Saturday, November 19, 2011

Show Me the “Monetary Reform” David Cunliffe!

Show Me the “Monetary Reform” David Cunliffe!

Following Phil Goff’s release of Labour’s Finance Manifesto today, David Cunliffe has said in a New Zealand Labour Party press release: “Labour is backing the drive for more high value exports with monetary reform ...”

I challenge David Cunliffe, Labour’s Finance Spokesperson, to front up and explain what he means by the term ‘monetary reform’.

If he means replacing toxic debt-based commercial bank credit with social credit, as the sole means of money coming into existence and continuing to exist – issued in the public interest, to serve the common good - then I would endorse his definition.

And if he accepts that it’s crazy for our government to borrow from foreign lenders, with interest, when we could use the publicly-owned Reserve Bank of New Zealand as an independent statutory monetary authority with the sole power to create, issue, and cancel New Zealand’s money, then I applaud his endeavours.

But if Mr. Cunliffe thinks ‘monetary reform’ means implementing a Capital Gains Tax; tweaking the objectives of the Reserve Bank Act; having exporters represented on the Reserve Bank Board; taking pressure off the official cash rate and relying on greater supervision tools; and encouraging more aggressive Reserve Bank interventions in the currency markets ... then he doesn’t mean monetary reform at all.

In fact, Labour’s Finance Manifesto is nothing more than ‘monetary orthodoxy – with lip gloss'.

Sunday, July 17, 2011

Capital Gains Tax - So Last Century

The Labour Party’s desperate capital gains tax plan, so far from being bold, will do nothing for the economy or the country. The USA has had a capital gains tax for many decades, but it has not stopped housing bubbles or redistributed the tax burden more fairly. Taxing capital gains is a complicated and costly exercise in futility, a last century concept along with the National Party’s asset sales and other out-dated ideas. What New Zealand needs is a 21st Century tax system that is truly fair and takes advantage of modern technology. There is a growing call for a Financial Transactions Tax (FTT), around the world and here in New Zealand. FTT is a tax with no loopholes, so that those high income earners that currently avoid paying tax will at last contribute to Government revenue. FTT is entirely cost-effective. Banking software already exists to collect withholding tax, so there is no need to re-invent the wheel. An effective FTT rate, one that will both slow rampant speculation and collect sufficient revenue for Government needs, can be so low that even the poorest families will hardly notice it. Faced with FTT, investors will be encouraged to put their money into the real economy for the long term, into businesses that produce actual goods or services. We may see a more stable currency, as FTT shaves the tiny profit margins of the money traders. FTT will start collecting revenue immediately, unlike CGT which will not be realised until well into the future. I see capital gains tax as little more than costly bureaucracy at best and a windfall for tax lawyers. At worst, it will drive even more middle income families out of business and the housing market, leaving the field clear for the biggest players. Capital gains tax may sound good to some on the hustings, but voters should know that it is not as simple as a choice between two evils  capital gains or asset sales. With FTT, we don’t need either one.

Thursday, July 14, 2011

Just because you believe doesn't make it true

A relationship counsellor has an article published 12 July 2011 in one of our local Matamata newspapers. The article is great and is certainly worth a read, but his words apply to a wider sphere than just relationships. What he said was: • Just because you have been told something lots of times does not make it true. • Just because you believe something doesn’t necessarily make it true. • Just because you have believed something for a long time also does not make it true. • If you learn something based on information at the time you can unlearn it by getting more information and understanding. • Remember that whatever you believe, you will find evidence to support it, whether it is true or not. We should take heed of these words when we read and watch the media in the lead up to “Election 2011”. For instance: • Just because you hear New Zealand Superannuation is unsustainable and the age of eligibility must be raised to 67, doesn’t make it true. • Just because they say New Zealanders do not save enough so we have to borrow overseas, doesn’t make it true. • Just because they say “Banks don’t create money” doesn’t make it true. • Just because they say “The Reserve Bank can’t create money” doesn’t make it true. Look for the truth and vote for that this election.

