Tuesday, 22 April 2014

Tried - tested and suggested solutions to private central banking pyramid scam.

Change of public policy proposal for nation-state government’s - including New Zealand at this time - that currently outsource the accountancy of their primary credit base - based upon value of their own natural resource collateral - to then have private banks type that value into their accounts to then lend it back to the nation-state as interest bearing loans to circulate as the nations entire currency.

To solve the seemingly impossible economic puzzle of downward pressure degradation facing most every public service sector and wider society of private central banking nations - as currently without more debt they cant have growth - with less debt they have less currency causing economic contraction and what they need is more currency with less debt. 

Without reform of the entirely interest bearing private loan based money system they currently suffer - the poverty among plenty downstream of it - leading to domestic and global instability - can never be fixed!

The current money system we suffer is a relic of the days of British Imperialist Empire ruling over subservient colonies. Imperialism being the proceeds of a local wealth pyramid system based upon a fraud being used to fund its expansion across borders and has no place in any world that wants to ever call itself a free-world occupied by free societies of individuals enjoying equal economic opportunity.

Winston Churchill said:
“The farther back you can look, the farther forward you are likely to see.”

Samuel Johnson said:
“Integrity without knowledge is weak and useless, and knowledge without integrity is dangerous and dreadful”

Former New Zealand Governor Sir George Grey speaking in Parliament in 1883 said;
“I conscientiously believe that two or, three great’ establishments, all really under one directorate, do’ exercise in the Legislature of this country an undoubted and dangerous influence. I sincerely believe that this existing Government is maintained in its place by those bodies… I say that even among the voters it will be a long time before that independence can come about which ought to prevail, because I fear many of them are in some manner entangled with engagements’ which will place them at the mercy of those persons who rule those different great bodies of which I speak.
I go further and say and in saying this I know, of course, that I create, and must create, a great many enemies I firmly believe that the same persons by monetary influence control a great portion of the press 'One great central power in New Zealand oppresses it from end to end. That central power is moved by the Premier, and the Premier is the solicitor of these great moneyed corporations. Is it just? Does it give the people of New Zealand a fair chance? Is it not hard for a man to know that if he cries for justice some debt upon his estate may he made the cause of his ruin instantly? Is it right for us to feel degraded by knowing that such is the case here? As long as this continues I see’ no hope for ourselves or our country.”

New Zealand Prime Minister and former international
investment banker John Key said in an interview on TV3 The
Nation - 17 November 2012;

“Our (Govt) debt to GDP levels by then will top at just under 30 percent, in other words, um, we'll be relatively lowly indebted compared to countries like America and Europe, but I put it to you we are a small open economy, we have high levels of private sector debt, we, mum and dad, have borrowed that debt effectively from foreigners because their local bank has sourced that from foreigners.”

Tools needed for a transition to a Steady State Economy with a stable Honest Primary Public Money Supply Base to fund a sustainable primary economic base;

What is a Steady State Economy?

A steady state economy is an economy with stable or mildly fluctuating size. The term typically refers to a national economy, but it can also be applied to a local, regional, or global economy. An economy can reach a steady state after a period of growth or after a period of downsizing or degrowth. To be sustainable, a steady state economy may not exceed ecological limits.

Vincent Cartwright Vickers was born on 16th January 1879, and educated at Eton and Magdalen College, Oxford. He was a Deputy Lieutenant of the City of London, a director of Vickers, Limited, for twenty-two years, and a director of the London Assurance from which he resigned in January 1939. In 1910 he was made a governor of the Bank of England, and resigned this appointment in 1919. Later, he became President of the Economic Reform Club and Institute.

Excerpts from - Economic Tribulation – by Vincent C Vickers - published 1941;

In the question of what steps should be taken to put matters right, I can only suggest the general direction in which our future policy should point; for I myself do not believe that there exists any perfect cut-and-dried scheme which is likely hereafter to be adopted, lock, stock, and barrel, as our future monetary system. Moreover, there are many other technical and psychological considerations which would be necessary in order to achieve peace and contentment amongst the people. The main objectives however, should include:-
1.) State control and State issue of currency and credit through a central organisation managed and controlled by the State.
2.) Stabilisation of the wholesale price level of commodities. That is to say, a fixed and constant internal purchasing power of money; so that a pound will buy to-morrow what it bought yesterday; an honest pound, not a fluctuating pound. And this can be done by so issuing and regulating the volume of available credit and currency that it shall at all times be adequate to permit of the purchasing power of the consumer being equated with the volume of production; not by limiting the purchasing power, but by firstly increasing purchasing power more in proportion to the productive capacity of industry.
3.) Fixation of foreign exchanges by foreign exchange equalisation funds, and agreement with Empire countries and all other countries willing to fall into line; and, once this was accomplished, the removal or diminution of trade barriers which to-day protect the countries from the results of a bad monetary system.
4.) Any additional supply of money should be issued as a clear asset to the State; so that money will be spent into existence, and not lent into existence.
5.) The fluctuating quantity of gold lying in the vaults of the banking system should never be permitted to govern the volume of credit and currency needed by the country.
6.) The elimination of slumps and booms; and more direct procedure for eliminating unnecessary poverty
7.) The abolition of the Debt System where all credit is created by the banks and hired out at interest to the country.
8.) Absolute State control over all foreign lending; and the adoption of the general principle that our foreign trade should be so conducted as to preserve -
(a) the interests of the Home Market,
(b) the interests of the Empire countries and the English-speaking nations,
(c) the interests of Foreign nations, and that this principle should particularly apply in the case of Home production and foodstuffs.

Public Banking System Nations past and present;

every nation of Anglo-Saxon ancestry has at various times practiced Fully Functioning Public Banking to fund its primary economic base free of the impost of private banker interest which saw those nations experience no greater prosperity with fairer distribution of wealth than when doing so.

England - The Great War and the debt-free Bradbury Treasury Note:
The Financiers and the Nation by the Rt. Hon. Thomas Johnston, P.C., ex-Lord Privy Seal. It was written in 1934 and republished in 1994 by Ossian Publishers Ltd. Here is the link to the text of this quite remarkable and rare book:

In Chapter 6, entitled ‘Usury on the Great War’, I’ve selected the following paragraphs which I believe are both shocking and self-explanatory:

WHEN the whistle blew for the start of the Great War in August 1914 the Bank of England possessed only nine millions sterling of a gold reserve, and, as the Bank of England was the Bankers’ Bank, this sum constituted the effective reserve of all the other Banking Institutions in Great Britain.

