I don’t see how we can expect to have any sort of sane monetary policy without doing something to insulate us from the idiocy that passes for monetary policy in other countries.

BJ

our deficits didn’t just come about because we suddenly became poor at producing or at exporting, nor did a previously sober race suddenly say “hey these credit cards are great! we can spend more than we earn!” in fact we’re probably better exporters than ever before, with an economy more focussed on our export industries instead of on the old inefficient import-replacement manufacturing.

while a situation like this is more complex than can be fully accounted for in generalities, in the main we didn’t get into debt from trade imbalances - the problem is primarily generated from the other side of the equation - trade imbalances arise from capital movement imbalances. the precipitate liberalization of capital markets & ownership regulations along with the sale of state assets have dragged investment into the country (not so much into new productive capacity but simply into acquisitions), which has kept the dollar high & hence foreign stuff cheap. the government compounds that problem by insisting on defending the high dollar (because allowing imort prices to adjust to long-term levels is called… inflation!) which not only alleviates the perception of risk for foreigners making an investment into such an already indebted country, but which keeps the rate of return high & attractive. add the inflating property market dragging capital away from the productive sector & there is little incentive for households to save & defer expenditure.

simply devaluing the dollar today would be a mistake. although it would hurt foreigners currently holding nz equity or debt, it would make investments here even cheaper for foreigners in the short term while ironically reassuring such investors that nz was now on a sounder economic footing for the future. it is also questionable whether we can instantly adjust to exporting more & importing less, or whether for a while we would simply keep on importing but at higher prices.
that is why i consider direct regulation of capital movements & foreign ownership, perhaps to the extent of some nationalisation, (& perhaps through taxation as samiam suggests: in particular ensuring the corporate tax rate is at least as high as the highest personal tax rate) is the place to start dealing with the issue, the sooner the better.

i acknowledge that besides these core issues there are other matters contributing to the problem, such as student debt. offering long-term loans to kids who are bulletproof & confident that their glittering career, supported by the qualification for which they are paying, will make repaying the loan easy, seems irresponsible. the reality is that like other western countries we are producing highly qualified pizza delivery drivers.
the phrase “over-educated” would be a bit harsh, everyone has the right to education, but i consider the government’s role should be the provision of free public libraries, broadcasting, websites etc. - not to process masses of people through a commercial qualifications framework.

> Do only “real people� have kids?

what a peculiar question. Of course only real people have real kids, though imaginary people may have imaginary kids.

‘trap’ or not, WFF certainly appears to help many ‘real people’.