Friday, July 8, 2011

Raise super age, doctors say, and spend up on kids

New Zealand Herald 8 July 2011 has the above as the lead headline on page 2. The article continues with " Generous pensions wrong while children are living in poverty, medical trio say". New Zealanders are locked into a "them or us" mentality, instead of a "If we can afford it for them, we can afford it for us as well". Logic suggests that if New Zealanders desire particular outcomes i.e. to provide super to those over 65 years and to spend up on kids health or on any other desired outcome, then the financial system should enable those outcomes to be financially possible - subject only to the availability of people with the necessary skills, technology, resources and that all projects are also environmentally sustainable.

Older workers taking jobs

Older workers taking the jobs while youth unemployment rises - currently 27.5% for those aged between 15 to 19 and 13.5% for those 20 to 24. What's going on? I would suggest that we should aim to reverse the process - progressively reduce the retirement age to 55 while increasing the employment rates of the youth. We should be extending the working hours, the life, the productivity and the efficiencies of our technologies and production lines.

Thursday, July 7, 2011

A Capital Gains Tax?

Somebody accused Labour of "Walking backwards into the future on the crutch of a new tax" - Must of been one of the other members of their "Tag Team" National who are currently in the ring doing nothing but walking backwards into the future in a wheelchair of new Public Service cuts and the sale of State Assets". While New Zealand's political theatre plays the same old show, the rest of the world is seriously looking at something new - A Financial Transaction Tax, aka Tobin Tax, aka Robin Hood Tax.

"Confidence jump raises spectre of inflation"

The above heading quoted from the New Zealand Herald's BusinessHerald lead article (6 July 2011) just highlights what an absolute mess New Zealand's economic & financial system is in (let's include the world). It's obviously a no win situation - we've had no confidence, no growth, no jobs, no pay increases (so depressing), low interest rates (that part is good) and that's given us lower inflation, and now a climb in confidence, a robust recovery, more jobs, higher pay (so exciting ... not for long), higher prices, higher interest rates (and that is not so good) and that gives us higher inflation. If you've been reading newspapers ( hard copy & online) as long as I have, you'd see that nothing has changed in the world of economics, finance and politics. The problems are the same. The small array of solutions that are offered are the same and as each so called solution is implemented the results are the same ... we all get older and collectively deeper in debt.

Wednesday, July 6, 2011

Budget 2011 - Tried and Tired

Budget 2011  Tried and Tired Yet another New Zealand Finance Minister, Bill English, has produced a Budget based on the misguided belief that problems can be solved by the same thinking used to create them. What is needed is a new form of economy  monetary reform. Democrats for social credit (DSC) monetary reform will address the deep problems caused by inequality of income, neglect of the environment and the debt slavery that characterises the present unsustainable economic paradigm. Bill English’s budget will have little effect on any of these issues other than making them worse. Core to monetary reform is the New Zealand Monetary Authority (NZMA) that can provide and manage money as a public utility, for the economic, social and environmental benefit of New Zealand and its people. The current inefficient and expensive source of money borrowed from huge banking cartels will be replaced by an extremely efficient source  the NZMA. The burden of compounding debt will be relieved through public ownership and control of the money supply. A DSC economy will be stable, equitable and prosperous, without damaging our environment or exhausting precious finite resources. Monetary reform will deliver the wealth created by people’s work back into the community. New Zealand’s current real economy suffers from a lack of affordable capital. The 2008 recession was merely a symptom of the problem, as any capital available is directed to commercial banks and speculators, while business opportunities are lost, social services are cut, and people lose their jobs and homes. The current tax system is unwieldy and unjust and should be reformed by progressively introducing a Financial Transactions Tax and a Foreign Transactions Surcharge. These will gather revenue more fairly, with the added benefit of repressing damaging speculative financial activity. DSC will support business, promote community, relieve poverty and provide adequate incomes for all residents. We will reduce crime through better living standards, reduce pollution through sustainable innovation, and reduce the gap between rich and poor through enlightened economic policy. A DSC reformed monetary system will recognise what is essential for a society to function successfully, and invest accordingly, in the public utilities of health care, education, energy, public transport, communications, the environment and most importantly, the money supply. Existing assets will not need to be sold off to fund new infrastructure  no more profits need be sent off overseas. Tried and tired Budgets such as Bill English has presented shore up a global financial system that is no longer sustainable. With DSC monetary reform, we can have a country that is financially independent, socially cohesive and environmentally sound.