The bank managers at the outbreak of War were seriously afraid that the depositing public, in a panic, would demand the return of their money. And, inasmuch as the deposits and savings left in the hands of the bankers by the depositing public had very largely been sunk by the bankers in enterprises which, at the best, could not repay the borrowed capital quickly, and which in several and large-scale instances were likely to be submerged altogether in the stress of war and in the collapse of great areas of international trade, it followed that if there were a widespread panicky run upon the banks, the banks would be unable to pay and the whole credit system would collapse, to the ruin of millions of people.

Private enterprise banking thus being on the verge of collapse, the Government (Mr. Lloyd George at the time was Chancellor of the Exchequer) hurriedly declared a moratorium, i.e. it authorized the banks not to pay out (which in any event the banks could not do), and it extended the August Bank Holiday for another three days. During these three or four days when the banks and stock exchanges were closed, the bankers held anxious negotiation with the Chancellor of the Exchequer. And one of them has placed upon record the fact that ‘he (Mr. George) did everything that we asked him to do.’ When the banks reopened, the public discovered that, instead of getting their money back in gold, they were paid in a new legal tender of Treasury notes (the £1 notes in black and the 10s. notes in red colours). This new currency had been issued by the State, was backed by the credit of the State, and was issued to the banks to prevent the banks from utter collapse. The public cheerfully accepted the new notes; and nobody talked about inflation.

To return, however, to the early war period, no sooner had Mr. Lloyd George got the bankers out of their difficulties in the autumn of 1914 by the issue of the Treasury money, than they were round again at the Treasury door explaining forcibly that the State must, upon no account, issue any more money on this interest free basis; if the war was to be run, it must be run with borrowed money, money upon which interest must be paid, and they were the gentlemen who would see to the proper financing of a good, juicy War Loan at 31/2 per cent, interest, and to that last proposition the Treasury yielded. The War was not to be fought with interest-free money, and/or/with conscription of wealth; though it was to be fought with conscription of life. Many small businesses were to be closed and their proprietors sent overseas as redundant, and without any compensation for their losses, while Finance, as we shall see, was to be heavily and progressively remunerated.

Canada - Canadian public credit history more needed today than ever!
An Urgently Needed Change in Monetary Policy
Borrowing from Bank of Canada would make governments debt-free
by George H. Crowell
National Office | The Monitor
Issue(s): Government finance
June 1, 2011 http://www.policyalternatives.ca/publications/monitor/ugently-needed-change-monetary-policy
Through the publicly-owned Bank of Canada, which was established in 1935, the federal government can borrow money, essentially interest-free, and make such funds available not only for its own use, but also for provincial and municipal governments. Such borrowing helped Canada get out of the Great Depression, and to finance our participation in World War II. Continuation of this practice until the early 1970s played a key role in creating Canada’s post-war prosperity, as well as launching Medicare and other national social programs.
For the past four decades, however, our governments at all levels have increasingly been borrowing instead from the private banks, and paying steep interest on those mounting debts. Each year, governments across Canada now pay some $60 billion in interest on their debts – interest payments that need not be incurred.

This enormous debt burden deprives our governments of revenue that could be used for much-needed improvements to social and economic services – and also to help civil society groups that work for the public welfare. Such organizations depend largely on government funding, but are repeatedly told there is never enough money available.

Governments themselves also use their deliberately incurred borrowing debts as an excuse for cutting public programs and services instead of preserving and expanding them. At the same time, however, they keep cutting the tax rates on wealthy individuals and corporations who don’t need tax relief – and many of whom evade the taxes they owe, anyway, through tax loopholes or by hiding their wealth in offshore tax havens. There also doesn’t seem to be any shortage of funds for unnecessary new prisons, for unjustifiable military interventions, or the wasteful purchase of new weaponry.

One of the organizations that has tirelessly called for a return to government borrowing from the Bank of Canada is the Committee on Monetary and Economic Reform (COMER). Since its formation in the 1980s, COMER has produced reams of statistics, reasons and arguments for reviving the lending powers of the Bank of Canada. It has shown how the massive interest-bearing debt now carried by our federal and provincial governments could gradually be replaced with interest-free debt.

Such a change in monetary policy, combined with crucial changes in tax policy, would make available tens of billions of dollars that are urgently needed to rebuild our public infrastructure, protect our environment, and strengthen Medicare and other social programs so vital in meeting human needs. Such expanded government spending on worthwhile projects would also create jobs, stimulate additional economic activity, and significantly increase tax revenue.

To start a campaign for the monetary reforms needed to achieve these national gains, COMER recently issued a “call for the renaissance of the Bank of Canada.” The call is directed at civil society organizations. It urges them to join with COMER in demanding that the federal government revive the power of the Bank to provide funding to all levels of government, mainly with interest-free loans, as was done between 1935 and the early 1970s. These loans, of course, would be for needed public investments, primarily to protect and improve social programs and repair and build public infrastructure. (Go to the COMER website – www.comer.org -- to read the full text of the call.)

COMER has been dismayed that civil society groups have not pushed for these changes in monetary policy on their own, since it could make abundant funding available to meet a wide range of the social and environmental needs for which they advocate. This is perhaps because they are unaware of this possible answer to their funding shortages. The COMER campaign hopes to raise their awareness as it calls for their endorsements.

Of course the COMER people have to be realistic. They know the monetary policy changes they propose challenge the power of the private banking system, and they know this system has the support of the new majority Harper government. But the enhanced status of the NDP in the new Parliament (and the election of the first Green Party candidate, leader Elizabeth May) heightens the prospect that a revival of the Bank of Canada’s lending powers will be more frequently and effectively raised in the House of Commons. (Maybe every time the Conservatives cite the debt as an excuse for cutting social programs and services.)
Significantly, the NDP convention in 1995 and the Green Party convention last year both passed resolutions calling for a return to government borrowing from the Bank of Canada instead of the private banks. It would be in accordance with those resolutions for both parties to put this key monetary policy reform on their parliamentary agendas.

Indeed, it may be essential for the opposition to take this stand in the House, if only to deter Harper from making the Bank of Canada even less beneficial to the public interest. This could happen if Harper decides to act on his earlier support for the creation of a common U.S.-Canadian currency, or to bring Canada into a proposed new global currency system – both, of course, controlled by the private bankers. Such a loss of monetary policy independence would gravely impair the Canadian campaign for monetary justice.

Right now, however, the renaissance of the Bank of Canada, though very difficult, is not beyond achievement. Particularly if the campaign garners the support it deserves from the civil society groups that now suffer so much from the Bank’s disuse.

(George Crowell is a retired University of Windsor professor who has been working with COMER on monetary policy since 1994.)

