Here’s the good news about Russel Norman’s money printing plan [updated]

First, here’s John Clark explaining Quantitative Easing:

And now, the really, really good news about Russel Norman’s plan to print money to bring down our exchange rate was the response. Yesterday we saw a tidal wave of rational outrage at the Ginger Whinger’s insanity. 

John Key told Breakfast TV, "If printing money made you rich, Zimbabwe would be the richest country on the planet, and it's not.” He said the money plan was ‘wacky’ and could create a financial crisis. And Steven Joyce called it “a sign of panic.”

Given the number of politicians and central bankers around the prepared to embrace the wacky, this response was very encouraging to hear.

As was the response from the commentariat, despite the regular trial balloons promoting the idea launched  by popular commentators Bernard Hickey and Rod Oram. Perhaps the intellectual acumen of our commentariat is more informed than we might think.

• Roger J. Kerr observed “the worry is that the Green Party’s economic policies generally resemble the Polish Shipyard model, which collapsed twenty years ago as it did not work.” Our currency is high because it is a commodity currency, good exporters have been hedging against the exchange rate, and in any case the dominant determinant of the NZ dollar currency value is what goes on in Australia. The immediate consequence of Russel’s money bomb, he says, would be lower real wages.
  Roger J Kerr explains why politicians should not be trusted with setting the NZ dollar currency value. – INTEREST.CO.NZ
• NZIER’s Shamubeel Eaqub observes, “Greens' quake bond buying policy is not QE; It's the sort of 'debt monetisation' practised by Mugabe; Will see poor pay for quake rebuild via inflation.”
  The Greens’ policy for the Reserve Bank to buy bonds issued by the government to pay for the Christchurch rebuild was not the same as those policies, Eaqub told interest.co.nz.
  “It’s essentially monetising debt. It’s not even quantitative easing,” he said.
  “The idea of the quantitative easing that is happening in the US and Europe in particular is that they are trying to provide liquidity to banks to promote credit growth in the economy, through the private sector,” he said.
  “What [the Greens] are proposing is for the government to essentially monetise its liabilities through higher inflation.
  “It’s just monetisation of government debt - essentially saying that the central bank will provide credit to the government,” he said.
  In the US, while the Federal Reserve was buying up government debt through Treasury bond purchases, it was not ‘monetising’ Treasuries by buying them directly from the government with the newly created money.
  “The government of the US is still liable for that debt. But here [with the Greens' policy], you’re just going to give that money away. The Treasury bills that the Fed is buying are from the banks, to give liquidity to the banks, so the banks can then lend that money onto the economy,” Eaqub said.
  “Here they are saying [the Reserve Bank] should be buying bonds from the government. Those are two very, very different things,” he said.
• "Putting money into the system would create a 'sugar rush' but it would quickly wear off.  When would they stop buying?" Mr McIntyre said no-one appeared to have thought of what happened to the extra money flooding around the system from governments buying up bonds when the financial crisis eased.
  Is printing more money the answer? – ODT

And on Twitter, Interest.Co.NZ’s Alex Tarrant posted:

BREAKING: Fuji Xerox approaches Green Party in early bid for printer procurement contract…

Most bloggers were horrified. Whale Oil posted this

David Farrar pulled out enough Zimbabwe currency to buy a small chocolate bar:

• “Russel Norman is completely misrepresenting QE by saying that the recent crisis is “evidence it isn’t inflationary”.  QE was put in place to fight the fact that policy was too tight overseas, and they were trying to fight deflation – in essence the fact that inflation stayed near the “target band” in these countries is evidence that QE is indeed inflationary as you would expect … just in the way they were intending.”
  No QE free lunch for NZ – Matt Nolan, TVHE
• “It's "only" going to be $2 billion that is quantitatively eased. And it's only to buy earthquake recovery bonds.
  Russel Norman must be daft if he expects us to swallow that. What he is proposing is simply the thin end of the wedge, and he will quickly find other justifications to print more and more money. And each time he does, inflation will rise, and life will get tougher for everyone, Green Party supporters included.”
  The thin end of the wedge – KEEPING STOCK
• “I thought this madness died with Social Credit, but Greens (and Labour may not be far behind) have said that they want the NZ Reserve Bank to effectively start printing money. They think that NZ printing more money is a good way to increase the relative value of the US dollar. We might as well start burning our savings.”
  Greens literally believe money does grow on trees – David Farrar, KIWIBLOG
• “Printing more money as Norman suggests , is one of the failed policies of the 70s and 80s that the late Sir Robert Muldoon might have favoured.”
  Green snake oil on sale – HOME PADDOCK
• You can rely on Russel Norman to engage in reality evasion, but his latest attempt to introduce monetary policy into the Green Party's repertoire is laughable… Russel Norman knows that the money you hold should be worth less…
  QE has been the Keynesian response in Japan, the US, the UK and the Eurozone.  The mass destruction of value due to these bubbles popping has been filled by massive money printing, yet it has not resulted in a sustained kickstart to demand… It wasn't undertaken to improve export competitiveness.  It has demonstrably failed to boost Japan's economy.  It has created minor blips in the US economy, and nothing more.
  For The Standard to say that having a consistently high dollar is about speculators making money from New Zealand is demonstrable ignorance.  To think that, say cutting the value of the NZ$ by 25%, is good for the working poor (when it will raise prices of petrol, electrical goods, overseas holidays and any imported books, clothes), is bizarre.”
  Russel Norman says "fuck the poor" with his economic illiteracy – LIBERTY SCOTT

Even comments at the Herald and Stuff and on the blogs have been good:

• "Norman has just added a new interpretation of "green" in politics. Previously it was just "green" as in environmental; now it's also "green" as in immature." – Terry
• “More lunatic stuff from the Greens god forbid they ever get into power - the country will be sunk.” – Buster
• “I liken this to a declaration of 'let them eat cake' indicating a profound gap in understanding economics.” – Demos
• “Terrible idea. The impact against the US dollar may work out well for exporters, but think about how we will compare to the Australian dollar. More of our talent will move across the ditch for substantially higher wages.” – John
• “To them money is free, it grows on trees and you just get the next generation to pay for current consumption.” – Prezzie
• “Just when you think you can trust the Greens, they go and say something so stupid as to guarantee they will never be in charge. Printing more money is something a child would come up with.” – FMax
• “What is quantitative easing?
  Short answer: It's an unconventional monetary tool used by central banks to stimulate the economy.
  America has been doing this since 2008. It has worked so well for them(sarcasm), that they decided to do it again and are actually deciding at the moment if they need to do it again.
  So by all means Green party, drag us down like the states, we just love to see all our hard earned cash get devalued and disappear while cost of living goes up even more.” – JW
• “Question for Dr Norman. How much money would have to be created to reduce the overseas exchange rate by the 10 to 15 cents needed to make our exports to anywhere but Australia ( which is our main market and which takes 60% of our exports now at a reasonable exchange rate) competitive.” – Rosy Fenwicke
• “Why are those other countries in that position. Because they printed funny money. Doubling nothing still equals nothing and it is like putting your head in the sand and pretending that the problem will go away.” – Robert Moody
• “Playing the 'Zimbabwe' card now. You lose.” – Sylph Critical
• “Have you actually had a look at what currency dilution has acheived for the US or the UK?
  Quantitative easing has failed again: What madness has seized our leaders! To extend Russel's "currency war" analogy from the other week, there's no point in trying to shoot when you're caught in the crossfire as we are.” – James Stephenson