Friday, May 29, 2009

Key objectives of a monetary reform prescription

The key objectives of a monetary reform prescription are to enable a healthy producing economy that provides us all with sufficient income. It is not to provide massive profits for banks or to rob people of their life savings through collapsing Finance Companies and Share Markets. The producing economy is not the problem. It has, at times, clearly demonstrated that it can create the range, and quantity of goods and services people need and want. What is at fault is the mechanism we use to enable the wheels of production to turn - money and debt. The Monetary Reform Prescription: · The Government to take back from financiers, on behalf of the public, our right to control the credit of the nation and to manage it as a public utility. The public utility will have the responsibility to introduce all new credit into existence. · Money is to be regarded as a ticket to transfer the goods and services produced by the talents of our people, utilising the tools of science and technology, to the consumer – these tickets (money) should not be loaded with interest-bearing debt to a private financial institution. · The gap or shortfall between the total value of our goods and services (GDP) and the total income available to spend on those goods and services needs to be filled without the burden of debt. This is to be done by treating the gap as a positive and monetising the appreciation of the nation’s increase in production value over incomes available. The best way to distribute this extra income should be investigated. · The government shall spend sufficient credit into existence to revitalise the New Zealand economy by stimulating domestic industry, and funding infrastructure maintenance and development. The adoption of this prescription would give New Zealand the strongest economy on earth.

Thursday, May 28, 2009

Bill English takes steps to keep debt under control – Yeah right!

The figures speak for themselves. Debt, more debt and even more debt right through until June 2017. The Budget forecasts: June 2009 $69.16 billion; June 2010 $76.12 billion and for June 2013 $106.62 billion – servicing that debt alone raises government expenditure on debt from $3.4 billion to $5.5 billion– does that look like debt under control? Bill English was certainly right to make debt one of his three objectives, but none of his orthodox budgetary measures will see the growing debt burdens currently experienced by New Zealanders lessen in fact. Our boom-bust economy is a symptom of a sick financial system - just as the fever and chills are symptoms of a sick human being. It is time to issue the economy with a Monetary Reform Prescription that will stop the fever and chills – it is Bill English’s responsibility to write the script. Today’s Budget announcements reveal his inability to do so.

Friday, October 24, 2008

The Reserve Bank Governor, Dr. Alan Bollard should not be so predictable

The Reserve Bank Governor, Dr. Alan Bollard should not be so predictable.

Every orthodox economist and their unthinking hangers-on, the media, had the one percent OCR drop sussed weeks ago.

When it is obvious to thinking New Zealanders that the current financial meltdown has been caused by economic orthodoxy, then it should have been obvious to Bollard that orthodox solutions are bound to fail – at best a one percent drop is but another stop-gap measure.

Bollard should have announced:

‘The Reserve Bank has established a credit facility for the Finance Minister to use on behalf of the Crown. This facility is of a similar nature to that recently established to assist Trading Bank liquidity but will be accessible at the cost of administration only - less than 1% interest.

‘The Government would be able to borrow from this facility to fund or refinance any of its current borrowing requirements. Funds would also be available for any of the Government’s proposed infrastructural development projects. It is also envisaged that the Government would share this facility to satisfy Local Government infrastructural development.

‘All principal, interest, and other money that is payable in relation to money borrowed by the Crown or Local Authority is a charge on, and is payable out of, the revenues of the Crown or Local Authority.

‘In addition the Reserve Bank has decided to extend its liquidity facility to the trading banks. This increase will cover all the advances trading banks currently make available to their customers. It will be made available at the cost of administration only – less than 1% - and trading banks are able to add their margin (approx. 2.50%) on top when it is on-lent. The trading banks will be given formal directions to cease advancing any monies to their customers unless it is sourced from their Reserve Bank facility.’

The above announcement would not have been predictable. The Governor would have seen immediate evidence of a reduction in domestic cost pressures, and New Zealand’s economic activity would not be further constrained.

Friday, October 17, 2008

French President Sarkozy got it right

French President, Nicolas Sarkozy, got it right when he told the EU leaders at their 15 October 2008 Summit meeting ‘We need to found a new capitalism based on values that put finance at the service of companies and citizens and not the reverse'.

DSC got it right decades ago when they established one of the tenets: ‘Systems should be made for people, not people for systems; any that fail to serve people should be reformed or discarded.’