Australia - Australia's best years under public credit implemented by their Labor Party

National Banking in Australia:
The Commonwealth Bank
July 2012
By Robert Barwick 

In two distinct phases, from its inception in 1911 to 1923, and then from 1942-49, the Commonwealth Bank proved the power of national banking: it directed the public credit of Australia into the development of great infrastructure and crucial industries, including the Trans-Australian Railway; it financed Australia’s participation in WWI; and it financed the miraculous war-time economic mobilisation of WWII which transformed Australia from an agrarian backwater into an agro-industrial powerhouse, including the postwar great Snowy Mountains Scheme. Just as in the United States, the rise and fall of the Commonwealth Bank is the story of Australia’s battle for national sovereignty.

The American-inspired patriots of colonial Australia who fought for nationhood knew that national banking was the determining issue. Australia’s labour movement was born out of the bloody 1890 maritime and shearers’ strikes against the London banks, pastoral houses and shipping companies that controlled the colonial economy, and whose stranglehold would unleash the devastating crash of 1893. Already in 1891, NSW’s Labor Electoral League, one of the components which would form the Australian Labor Party, enshrined a commitment to national banking in its electoral platform, alongside a demand for “The federation of the Australasian colonies upon a national as opposed to an imperialistic basis….”

It was the expatriate American ALP politician King O’Malley who gave the Labor Party its deep appreciation of the workings and the signifi cance of national banking. In 1908 O’Malley convinced the federal Labor Party conference held in Brisbane to adopt a detailed national banking proposal in its fighting platform. In a five-hour speech in Federal Parliament the following year, O’Malley emphasised the importance of a national bank for Australia’s sovereignty:

We are legislating for the countless multitudes of future generations, who may either bless or curse us. … We are in favour of protecting, not only the manufacturer, but also the man who works for him. ... I propose the institution of a government national bank for managing the finances of the Commonwealth and the States. … Cannot honourable members see how important it is that we should have a national banking system … —a system that will put us beyond the possibility of going as beggars to the shareholders of private banking corporations? The movement of the money volume is the vital monetary problem—the master-key to the financial situation. Through the control of this movement prices may be made to rise or fall or remain substantially steady. … Such power is an attribute of sovereignty … and ought to belong to none but the sovereign people exercised through … Parliament and Government in the interests of the whole people.”

O’Malley triumphantly proclaimed the precedent for his proposed new national bank. “I am the Hamilton of Australia”, he declared. “He was the greatest financial man who ever walked the earth, and his plans have never been improved upon. … The American experience should determine us to establish a national banking system which cannot be attacked.”

Labor vs. the Money Power

To force the ALP caucus to implement the national banking policy, over the opposition of Melbourne’s British-controlled Collins Street banks, O'Malley formed what he called the “Torpedo Brigade” among Labor MPs. O’Malley and his allies pushed through the Commonwealth Bank Act in December 1911, and O’Malley personally handpicked Denison Miller to run the new national bank, exhorting him, “You have a chance to make history, Brother Miller, Australian history, which will become world history. Think the matter over deeply. And accept the job. Decide to make history— I’m sure you’re the man to do it.” In his 1962 book, The Great Bust, former New South Wales Treasurer and later NSW Prime Minister Jack Lang documented the terror which Miller and the Commonwealth Bank had struck into the British oligarchy, until Miller’s untimely death in 1923:

In Australia the war had been financed by the then newly established Commonwealth Bank. It had found all the money to keep the armies abroad, and also to finance the producers at home. It had financed the Commonwealth Shipping Line deal for Hughes. Denison Miller had gone to London after the war had finished and had thrown a great fright into the banking world by calmly telling a big bankers’ dinner that the wealth of Australia represented six times the amount of money that had been borrowed, and that the Bank could meet every demand because it had the entire capital of the country behind it. The Bank had found £350 million for war purposes. A deputation of unemployed waited on him after he arrived back from London at the head office of the Commonwealth Bank in Martin Place, Sydney. He was asked whether his bank would be prepared to raise another £350 million for productive purposes. He replied that not only was his bank able to do it, but would be happy to do it. Such statements as these caused a near panic in the City of London. If the Dominions were going to become financially independent of the City of London, then the entire financial structure would collapse.”

Lang went on to describe the City of London’s intention to bridle the Commonwealth Bank, by creating a supranational banking structure that would take control over the finances of all nations, constituting a de facto world government. The subjugation of the banking system of Europe today, under the European Stability Mechanism (ESM) demanded by London and related financiers, is a dead ringer for the process exposed by Lang:

Basically it was a problem of banking. Some formula had to be devised which would enable such local institutions as the Commonwealth Bank of Australia to be drawn into the City of London’s net. The financial experts studied the problem deeply. Out of their deliberations emerged the plan to centralise the control of all banking throughout the Empire by channeling it directly into the supervision by the Bank of England. The Bank of England was to become the super Bankers’ Bank. … The Bank of England took up the idea of Empire control most enthusiastically. It was even decided to aim at a World Bank, to be run by the League of Nations, which would control the credit of the world. The grand idea was that one single Board of Directors would make the decisions which would determine the economic policy of the world. The bankers were to be the supreme rulers. Naturally, the Governor of the Bank of England expected to be at the apex of the system. If, for example, the Bank of England could control the Commonwealth Bank of Australia there should be no impediment in the way of controlling the government of the country as well. … The death of Miller removed at a critical moment the one man capable of defending the citadel of Australian fi nancial independence.”

Notwithstanding the remarkable accomplishments of the Commonwealth Bank, its mere twelve years of operation, before private financiers seized control of it following Miller’s death, were not enough for the Bank to break the British monetary stranglehold on Australia. Frank Anstey, one of O'Malley’s former Torpedo Brigade members and the mentor of future prime minister John Curtin, showed in his 1921 book, The Money Power, that the issue was understood to be national sovereignty:

Australia is a mere appendage of financial London, without distinct economic existence. ... London is, so far, the web centre of international finance. In London are assembled the actual chiefs or the representatives of the great financial houses of the world. The Money Power is something more than Capitalism. ... These men constitute the Financial Oligarchy. No nation can be really free where this financial oligarchy is permitted to hold dominion, and no ‘democracy’ can be aught but a name that does not shake it from its throne.”

Indeed, when Miller died in 1923 the London banks directed the Australian government to hand control of the bank to a board of private businessmen, who promptly turned off the tap of public credit. During the Great Depression, the privately controlled board of the Commonwealth Bank refused to follow a government directive to issue credit for public works— a plan to alleviate the 30 per cent unemployment, on the successful model being applied by U.S. President Franklin D. Roosevelt. This defiance of government policy, by the board of the bank, caused such a scandal that in 1936 a Royal Commission was established to investigate banking in Australia. The commission found that the government should be the ultimate authority over the banking system, findings ignored by the Lyons-Menzies governments.

