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Financial Institutions create credit

"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.
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Anonymous said…
And havn't they been busy!

The Connection Between Overseas Bank Bailouts And The recently Publicised Events In New Zealand
Researched And Compiled By Iain Parker June 2008
List candidate Democrats for Social Credit:

1)British government commits taxpayers to bailing out the banks.
(See full comments: http://blog.johnpemberton.co.nz/html/ipbg.html)

2)Reform Of The Reserve Bank of New Zealand’s
Liquidity Management Operations.
(See full comments: http://blog.johnpemberton.co.nz/html/iprrb.html)

3)Government increases T-bill tender.
(See full comments: http://blog.johnpemberton.co.nz/html/ipgtbill.html)

4)RBNZ readies to shore up banks.
(See full comments: http://blog.johnpemberton.co.nz/html/iprbsub.html)

5)GOVERNMENT SECURITIES TENDERING
IMPORTANT CHANGES IN TENDERING OPERATIONS.
(See full comments: http://blog.johnpemberton.co.nz/html/ipgst.html)

6)Westpac to offer world bank notes.
(See full comments: http://blog.johnpemberton.co.nz/html/ipwp.html)

7)Current account deficit soars.
(See full comments: http://blog.johnpemberton.co.nz/html/ipcads.html)

8)DOLLAR DECEPTION:
HOW BANKS SECRETLY CREATE MONEY.
(See full comments: http://blog.johnpemberton.co.nz/html/ipdd.html)

9)The Reserve Bank, private sector banks and the creation of money and credit.
(See full comments: http://blog.johnpemberton.co.nz/html/iprbpsmc.html)

10)Excerpts from the New Zealand Bankers Association 2006 - Banking In New Zealand Fourth Edition
PAGE 18 - THE CREATION OF MONEY AND CREDIT.
(See full comments: http://blog.johnpemberton.co.nz/html/ipnzba.html)
June 29, 2008 at 4:49 PM
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