It has been clear to us (DSC) that the orthodox financial system has never served companies or citizens; in fact quite the reverse has been the case. We have been but mere tokens in a game of monopoly, where the illusion of power and decision making was ours - but in reality the power lies with the Banks and we are the servants. DSC believes that any steps taken by governments to treat the immediate symptoms of the current financial crisis without attacking the roots of the disease will merely perpetuate the problem, while an opportunity for real solutions passes us by.

We cannot solve these problems by using the same thinking used when we created them.

It is time New Zealand had political leadership with the vision of President Sarkosy - who got it right.

ENDS Contact: John Pemberton, DSC Finance Spokesman, Ph. 021 716 895, E-mail

Tuesday, October 14, 2008

Growth - but not as we know it

Growth - the only solution offered by the major players in New Zealand politics. The National Party in particular trot out their mantra " We have policies to get growth back into our economy".

The DSC Plan for Financial reform details the mechanisms and tools to establish a just financial system. Once the plan is implemented many other serious issues which face our planet and our people can then be addressed.

The following comments have been extracted from the DSC submission to the "Inquiry into the future monetary policy framework" - Issue IV. New Zealand economy’s capacity for non-inflationary growth and how it can be improved.

Our reply:

DSC believes that under the current financial system “non-inflationary growth” is impossible,as all growth is dependant on borrowed money which incurs interest, which must then be added into prices. Thus the price of money contributes to cost inflation.

Whether the economy has been managed in a monetarist way or a fiscal way, the boom/bust cycles continue to occur. Until the issue of ownership, distribution and cost of new money is dealt with, cost inflation and ever increasing debt burdens will continue.

In addition, the use of Gross Domestic Product (GDP) as a growth indicator is another “blunt instrument” that inadequately reflects the genuine state of the New Zealand economy. GDP lumps negatives such as massive storm damage with business success as part of the same “growth”, while other activity such as volunteer work and the contribution of the environment go unrecorded. A raft of new measurement tools need to be applied in order to accurately record both positive and negative aspects of the economy, the society and the environment.

DSC recommends

• That growth should not be limited by money or its cost but instead by the availability of labour, technology and materials, and by environmental impacts.

• Any planned economic growth should be toward achieving a carbon neutral status for New Zealand.

• That Reserve Bank Credit at cost be made available to fund businesses, territorial authorities and other groups who grow and expand their activities in making the transition to a carbon neutral status for New Zealand.

• That the government actively promote economic growth in areas that help to achieve a fossil-fuel free status for New Zealand.

• That new measurements of progress be employed, Genuine Progress Indicators (GPI) that track social, economic and environmental progress, in order for funding to be provided in areas that need assistance.

Comment: DSC since its inception has advocated reform of the monetary system, not as an end in itself, but to realise social, economic and environmental justice. Measuring the market value of economic production tells us very little about the broader health of the community or the environment, and nothing about the social costs of what has been produced in the economy, or about its usefulness or sustainability

Monday, October 13, 2008

DSC plan for financial reform

Today the Democrats for social credit Leadership released a 7 point plan designed to establish the framework for a social credit economy in New Zealand. Leader Stephnie de Ruyter and Deputy Leader John Pemberton said the DSC Plan for Financial Reform offers a workable solution to the financial turmoil resulting from the global credit crisis. The following 7 point plan will reform the inherently unstable financial system. This is achieved by replacing toxic debt-based commercial bank credit with social credit. The issue of social credit will be the sole means of money coming into existence and continuing to exist – and will be issued in the public interest, to serve the common good. 1. ‘Monetary Authority New Zealand (MANZ)’ will be established as the only institution with the power to create, issue, and cancel New Zealand’s money. 2. Trading Banks will become licenced agents of MANZ. Trading Banks will only be able to advance to their customers that money which has been made available by MANZ. The trading bank’s primary role will be to serve the commercial interests of the economy – business and corporate customers. 3. Specialist savings institutions, charged with serving the investment needs of New Zealanders and not the profit of overseas shareholders, will be encouraged. This refers to Credit Unions, PSIS, TSB and any other Community type banks. 4. The Reserve Bank of New Zealand, renamed as “Infrastructure New Zealand” (INZ), will take on the specialist role of managing investment monies required for low economic yield social investment such as: housing; roading; environmental and local authority infrastructure. 5. The division within the Reserve Bank which carries out the supervisory role over banks and financial institutions will be transformed into a stand-alone, independent, publically owned organisation. 6. MANZ will be charged with identifying the income shortfall between total prices and total incomes (The Gap). Debt free money will be made available by MANZ to the New Zealand Government to fund “Kiwi Income” (KI), in the form of a national dividend to every resident New Zealander. MANZ will also be able to fund Health, Education and Environmental projects - in ways that decrease the call on family incomes. 7. MANZ will be responsible for the availability and flow of working funds necessary to facilitate trade with other nations. MANZ will ensure that the money made available by each nation for trade is backed by the real value of goods and services. MANZ will facilitate an exchange of equivalent value with no undue influence from currency, and other, speculators. DSC is the only political party of reform with a comprehensive plan that will take New Zealand forward into a more just and sustainable future as an independent and sovereign democracy. The time is right for social credit to replace social debt in New Zealand.