In a 1937 speech to the Labor Party’s election campaign launch in Fremantle, WA ALP leader John Curtin reiterated Anstey’s 1921 warning that there could be no Australian sovereignty without government control over the nation’s finances. Curtin demanded restoration of the Commonwealth Bank’s original charter, and that the Bank be freed from the vice of private financiers and put back under government control:

If the Government of the Commonwealth deliberately excluded itself from all participation in the making or changing of monetary policy it cannot govern except in a secondary degree.”

In 1939, on the eve of the war, the aging King O’Malley again went to bat to re-establish the Commonwealth Bank under its original purpose and charter, as opposed to its domination and speculative misuse by private fi nanciers. In his pamphlet Big Battle, O’Malley insisted that the individual rights people believed were theirs could not be guaranteed without sovereign control over credit, and that the purpose of national banking was to facilitate the creation of tangible, physical wealth, as opposed to the inevitably disastrous “fog wealth” of private banking speculation:

“Permanent wealth is produced by the slow process of industry, combined with skill and the manipulation of capital. Fog wealth is produced by the rapid process of placing one piece of paper in the possession of a bank as a collateral security for two pieces of paper. Some of the enormous quantity of paper which is being created now will sooner or later collapse. But with the Commonwealth Bank capable of sustaining legitimate credits, there can come no panic which will again destroy the market value of intrinsic values, ruin debtors, deprive workers of work, and produce general distress. Oh! Would that I possessed the power to arouse the Australian people to the imperative importance of reviving the Commonwealth Bank!”

After the War

The Commonwealth Bank was indeed revived by John Curtin and Ben Chifley during and immediately after WWII, with stunning success. But the British Crown’s Privy Council overturned Chifley’s bank nationalisation legislation, which had been passed by both houses of Parliament in 1949, and soon Labor was out of power for the next 23 years. During that period Prime Minister Sir Robert Menzies, a professed admirer of Hitler and Mussolini during the 1930s and a notorious lackey of the anglophile Melbourne financier Sir Staniforth Ricketson, finished off what was left of the Commonwealth’s function as a national bank.4 He established the Reserve Bank as an independent central bank with control over the nation’s finances, and appointed as its first governor a British-educated Fabian, H.C. “Nugget” Coombs. As Minister of Post-War Reconstruction, Coombs had ripped up most of Labor’s grand postwar reconstruction plans. He gloated of the globalist control over banking when he said of himself, “I am a member of the international freemasonry of central bankers.”

Remnants of a public credit policy continued to exist in Australia, through the Commonwealth Development Bank, the Australian Industry Development Corporation (AIDC), and the various state banks, which enabled the federal and state governments to direct lending into farming, manufacturing and small business. In 1981, under the direction of a cabal of investment bankers centred in Hill Samuel Australia (later renamed Macquarie Bank), a subsidiary of the City of London’s Hill Samuel & Co., Ltd., the Committee of Inquiry into the Australian Financial System (the Campbell Committee) demanded sweeping banking deregulation, including the elimination of all such public credit institutions. To its eternal shame, it was the Labor Party, under Fabian traitors Bob Hawke and Paul Keating, that delivered on the City of London’s demands upon assuming power in 1983.

Keating deregulated the banks, exposing Australia to the predations of foreign banks; floated the dollar; amalgamated unions to bust their bargaining power; annihilated manufacturing by slashing tariffs (to “enhance competition”); and privatised major public assets, including the Commonwealth Bank. As revealed in Keating: the Inside Story, by John Edwards, Keating declared his intention to dismantle every aspect of the advanced agro-industrial economy that “old” Labor governments had used public credit to build up, proposing that Australia’s economic future should be almost solely that of a raw materials exporter, with whatever shards of manufacturing might manage to hang on with low or no tariffs: “Minerals, wool and wheat—that’s our long suit. And we have to make secondary industry competitive.” Three decades after Keating began this assault on Australia’s economic sovereignty, his intention for Australia has been realised.

New Zealand - New Zealand’s proud history of pushing for an honest money system and monetary, banking and credit reform.
Compiled by Iain Parker 2012
Note – Italic text is written by Iain Parker. Normal text is excerpts of documents as named. Bold text are points of importance;

Michael Joseph Savages (First New Zealand Independent Labour Party PrimeMinister 1935-40) said in his 1920 maiden speech to Parliament;
The Government should create a state bank , and use the public credit for the public good as an alternative to borrowing overseas”

Twice PrimeMinister of Canada – William Lyon Mackenzie King – spanning most of period 1921 – 1948 said in 1935;
Once a nation parts with the control of its currency and credit, it matters not who makes that nation’s laws. Usury, once in control, will wreck any nation. Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of the sovereignty of Parliament and of democracy is idle and futile.”

