rpcas im curious where you came up with this stuff? I've heard a lot of economic theories in my time but nothing quite like yours.

Te Whetu is pretty much bang on, treasuries reduce money in circulation being M1 so total money supply will not increase (assuming the securities are not being purchased by govt) and velocity of money remains the same.

Going back to your earlier reply to me about why govt taxes apparently to "create demand for NZD" really does not make any sense. The govt exercises a monopoly over currency in NZ therefore there is no competition. If we had a free banking system where a bank could issue its own currency then govts monopoly over money would be taken away and so its ability to execute monetary policy in the economy. In any case, for what purpose would a govt want to create demand for the currency it exercises a monopoly over?

You seem to be engaging in a fallacy of only looking at currency and not the fact that the currency needs to be exchanged for resources.

As for "regulating aggregate demand" that just sounds like Keynesian nonsense (no offense to Keynes of course ). Go back to your Milton Friedman son, "inflation is always and everywhere a monetary phenomenon".

Te Whetu a couple of comments - inflation has very negative impacts on an economy not just poor people but the business environment as it creates a lot of uncertainty. Its not the actual rate of inflation that causes this problem but the rate of change in inflation. If inflation was a constant 10% p/a and we all knew and expected that we could deal with it in wages, contracts, capital purchases etc. Its when it varies that it causes so many problems and people are unprepared.

Also not sure why you think a property tax is a good thing. In my opinion income is the most appropriate thing to tax. And capital as compared to income and consumption is the most sensitive to taxes. Capital can flee an economy if it doesnt like a tax unlike labour and consumption. Obviously land is not the kind of capital that can flee an economy and because of this there is a strong economic argument that taxing land is efficient but there are very strong counter arguments against this when you consider the role of the govt becomes landlord and master of your property and free to levy taxes as they see fit.

Anyway in my opinion property taxes are more likely to drive property prices up not down.