Monetary Justice

Show Me the “Monetary Reform” David Cunliffe!

2011-11-19T23:01:00.001+13:00

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'.

Capital Gains Tax - So Last Century

2011-07-17T23:10:00.000+12:00

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.

Just because you believe doesn't make it true

2011-07-14T00:59:00.000+12:00

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.

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

2011-07-08T23:18:00.000+12:00

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

2011-07-08T01:14:00.000+12:00

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.

A Capital Gains Tax?

2011-07-07T23:41:00.000+12:00

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"

2011-07-07T20:58:00.001+12:00

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.

Budget 2011 - Tried and Tired

2011-07-06T23:58:00.002+12:00

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.

Key objectives of a monetary reform prescription

2009-05-29T16:41:00.001+12:00

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.

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

2009-05-28T23:17:00.001+12:00

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.

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

2008-10-24T01:49:00.004+13:00

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.

French President Sarkozy got it right

2008-10-17T08:59:00.003+13:00

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 pemberj@slingshot.co.nz

Growth - but not as we know it

2008-10-14T00:05:00.008+13:00

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

DSC plan for financial reform

2008-10-13T23:34:00.003+13:00

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.

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

2008-10-10T00:11:00.001+13:00

“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.

Credit Crunch sees “Money-Power” in fewer hands

2008-10-08T21:51:00.002+13:00

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.

It’s about debt

2008-09-22T20:50:00.003+12:00

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

2008-09-22T20:41:00.003+12:00

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.

Nats giveth…and taketh away.

2008-08-26T00:12:00.001+12:00

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.

Reserve Bank facility needs to be extended

2008-08-22T22:26:00.002+12:00

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%.

John Key’s money market mates will prosper under National

2008-08-03T14:30:00.001+12:00

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 become, unashamedly, a Labour look-a-like. New Zealanders must be wary of someone who has spent so much time brushing shoulders with the powers that be within our current financial system. The personal success of Mr Key within this system needs to be measured against the huge growth in debt and financial instability that now surrounds him. John Key’s credibility can only be rescued if he promotes an honest money system, where New Zealanders own and control their own money supply - a system where necessary funding was obtained, for infrastructure and environmental protection, from within our own shores, at a mere cost of administration using our own Reserve Bank. The only nests to be feathered in this case would be the New Zealanders and their families.

Bollard highlights the flaw in modern economic theory

2008-07-30T23:05:00.001+12:00

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 quite clearly recognises this as wrong. He threatens “monetary policy will respond”, if genuine costs are factored in to prices. If he still thought Keynes was right he would accept, that as costs flows are generated an equivalent income flow is also generated – no inflation – therefore no need to threaten his brand of monetary policy. Allan Bollard obviously recognises the shortfall in purchasing power and knows that this shortfall is currently filled with interest bearing debt. It must be devastating to all business owners to hear the Governor tell them they cannot pass on into prices the legitimate increase in their cost of their production. I do not agree with the fundamental doctrine of today’s economic theories. It is glaringly obvious that income does not equal the value of current output, as witness the overwhelming number of families in New Zealand, and indeed all over the world, who must borrow to exist. Goods would remain on the shelves unsold, without the expensive credit issued by commercial banks.

It’s not the “Big picture” – it’s the rotten canvas

2008-07-02T16:26:00.000+12:00

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 impossibility of funding adequate - let alone first rate - health and education systems, the futile efforts to provide genuine growth in incomes to all, and at the same time to have a productive profitable economy that can make the investment necessary to recreate a green, sustainable New Zealand. It is all impossible because of underlying debt and interest – the rotten canvas. Nearer the end of this year, election 2008, more now than ever before we need people who can not only see the big picture but know what sort of canvas to paint it on. New Zealand’s greatest big picture, a long term success, was the massive state housing project established by the Michael Joseph Savage Labour Government. The project was built on a sound canvas of “honest money” created by the Reserve Bank of New Zealand at a mere cost of administration. Bring on the new canvas so the big picture can be realised.

Financial Institutions create credit

2008-06-27T20:22:00.003+12:00

"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.

Cost of living skyrockets - Incomes fall further behind.

2008-06-15T17:18:00.005+12:00

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 speculators are making a killing now - Money speculators have been doing it for centuries.

2008-06-05T18:48:00.009+12:00

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

2008-05-23T00:12:00.003+12:00

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 would give.” Let us all hope that he continues to use his calculator wisely and works out the true cost of interest to the economy. Just as we have food labelling to expose the unhealthy ingredients we eat, we should have labelling that exposes the insidious amount of interest that is hidden in the price of every good or service we purchase or every rate or tax we pay. If the Finance Minister is sincere in his expressed wish to leave a mark on New Zealand Politics and to be remembered in an even greater way than Michael Joseph Savage, he will have to produce a Budget that will remove one more monkey from, not only his shoulder but from the shoulders of every New Zealander. The High Interest Rate Monkey must go.

Debt, debt and even more debt

2008-05-08T20:38:00.006+12:00

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. Unfortunately, under the current financial system, increasing debt is a given just for our economy to stay still. An even greater growth in debt is required to make it grow. The barrage of advertisements in all forms of the media are designed to "Lead us into temptation" to buy, buy and buy. They encourage and show us how to buy on the "never never". Can you imagine the levels of unemployment, the closed shops and businesses if there was no sales fuelled by debt? We openly abhor debt. We loathe the amount of interest we pay, and we feel fear when we get caught in the clutches of compounding interest. Under the current system we will be in debt until we die. The literal meaning of 'mortgage' is 'the grip of death'. Our futures are well and truly mortgaged!

The Reserve Bank of New Zealand

2008-04-25T12:31:00.006+12:00

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.
Failed to use this nation's own money for non-commercial infrastructural works at either national or local level, so that interest charges double or treble the costs of non-commercial projects.
Developed a skill-deficient, low wage economy.

A Democrat for social credit (DSC) Government will:

Claim back the right to control the creation of our nation's money, so that it works for New Zealanders rather than the shareholders of foreign multinationals.

Employ a system of accurate national accounting, by a non-political independent body of the status of the Judiciary, to determine accurately the monetary needs of the New Zealand economy. This will avoid either demand inflation or deflation, and will ensure less dependence on debt to buy the goods and services we all need for the standard of living we justly deserve.

Deliver interest-free funding from the Reserve Bank for local and central government assets, thus reducing debt by eliminating the interest component of the loan. These measures will enable permanent long term tax reductions.

Guarantee a tax free income sufficient to live in dignity for all New Zealand citizens. As our economy recovers sufficiently from present and past mismanagement.

"Monetary Justice"

2008-04-24T00:31:00.000+12:00

Welcome to "Monetary Justice".