Michael Joseph Savages (First New Zealand Independent Labour Party PrimeMinister 1935-40) views as cronicled in – From The Cradle To The Grave – by Barry Gustafson 1986
Pg 146 – Savage read and quoted Keynes, and agreed wholeheartedly with Keyne’s suggestion that ‘the first necessity was that bank credit should be cheap and abundant’ if the economy was to be expanded and unemployment overcome. But he wanted a more of a permanent solution than Keyne’s subsequent suggestion of increased public investment financed through a budget deficit as a means of offsetting a temporary decline in private investment, thus maintaining or stimulating consumption and………
Pg 147….production in the short term. Savage believed in increased government expenditure on social welfare, public works, guaranteed prices to farmers and minimum wages to workers as a means of increasing consumption, demand and economic activity. But he also believed in balancing the budget as far as possible through supplementary, graduated, direct taxation; restrained borrowing; and credit creation.
Nor was Savage convinced that the answer to New Zealand’s economic problems lay in the monetary mechanism suggested by Douglas and the Social Credit movement, though he certainly shared their basic assumption that what was physically possible should be financially possible. Lee and some other Labour Mps, notably Langstone, Parry, Mason and Carr, found Douglas’s critique ‘identical with that of the Labour Party’ and Douglas’s National Dividend scheme similar ‘in every sense’ to Labours policy of increased and redistributed purchasing power. Savage, though not as critical as Holland, who believed Social Credits solution ‘would mean disasterous inflation’ had serious reservations and joined Holland in stating publicly that the Labour Party ‘ does not accept the Douglas scheme’.
Douglas emphasised a continuous creation and injection of credit to bridge what he claimed was a permanent gap between purchasing power and production, not a temporary flaw in the distribution of adequate means of exchange. Douglas also wanted an economic system that would provide the basis for individual freedom and a move away from the growing concentration of power in the hands of government, big business, banks and trade unions, all of which he regarded as conspiring against the people as a whole. Social harmony would only be possible when all the ‘useful people’ were able to enjoy the wealth they created, and that in turn would only be possible when the hidden but real government, the banks, had their financial powers stripped from them and new economic mechanisms were created to increase and distribute money and credit.
Savage, however, argued that the creation of extra currency and credit was useless and even dangerous if not accompanied by a redistribution of purchasing power and balanced by increased production. He admitted that ‘ The Douglasites have an idea that is atleast a step out of the orthodox rut, and to the extent that it is going to cause people to think we should welcome it, but to my mind it does not bridge the gap from where we are now to a free circulation of commodities, and that is the object of currency and credit generally.’ 
While Savage pressed for an increase in credit, therefore, he made it clear that, in his opinion, an increased supply of money on its own was insufficient; the use to which that money was put was all important. Savage believed that ‘ the careful use of public credit through the existing banking machinery for the purpose of national construction was paramount. what is wrong with the monetary system,’ he argued, ‘is that there is……
Pg 148….insufficient money finding its way into the pockets of the mass of the people,because I believe definitely that so long as private individuals control finance they control everything else. Banking has become an integral part of industry, and the bankers govern the situation, and whatever steps may be taken by Parliament to relieve or assist industry may be nullified by refusal of credit by those controlling it.’
Savage concluded, reflecting the influence of Fisher and Soddy rather than Douglas, ‘I do not know that there is much wrong with the present banking system except the control of it. That is what matters in the finish.’ Only when the state, not private banks, control the money supply could it be expanded when necessary and directed into productive not speculative areas of the economy. Only then, Savage believed, could there be stable, sustained sensible growth in the economy. ‘Parliament can, and should, be the master in financial affairs,’ asserted Savage, and by Parliament he meant the whole of Parliament, not ministers using regulations that led to ‘comparative autocratic Government’ or commissions and boards not directly responsible to the voters.
Savage believed that credit creation, which would supplement not replace taxation and loans, would be non-inflationary only if ‘carefully applied to reconstruction purposes’ and used ‘wisely and economically.’ Over dependence on or excessive use of any single method of funding government expenditure – excessive taxation, excessive borrowing, excessive credit and currency creation – were all equally objectionable and as dangerous in Savages view as an insufficient supply of purchasing power.‘Artificially created credit must be guarded against’, especially, because it was no ‘remedy for a condition which is often due rather to insufficient collateral security, a fall in prices, or unsatisfactory farming.’

So there we have Savage in disagreement with Douglas. It must be said it would appear a rather confused and contradictory Michael Joseph Savage at times. Perhaps that is why the next excerpt from the book – Simple On A Soap Box – by John A Lee 1963 proves that he differs and disagrees with both Savage and Douglas as to how public credit should be issued. It must be noted that Barry Gustafson implied John A Lee totally agreed with C H Douglas Social Credit when from his own writings below it is clear he did not;

