Role of bank loans
The question of how to deal with inflation was addressed last week by former RBNZ Governor Graeme Wheeler and Bryce Wilkinson of the New Zealand Initiative.
They were critical of RBNZ actions under current Governor Adrian Orr for creating too much money, then not easing back quickly
enough. They blame historically low interest rates since the GFC for fuelling the housing bubble.
There is a divergence between mainstream economists, who don't believe that banks create money when they make loans, and others, like the Australian economist Professor Steve Keen, who believe that they do. (There are papers from the Bank of England and the Bundesbank backing Keen.)
Given the extraordinary profits made by the four Australian-owned banks from the housing bubble in NZ in the last few years, surely now is the time to investigate whether the money created by these loans has contributed to inflation and whether there should be new restrictions on banks' ability to create money with loans.
Michael Laurie, Green Bay.
Capital punishment
Unabated commercial corporate greed is the major driver of inflation, not wages, oil prices or the war in Ukraine.
Conventional economic theory pits labour in a battle against capital. Well, there's no longer a battle, the war is over - capital has won.
The disparity of wealth between the uber-rich and everyone else; not just the poor, is abhorrent.
The uber-rich disregard the lessons from history at their own peril. It is incumbent on the uber-rich and powerful to work towards social cohesion.
For if they don't, when the poor eventually run out of things to eat, they will eat the rich.
Boris Sokratov, Campbells Bay.
Drain the swamp
Last week saw massive flooding from Kaitaia to Balclutha. It is clear massive infrastructure needs to be invested in to cope with endless heavier rain events.
This means stormwater pipes, wetlands, water abatements, etc. Small councils don't have the money, do they?
Although I am annoyed at having to help the rural sector deal with flooding, in the bigger picture I see that these huge projects have to be done to future-proof us from climate change consequences.
Rates just won't cover it from many. This is what Three Waters is about and, to me, is just common sense to pitch in for the greater good.
I suspect the anti-Three Waters brigade might be the first complaining about councils not doing enough.
John Buchan, Torbay.
Business models
Denys Oldham's "Skill set" letter (NZ Herald, July 29) expresses concern that chief executives of the four newly-minted Three Waters entities will not necessarily have any knowledge of water. Perhaps I can explain why:
Those entities will have a governance model known as managerialism, which was imposed on the public service by the 1988 State Sector Act. This model promoted the nonsense that a government department is a "business", and that a generic set of management skills is all that is required to be a manager.
A bloated bureaucracy is inherent to the model with many positions being essentially non-productive, in particular those hired in "communications" i.e. spin doctors.
All of this will follow the establishment of the Three Waters entities. In fact, the spin doctors are already at work, trying to justify a scheme that is understandably seeing strong resistance.
Bruce Anderson, Christchurch.
Expert overview
A letter to the editor, headed "Skill set" (NZ Herald, July 29), made reference to the fact that there is no mention of hydraulic engineering in the application for chief executive positions at Three Waters.
The current Government has many examples of this, i.e. Megan Woods with house building; Michael Wood with road building; Andrew Little with matters medical; and I can't think of any posts where the MP in charge has any expertise in their portfolio, including the Prime Minister.
The results speak for themselves.
Bob Summerell, Morrinsville.