Friday, October 10, 2008

“You’ve got to remember - Banks Create Credit”

“You’ve got to remember – banks create credit, they lend it to companies and that creates growth.” - John Key, Leader of the National Party, on Television New Zealand Breakfast programme, 9 October 2008. John Key, on national television, has admitted to the people of New Zealand the truth about money which social crediters have known for decades. Where are the howls of derision from the Labour pack? Where are the cries of ‘funny money’? Only a thundering silence, because to deny that banks create credit is to deny the very existence of the global financial meltdown. No longer can politicians, money market managers and economists hide behind the claim that banks only lend other people’s savings. John Key has naively let the cat out of the bag, and we thank him for that. The Leader of the Opposition is perfectly right. Banks create credit out of thin air, lend it to companies and charge interest for the privilege. The entire world economy is based on this one confidence trick. It’s time to take the ‘trick’ out of confidence. It’s time to take the power to create the nation’s money supply back into the hands of a publicly owned credit authority, for the good of all New Zealand citizens.

Wednesday, October 8, 2008

Credit Crunch sees “Money-Power” in fewer hands

Armageddon is upon us – not as we dreamed of, where the hero finally rides in, takes over the world and rules for a 1000 years of peace and plenty - but where a few anti heroes (the big banks) ride in and gobble up the smaller fry. They plead poverty and cry ‘bail us out or no more loans’. The craven Government capitulates, borrows billions of dollars at the expense of taxpayers, and relieves the bankers of their toxic loans. The Money-Power has now tightened its grasp on the world. In the short term the money taps will not flow so freely, but the rate of debt growth will escalate as the compounding effect of higher interest rates kicks in. So what are the options? How will Cullen or English manage the financial tsunami when it hits New Zealand? We know that unfettered finance capitalism of the Rogernomics and Ruthanasia variety totally failed. We can be pretty sure the Keynesian approach of governments running deficits – pumping the economy with more and more tax payer funded debt will also fail. No nation on earth has managed to create a stable industrial economy. Neither those in positions of power nor their advisors know what is wrong, and they certainly don’t know what to do. The solution is to fill the gap between incomes and prices – not with interest bearing debt – but with a dividend to all citizens. This can only come from a publicly owned money supply and a production-based – not speculative – monetary system. The 1000 years of peace and plenty could become a reality if we stood tall - established a New Zealand Monetary Authority, used it to replace the debt-infected money supply of the old economy with a transfusion of the life blood our economy needs - New Zealand dollars uninfected by compounding interest. Instead of the power of the few it would be the power of the many.