Pg 133 – As the 1928-35 economic crisis receded the electorate remained pronouncedly conscious of monetary theory, of rates of interest and of development by State credit rather than by recourse to higher borrowing rates. The British Labour movement had the same lively awareness. G. D. H. Cole, Arthur Henderson and many other socialists who rejected the Douglas Credit mythology had become genuine social creditors. I distinguish between social credit and mystical Douglas Social Credit. The clamour for more intelligent use by the State of its own resources and for lower interest rates continued across the world, in the wake of the depression, until it was submerged in the clamour of the Second World War.
Our caucus resolution not only ordered exchange control but also that there should be no increase in the interest rate without the consent of caucus. But we did not trust the Old Man or Nash. Labour movements the world over had not recovered from Ramsay MacDonald’s and Philip Snowden’s determination to place the gold value of the pound above a life-time’s loyalty to Labour (even though the gold standard was abandoned a week later). During the election the Old Man at his vast evangelic meetings had made emotional affirmations, between the cheers, of his determination to use the “internal credit of the people” for public works, indeed for “loan-free public works”, and had repeated assurances that Labour intended to reduce interest rates for public development.
But from the moment the M.P.s returned to their homes inspired news paragraphs started to suggest a return to orthodoxy to deal with our exchange crisis, a greater rate of interest to attract funk deposits, and maybe a lesser use of credit in New Zealand, a policy which contradicted everything Labour had…..
Pg 134……..said about money since 1928. All this was easy for Walter Nash to swallow, but not for the rest of us. We knew that, sentimentally, the Old Man was with us, that he always talked our way, but we knew that in fact he would defend whatever brief Walter Nash put into his mouth. Any suggestion of a credit squeeze was abhorent to us.
Pg 53 – During a budget debate in the depth of the depression Savage, Nash, Parry and McCombs had tabled a resolution in caucus. They wanted the Labour Opposition in Parliament to move that a certain sum of money be borrowed on the security of the unemployment fund and used to alleviate distress. The time had arrived for a challenge. I became very active and lobbied every Labour M.P. I ensured a big caucus attendance.
We would move, as an alternative,that credits be advanced by the Government-owned Reserve Bank so that we could invest our materials and idle man-power surplus in socially-owned construction. We could see no reason at that moment for borrowing at a rate of interest. Surely the time had arrived for an Issue of credit. Australian Labour was talking `issue’; in Britain tracts on money reform were flowing from Labour pens. In a world of plenty the dispossessed had no money. Even Roosevelt, later, talked our language. We thought the moment had come for the people to claim rights of issue for their own bank. The goods existed, why not create credits?
Caucus, when it met, divided in a bitter debate in which Savage organised the advocates of borrowing and I the faction in favour of the state issue of credit. Caucus was was adjourned four times. I think every member insisted on speaking. At the third meeting Harry Holland, then Leader of the Party, espoused our cause. I saw M.P.s taking their coats off to one another in that caucus, so bitter did the conflict become. The Savage-Parry-Nash-Fraser-McCombs resolution went down to a humiliating defeat, only Fred Jones of Dunedin South supporting the resolution. Nearly thirty Labour M.P.s voted for credit issue including Harry Holland himself. We moved accordingly in Parliament.
Out of that debate had come a new finance policy in which, I am convinced , Nash never believed. In 1935 the Labour Party affirmed that the Government should have sole right over the issue and control of new credit. But in the meantime Holland had died. Savage, the oldest surviving private and deputy, had become Labour Leader and was on the road to the Prime Ministership. He never forgave me the humiliating defeat I had organised. Prior to that caucus Savage used to tell everyone, both publically and privately, that I would be one of the first chosen in a Labour Cabinet. After the defeat I knew that only a caucus vote would compel Savage to accept me. He became unfriendly from that day on.
Pg 58 – Factory production had become unprofitable. I wanted to see money issued for essential works until production flowed once more. I did not want to take over factories. I did want us to take over banking and the issue of credit. I did want us to use our credit to finance work so long as unemployment existed. I objected to New Zealand being made bankrupt because prices had fallen overseas. We should maintain our own price level and with it solvency. This attitude to price was indeed the genisis to our guaranteed price scheme. Twenty other voices in caucus urged the same thing I did.
But alone, perhaps, I sensed that if we issued internal credits and did not establish exchange control and import selection our credits would create demand for imports in excess of our London funds and create a financial crisis which would bring the Labour Government to its knees when it set out to renew London loans. To me exchange control and import selections, so that we could control the flow of credits and imports and maintan a reserve, was absolutely essential to socialist financial policy.
Pg 68 – I am sure that much of Labour’s success is a consequence of good or bad times. Labour was good for business after Nationalist bad business. The average Labour MP did want to restore purchasing power to the masses and that was in itself a fruitful idea. But there were no ideas as to how to change or gradually transform the economic system so that increased production could spell expanding incomes and greater leisure and fewer depressions by breaking the cursed cycle of capitalist inflation-deflation. For half a century Labour in Britain, Australia, and New Zealand had talked of socialising ‘the system’ but when the moment came for modest doses of the socialism for which the electorate had granted a mandate Labour either did not know or where there was knowledge, did not have the courage to make changes.
Pg 77 – A few days later the PrimeMinister sent for me again. Nash had come up with a proposition. “We will make you the Under-Secretary in charge of housing. You will handle housing business as though you were a Minister. You will present housing to Cabinet, you will deal with housing business in Parliament. Walter will be your Minister, but he will be going to England by the time you get started and it will be up to you. We will introduce legislation the moment Parliament settles down. No one will get in your way.”
Will money be available from the Reserve Bank?” I asked.
This was a contensious Party issue. With tens of thousands of men on relief work the Labour Party, Nash and Fraser apart, believed that the funds of the Reserve Bank should be used for essential capital works until available men, machinery and materials were being fully employed. We wanted to undo the politically enforced Banker’s deflation. Nash wanted to stabalize deflation. We did not want to create money when men, materials and machinery were being fully engaged; at that point we believed the cost of works should be met out of revenue. But we were not prepared to create debt as long as goods, machinery and men were idle. That was the moment to use public credit.
Money will be made available from the Reserve Bank.” The Prime Minister made the promise.
Pg 90 – Although the power to underwrite and arrange fresh borrowings has been availed of rather than the power to make new issues, except where the issue is an overdraft, such as has been arranged for the dairy industry account, one definite issue has been arranged for. The Government has instructed the Reserve Bank to make five million pounds worth of credit available for housing purposes. These funds will be drawn upon by the Housing Account of the State Advances Corporation. All the funds so advanced will be used to create new assets in the form of houses and a straight out issue of money for the creation of such assets was considered justifiable. The instruction to the Reserve Bank, according to the Hon. Mr. Nash’s statement to Parliament, specifically prohibits the Reserve Bank from negotiating the sale of any portion of this issue, so that the whole issue is to be new money upon which the interest earned will belong in its entirety to the State. And the houses, of course, will belong to the State.
Pg 91 – In the halfway house of socialism-capitalism the evils of both systems are likely to afflict us if we are not careful. Labour must stimulate the production of such quantities of goods as are necessary to New Zealand’s welfare at an even higher standard. Capitalism cares only that the transaction yeilds a cash profit. To use a money machine to only create capital works and leave consumption goods to private finance is dangerous. Hence at some stage Labour must give effest to the Prime Ministers intention of making credit available to secondary industry. Production that may not be profitable at the overdraft rates of the trading banks may be so socially desirable as to necessitate freeing it from the profit system so that quantities can flow to the extent required by the nation.
(Incredulously John A Lee who had contributed so much to the Labour Party and kept them on track to keep their promise of needed fair-minded financial system reforms would go on to be thrown out of the party by union leaders who became all powerful due to aquiring the compolsory union block vote at Labour Party conferences and who Lee had criticised for gaining so much for contributing so little);
Pg 178 – Preparations were being made for the 1940 Conference; branches were appointing delegates in record numbers. I could count my friends by the hundred. Branches were three to one behind me (apart from areas where Catholic Action groups had intervened because of the rumour that I opposed the Old Man’s conversion). They sent me unsolicited promises of support.Dr. McMillan thought my article a good one and printed 1,000 copies of Pychopathology in Politics which he intended to distribute to Conference.
Some members of the National Executive, behind my back, grew active. Up till then there had been no card vote in the Labour party of the type that existed in Britain. Unions were allowed at Conference a number of votes proportionate to their membership. To this end their leading delegates were provided, at the opening of Conference, with a card showing the number of votes each could poll on behalf of his union. But full voting power could only be exercised if all the union’s branches were represented at Conference by delegates. Now a move was started to allow union presidents and secretaries to poll the full vote of a federation without such representation and without evidence that its members had been consulted.
James Roberts and David Wilson brought forward a proposal to allow the full card vote in such circumstances. The Party’s constitution clearly provided that alterations to the constitution had to be notified to branches by prior remit. Roberts and Wilson proposed to amend the rules by providing for the card vote in the Executive Report with which Conference opened. Endorsement of the Report would automatically amount to acceptance of the new provision. This was clearly a means of amending the constitution never contemplated. I knew that the jury was being…..
Pg 179 ……..loaded against me before Conference, but I was powerless. A member of the Labour party cannot apply to a Supreme Court for an injunction to prevent an illegal alteration of the rules, even when he knows the change is being made in order to hang him.
“They altered the rules regarding the composition of the jury after your trial was started,” a judge of the Supreme Court was to say to me later.As Conference drew near, so did Savage’s death while the Standard still assured Party members that he was in full charge of business. The daily press, however, was beginning to suggest that the Prime Minister’s condition was critical. Some of my following began to desert me. One member had written telling me he thought Pychopathology in Politics was one of the best things I had done and hoping that I would not “run away from its truth”. He went to earth as fast as political heels would carry him. It had taken him a lifetime to become an M.P., so who am I to judge him ?Nor did he ever raise his voice publicly afterwards, although he sent me many private and friendly communications. I do not blame him. The card-vote magnates were to be powerful in possession of tens of thousands of unconsulted votes of their members many of them conscripted into their unions by the compulsory legislation.
Intransigent as ever, Dr. McMillan wired from Dunedin that he had been informed that the Prime Minister’s life could only last a matter of days or even hours, and that an attempt would be made to end my political life.As Savage showed signs of dying before conference ended, Fraser made up his mind that I had to be expelled before Savage died.
Expulsion from the Labour Party is much like excommunication from the Communist Party or the Mediaeval church. The world is invited to spit upon the sinner. He has passed beyond the portals of decent treatment.
Pg 162 – My reason for telling the truth about the Old Man was not any wish to be a hero. I have never wanted to be one. Whenever I have heard young children recite: 
“ For how can men die better than facing fearful foes,” I have always mentally interjected, “ In bed, of old age, at peace.” I remember the day I won my D.C.M. At Messines. The line was held up, men went to earth. I jumped up. It was the only thing to do. No doubt an odd one had jumped up before me and had fallen with a gut full of machine-gun bullets. I jumped up because forward was the only way. As I jumped up to run I heard a voice, despite the thunder of the guns, say, “There goes a fellow for the V.C.” an observation that had not the slightest bearing on my conduct. I would not have risked a finger for twenty V.C.s. What I did was merely commonsense.
Pg 275 – If capitalists are still afraid of Labour as a conspiracy to overturn the profit system let them sleep in peace! The trade union magnates plan big unions and want power within their organisations. They do not inspire the Labour Party to action. They are only hangers on. They have rich appetites, they are more like the cartoonist Edgar Dysons fat man than the capitalists themselves. The idea that they are capable of a revolutionary conspiracy is unbelievably funny. Union secretaries are the new conservative class; they hate agitation. They love unions so big that the controllers are beyond reach of the rank and file, safe from criticism.
Pg 276 – Is Labour a conspiracy? Labour these days accepts the existing system. The only case that Labour puts forward is about how tax proceeds shall be shared. The present important task of Labour, and I am not belittling it, is to humanise the capitalist system, not to socialise or control it. Most of the M.Ps these days know nothing of capitalism or socialism. They have never read a tract on the capitalist crisis. Their loyalty is not to an idea, but to machine, to a job as an M.P. 

