Reserve Bank’s plan is a Central Bank Digital Currency (CBDC). It is the worst of all worlds. The bank can continue to create currency out of thin air. It is digital only so it will be tracked, traced and taxed at every step. But worse than that, it can be disabled. Haven’t taken your latest booster? Sorry your CBDC is disabled. Broken the new hate speech rules? Bad luck, your salary has been cancelled. Eating too much red meat? Your CBDC can only purchase insects to eat now. Emitting too much carbon dioxide? No more petrol for you for the rest of the month. Want to save some money for a rainy day? Sorry, your CDBC expires after one year.
I am not joking. This is the plan. And expect the economy to get really bad so you are so desperate you’ll accept the CDBC for some relief. But if we resist, they will not be able to implement it.
I expect intermittent cuts to fuel, electricity, telecommunications, food, water and spare parts to soften us up for CBDC (it’s a kind of siege warfare). All of it to be blamed on Putin or climate change or some other distraction. Are you ready?
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