Monetary Justice

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 developm

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

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

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 availa

“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

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

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 doi

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 h

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 Parliame

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%.

The National Party’s desire to borrow from conventional sources for infrastructure development, will not only add further burdens to the many taxpayers by way of debt servicing, but will also help feather the nest of the few, his money market mates. Those who wheel and deal in the money market at present will be rubbing their hands with glee knowing that under National, John Key and Bill English will expand the government’s debt programme. In the current financial climate the prospect of debt instruments being traded and secured against the taxpayer will be a bonus. It is bad enough to suffer the effects of the current borrowing programme under a Labour Government without this being extended even further by National. New Zealanders must surely now reflect on the change that has occurred in the National party. A party that has only one answer of its own to offer – borrow more than Labour and help feather the nest of their leader’s money market mates. In all other respects it has beco

The Reserve Bank Governor, Dr. Allan Bollard, stated in his media release, 30 July 2008 that ‘… we cannot all pass on the higher costs to our customers or employers. If we do try to pass it on, then monetary policy will respond.’ By making this statement Bollard has finally accepted that orthodox economic polices are based on faulty doctrine. Orthodox economic polices are based on a doctrine, which defines the relationship between income and prices. J. M. Keynes, a British economist, advanced theories on macro-economics which still form the basis for policies applied today. In his General Theory of Employment, Interest and Money Keynes states: ‘Provided it is agreed that income is equal to the value of current output… all of which is conformable to common sense and the traditional usage of the great majority of economists…’ In other words In the process of producing goods and services there is sufficient incomes available to pay for the market price of those goods. Mr Bollard now q

It’s not the “Big picture” – it’s the rotten canvas Brian Gaynor (Herald, Saturday June 28) says ‘None of our political leaders seem to have a big picture vision or any idea how to reverse this long term under performance.’ I disagree - as important as the big picture is, it will never come to much if it is painted on a rotten canvas. New Zealanders have never suffered from an absence of visionary political leadership, have always had a pretty good idea of what they want as a country and have never had an economy that has been rudderless. New Zealand’s political visionaries, with their big pictures, have just been painting their dreams on the rotten canvas of debt and compounding interest. We have a desperate drive for growth, decades of current account deficits, a never ending need for taxation and rates and the unavoidable boom-bust cycles. We are unable to achieve a stabile and prosperous economy. There is the difficulty of funding a generous superannuation scheme, the impossib

"Financial Institutions ... create credit" - so sayeth Michael Reddell and Cath Sleeman in their joint article (Some perspectives on past recessions) in the latest Reserve Bank of New Zealand Bulletin, June 2008 vol. 71 no.2. The full quote on page 14 is as follows: "Deregulation gave financial institutions the freedom to create credit, without much experience in actually doing so. A significant portion of the new credit, fuelled by the inflows of foreign funds attracted by New Zealand’s relatively high interest rates, was used to finance speculation in the share market and the property market." Imagine the benefits which could be gained if a financial institution had made such new credit available for productive purposes. And imagine yet again the further benefits that could've been gained, if that financial institution had made the new credit available at its cost of production - a mere 1% or less.

Food, housing, education and transport costs have increased. Easy access to affordable and timely health care remains a difficulty. Why is it, on the one hand, Business, Local Bodies and Government can increase their cost structures and our budget burdens with ease, while on the other hand, they struggle to increase our incomes? Any increase in income or reduction in our rates or taxes are merely token gestures - they never catch-up and the gap between increasing prices and our purchasing power gets ever wider. It is about time a political party discovered the answer! No - it is about time a political party with the answer, was supported by New Zealanders to become the government! Check out: http://www.democrats.org.nz/ and http://www.johnpemberton.co.nz/

Oil can be bought and sold many times over, even before it comes out of the ground, but eventually oil will run out. Its scarcity factor can be managed simply by turning on and off the taps. Other commodities have had their day in the sun but one by one are replaced by the next opportunity for speculation. Money, on the other hand, is different in one key way - it can be created out of thin air at very little expense and will never run out. Those who are in control of the money creation process have quietly gone about their business - Creating money; Turning the money taps on and off; Speculative buying and selling of money - for centuries.

Tax cuts - no longer a monkey on Cullen’s shoulder. Budget 2008 has seen the tax cut monkey effectively removed from Michael Cullen’s shoulder. The removal, though, has exposed another – the high interest rate monkey. The high interest monkey was formally placed on Dr Cullen’s shoulder, not by the National Party or any of the other opposition parties in parliament, but by Michael Cullen himself. He placed it there when he said ‘More joy likely in falling interest rates than Budget relief.’ - NZ Herald 16 May 2008.” The DSC agrees with that but warns that the high interest monkey Dr Cullen now carries will cause more grief than the tax cut issue ever did. Another quote from Michael Cullen, in the same issue of the New Zealand Herald, actually says it all: ‘If you are sitting, say, in Auckland on a $400,000 mortgage, a 2 percent drop in interest rates is $150, $160 a week or more’. Tax cuts are fine but are of a miniscule benefit to us compared to the gain a low interest rate policy

The credit habits of Generation Y have been explicitly explored in todays New Zealand Herald following a report from Veda Advantage, New Zealand's largest supplier of credit information. Associated Budgeting Consultants Network chairman, Darryl Evans is quoted as saying "I believe living in debt is a learned behaviour.....at the moment I'm working with four generations of the same family. That says something". Darryl Evans said that he was'nt surprised at any of the report's findings. Well nor am I! Generation by generation our people have been getting further and further into debt. None of us can escape the burden of debt, it does not matter how financially literate we are. One way or another every New Zealander is servicing debt, whether it be their own debt or the debt loaded on the prices they pay for goods and services. And of course we pay tax to service the government's debt and we pay rates or rent which helps service local government debt

New Zealand's Central Reserve Bank is STATE owned. Despite that, instead of being used for the benefit of its owners, the people of New Zealand, successive Governments have: Allowed the foreign-owned trading banks to create and issue nearly all of the nation's money supply and claim it as their own. Notes and coins make up less than three percent of the money in circulation. Ninety seven percent of our money supply is on loan to us at interest from those banks. Actively encouraged banks to charge "rental" for this money at some of the highest interest rates in the developed world. Used high interest rates as a blunt lever to control inflation, while agreeing to exclude the resultant costs from the Price Index, so that their cost-inflationary effects do not allow pensions and awards to compensate for these. Deliberately used interest rate fluctuations to maintain an unemployed "pool" of about four percent of the workforce in order to hold down wage rates. Fa

Welcome to "Monetary Justice".