Man to Man by Tom Skinner 1981 – Michael Savage explained the State housing scheme to Tom Skinner of the (New Zealand) Federation of Labour as such;
Pg 45 – “I was with Joe on one occasion when he began chatting about the ramifications of the Governments State Housing Scheme. He told me … how the construction of those houses created assets in a productive way. The Government created the money through the Reserve Bank at a moderate rate of interest to cover the contract price, which paid for materials, tradesmen’s wages, the purchase and development of the land and all the other essentials required to finish the house. On completion the house was transferred from the Housing Division of the public works department to the State Advances Corporation – in effect from one department to another. The corporation was the renting agency responsible for selecting the tenants, collecting rents and maintaining the house and the property. The philosophy was that as the money was created for productive purposes no loss could occur if it were not repaid from one department to another. Meanwhile, during construction, tradesmen had been paid wages which had been spent and absorbed into the economy. But it was solid money backed by the creation of assets. People had been kept fully employed while the government built homes for the people.
Tom Skinner;
While Joe spoke I began suddenly to grasp the Labour philosophy related to the creation of credit. It set me off thinking about money and what it meant to the economy. The Government, figuratively speaking, could rub a state house debt out of the books because a building stood in its place. But money created by the banks in order to gain profits in the form of interest was the other side of the coin. It was unproductive, inflationary creation of money if unmatched by equivalent goods and services…..”
I have read and believe that monetary mismanagement is the greatest evil of our time. It breeds injustice, increased costs and, as the root cause of inflation, it diminishes the value of our money. Governments should carry out their pre-election promises and take the necessary steps to reform the monetary system. It can be done only by making the State the sole authority for the issue of currency and credit….. unfortunately, in this area politicians seem to be abysmally ignorant of elementary financial and economic truths.”

From The Cradle To The Grave – A biography of Michael Joseph Savage (First New Zealand Labour Party Prime Minister 1935-1940) by Barry Gustafson 1986;
Pg 198-9
The National Opposition (1936) was astonished by the use of Reserve Bank credit for housing, which disregarded traditional principles of budget finance. Forbes (George Forbes ex Prime Minister 1930-5 Great Depression era) admitted confidentially to Stewart (William Downie Stewart Jnr – Finance Advisor);
This places them in a unique position, the houses after erection carry no interest on capital cost, and for instance a thousand pound house can be let for 5s per week and be a financial success. The millenium seems to have arrived and it makes one wonder why we had to struggle in the bog, when there was such an easy way out of our troubles, houses, after being built with the highest paid workers in the world, at the lowest cost heard of, makes our policy of orthodox finance seem almost prehistoric.”

In July 1962 the leader of the Labour Party, the Rt. Hon. W. Nash, made a lengthy statement in which he said;

“Consistent with the needs of a sound economy, the State should create and use credit at the cost of issue for purposes of approved capital development. We are satisfied that the use of Reserve Bank Credit, within the limits set out is not only justified, but has already contributed much towards the Nation’s economic well-being.”
Thus, 27 years too late, Nash accepted the policy on which Labour was elected in 1935.

Ellen Brown March 7, 2012
It turns out that globally, not only are publicly-owned banks quite common but that countries with strong public banking sectors generally have strong, stable economies. According to an Inter-American Development Bank paper presented in 2005, the percentage of state ownership in the banking industry globally by the mid-nineties was over 40 percent. The BRIC countries—Brazil, Russia, India, and China—contain nearly three billion of the world’s seven billion people, or 40% of the global population. The BRICs all make heavy use of public sector banks, which compose about 75% of the banks in India, 69% or more in China, 45% in Brazil, and 60% in Russia.

Focusing on the financing of real businesses and economic growth seems to be the secret of the BRICs, which are leading the world in economic development today. But the BRIC phenomenon is more than just a growth trend identified by an economist. It is now an international organization, an alliance of countries representing the common interests and goals of its members. The first BRIC meeting, held in 2008, was called a triumph for former Russian President Vladimir Putin’s policy of promoting multilateral arrangements that would challenge the United States’ concept of a unipolar world.
The BRIC countries had their first official summit and became a formal organization in Yekaterinburg, Russia, in 2009. They met in Brazil in 2010 and in China in 2011, and they will meet in India in 2012. In 2010, at China’s invitation, South Africa joined the group, making it “BRICS” and adding a strategic presence on the African continent.
The BRICS seek more voice in the United Nations, the IMF, and the World Bank. They are even discussing their own multicultural bank to fund projects within their own nations, in direct competition with the IMF. They oppose the dollar as global reserve currency. After the Yekaterinburg summit, they called for a new global reserve currency, one that was diversified, stable and predictable; and they have the clout to get it.According to Liam Halligan, writing in The U.K. Telegraph:
The BRICs account for around three-quarters of total currency reserves. They have few serious fiscal issues and all are net external creditors.
Western financial interests have long fought to maintain the dollar as global reserve currency, but they are losing that battle, despite economic and military coercion. Russia, China and India are now nuclear powers. The BRICS will have to be negotiated with, and the first step to forming a working relationship is to understand how their economies work. Rather than declaring war on their more successful practices, we may decide to assimilate some of them into our own.