Monday, September 22, 2008

It’s about debt

This election is about debt. A stampeding bull elephant, the debt-fuelled world economic crisis, is about to stomp on New Zealand. We have escaped serious damage so far because of the relatively simple nature of our lending practices. But the bull elephant is getting closer. At the end of March 2008, this country’s total debt was at least $492.6 billion. On average, that’s a debt of $115,937 per man, woman and child in New Zealand. A family of four shoulders a debt burden of almost $500,000, and it is going to go higher. This figure includes personal debt, and the debt we service indirectly through taxes, rates and the price of goods and services. Debt is an issue that ought to be hard to ignore. And yet it is ignored. One major party talks about ‘trust’ and another one about ‘a fresh approach’ this election, while the media have a feeding frenzy over a minor party’s alleged financial peccadilloes. No-one is talking about the charging bull elephant, except for the damage he is doing overseas, as if it had nothing to do with us. It has everything to do with us. Democrats for Social Credit has warned voters for over half a century that this crisis was coming. Now it is here, so what are we going to do about it? Will it take the stomping of several bull elephants for voters to stop believing everything they read in the mainstream media and every platitude politicians in Parliament mouth? We have been given breathing space; let’s adopt a financial mechanism that will pull us back from the brink of economic disaster. Democrats for social credit is the only party that advocates such a financial mechanism - one that can save New Zealand and lead the world.

Do Not Resuscitate

Despite significant further turbulence in the US and global financial markets, Reserve Bank Governor Alan Bollard says the New Zealand banking system remains sound. Yeah, right! The New Zealand banking system is so sound, the Reserve Bank is gearing up a further back stop, just in case the financial pandemic reaches our shores. Yet the RBNZ medication may be too late - the contagion has already reached many of our finance companies. The current world economy, which most New Zealand banks and financial institutions are very much a part of, has suffered high fevers of speculation, money supply obesity and a paralysing inflation rate that is already damaging people’s lives and families. Overseas back-stops and bail-outs are at the expense of ordinary people, and do nothing more than provide life-support for a diseased financial system that ought to be allowed to die. It’s medical chart should say Do not resuscitate. New Zealand has the opportunity to thrive in a healthy economy that has no need of emergency financial services, or injections of liquidity that drive debt levels to fever pitch. Instead of the Reserve Bank sticking band-aids on a moribund financial system, I call for the establishment of a fresh, untainted and independent Monetary Authority for New Zealand. The New Zealand Monetary Authority would replace the debt-infected money supply of the old economy with a transfusion of the life blood our economy needs - New Zealand dollars uninfected by compounding interest. A vigorous new economic system in New Zealand could provide other countries with a prescription for better health and fitness.

Tuesday, August 26, 2008

Nats giveth…and taketh away.

The National Party Politicians giveth great tax cut promises, knowing that the National Party Pickpockets will taketh away. Maurice Williamson, National’s transport spokesman, gives us the heads up on what is to follow - any money spent on the common good such as major roading projects will be rapidly recovered by way of tolls. Goodbye tax cuts. Sleeping for nine years on the opposition benches, dreaming about policies of the past, have done nothing for their ability to deal with the here and now. Maurice Williamson’s comments on TVNZ’s Agenda programme about private sector funding and road tolls confirm the fact that National is still a classical conservative party - they will do nothing more than fiddle with the status quo. The problems of the day - debt; taxes; and the funding of health, education, environmental protection and infrastructure development - will not be solved by the political parties of status quo. At present there is no party of reform in the New Zealand Parliament – the need for one is more obvious now, with mounting social and economic problems. Democrats for social credit, a true political party of reform, would place creation and ownership of the nation’s money supply where it belongs: in the hands of the people of New Zealand - with the prime purpose of enhancing the common good. The Nats have got it wrong coming and going. Not only are they proposing an expensive source of funding that benefits the already rich, they are planning to build infrastructure that is unsustainable. Where are the visionary policies for the future? When people are already getting out of their cars and on to buses, why go backward and build more roads instead of investing in better public transport? New Zealand must not allow status quo political parties to fiddle while New Zealand burns – or borrows itself to death.

Friday, August 22, 2008

Reserve Bank facility needs to be extended

A news release, issued by the Reserve Bank - 21 August 2008 - has Toby Fiennes, the Head of Prudential Supervision, saying ‘Purely as a precautionary measure, the Bank has put in place a facility where it will accept Residential Mortgaged-Backed Securities as collateral for cash, giving institutions an additional funding avenue.’ I say well done Mr Fiennes, now the Reserve Bank has this facility in place they should focus their attention on providing a similar facility, for our Governments – both national and Local – to develop the infrastructure needs of our nation. The Reserve Bank’s decision to make this facility available - if times get difficult - now makes it obvious that in easier times it would work as well and likely to be even more effective, especially if the interest rate charged covered costs only i.e. less than 1%.