How might a dialysis of Sovereign Dollars work to achieve a Steady State Economy?
Raf Manji Sustento Institute 16-8-2011
Slowly but surely mainstream commentators, economists and policy analysts are all starting to realise that exponential debt is the core of our current economic malaise. This is great news to those of us who have been banging on about this for many years.
But still there is confusion around what to do about it. “Saving” has become the new buzzword, sitting squarely alongside “austerity”, as private individuals are urged to save more and governments are urged to spend less. That sounds like a sensible way forward. But watch the economy tank when that happens. Why?
Simply because when debt is paid down (and no corresponding new loans made) the money supply contracts as the debt is destroyed. The debt never existed as “money” in the sense of notes and coin but as an asset and liability for the bank. The interest is collected and the debt destroyed, leaving the profit for the bank. A monetary system based on debt will always lead to booms and busts as the interest charged overwhelms the ability of the productive sector to pay it. Ironically the system always needs infusions of new debt to stay afloat as the amount of money in the system declines.
Of course, when companies start to lay off workers (their first cost saving option) this creates uncertainty and an unwillingness for new borrowing to take place. This creates a self-reinforcing cycle which in some cases leads to recessions and occasionally to depressions. So what’s the best way out of this?
Austerity? No. Austerity will keep some investors happy but generally this will simply lead to slower growth and higher unemployment. But austerity is also a fact of life. When you have borrowed money and spent it, you know one day you have to pay it back. If you haven’t saved for that day then you will have to forego consumption for repayment. If you are in that position, which many governments are, you have, in fact, over consumed your income and eaten into your future. That’s not a pleasant space to be.
Is there an alternative?
Yes there is. I’d like to propose what I term “Monetary Dialysis“. This process seeks to replace debt money with real money (let’s assume for the moment that fiat money is real). The difference between debt money and real money is two fold: firstly, real money is permanent and once it enters the banking system it remains there; secondly, real money enters the banking system without interest, with no charge for its creation.
This two key differences will lead to new outcomes: a more stable money base and a less inflationary one.
How will this process take place?

1. This plan offers a very low risk way to resolve the world debt crisis without sudden or radical change to the world financial system. It brings together a number of ideas such as Universal Basic Income (UBI), Debt Jubilee Income (DJI), and Quantitative Easing (Monetary Dialysis) that are already receiving some attention but cause concern to some policy makers when they are considered in isolation. The plan can be implemented quickly and unilaterally.

2. The plan is based on specific forms of UBI and DJI structured to avoid inflation. The plan avoids most inflation because it can easily be adjusted so that incomes match the physical and human resources available to the economy.

3. The Manning Plan sets out implementation details for New Zealand. Each New Zealand legal resident will receive about $100/week in a special Basic Income Account, and each business will receive about $100/week in a special Debt Jubilee Income account for each Full Time Equivalent employee employed by that business who is paid wages and salaries under the PAYE (Pay as You Earn) tax system.

4. The total Universal Basic Income payments are initially about NZ $23 billion/year and the total Debt Jubilee Income payments are initially about NZ$7 billion/year. The money to make the payments will be created debt-free and interestfree by the Reserve Bank and administered by a New Zealand Debt Management Authority (NZDMA).

5. The payments made to indebted persons and businesses will be used to retire their bank debt. The payments made to non-indebted persons and businesses will be invested in a New Zealand Public Development Fund (NZPDF) that will pay tax-free interest on the deposits at around 2.3%/year, a figure comparable to the existing average deposit interest rate after taking into account reduced inflation and taxation.
The NZDPF money will be used to fund new productive development both public and private. NZPDF acts as a publicly owned Savings and Loan institution for the purposes of new productive investment.

6. About NZ$ 15 billion of bank debt will be retired during the first year, leaving new deposits of about NZ$15 billion, roughly similar to the present financial system.

7. Bank deposit holders will be able to invest in a Public Investment Trust Account (PITA) that will act as a publicly-owned Savings and Loan institution to manage the on-lending of deposits to fund the exchange of existing assets and to provide personal loans (including student loans and credit cards).

8. Bank balance sheets will still grow, but there will be little bank debt. Instead, secondary lending will be 100% backed by monetary deposits. Banks will be paid a spread of around 1.7%/year for their services, comparable to what they get now after taking into account that their lending becomes largely risk free. Normal debt repayment is guaranteed through the Universal Basic Income and Debt Jubilee
Income accounts.

Natural Stabilizers to achieve a Steady State Economy.

Prof. Dr. Margrit Kennedy is an architect, an ecologist, a financial expert and a critic of the prevailing economic system. As a Professor she headed the department of "Technological Advancement and Resource Efficient Construction" at the Universtiy of Hannover's architecture school. As early as 1982 she recognized that the broader application of ecological principals was inhibited by fundamental flaws in the monetary system, especially the consistent need for economic growth resulting from interest and compound interest.
Through her continuous research and scrutiny she became an expert on the subject, working on practical solutions for essential Problems:
How can we create a sustainable monetary system?
What characterizes monetary systems which do not collapse repeatedly and which serve us rather than control us?
Where can we find examples of well-working monetary systems in the past and present?

Within our monetary system we allow the operation of a hidden redistribution mechanism which constantly shuffles money from those who have less to those who have more money than they need: Thus, on the one hand, large amounts of money concentrate in the hands of ever fewer individuals and multinational corporations and, on the other, Third World Countries. will never be able to get out of debt in the current system, as by now they have to pay back several times the amount of what has been loaned to them.
The interest and compound interest mechanism not only creates an impetus for pathological economic growth, but also works against the constitutional rights of the individual in most democracies. If a constitution guarantees equal access of every individual to governmental services - and the money system may be defined as such - then it is illegal to have a system in which 10% of the people continually receive more than they pay for that service and 80% of the people receive less than they pay.
Many of the great political and religious leaders like Moses, Mohammed, Luther, Ghandi and most of the churches and spiritual groups throughout history have tried to reduce social injustice by prohibiting interest payments. They understood it as the main cause of social injustice. However, they did not come up with a practical solution to keep money in circulation. Thus, the archaic flaw in the system remained unchanged. The prohibition of interest payments among the Christian community by the Popes during the Middle Ages in Europe, for instance, just shifted the problem to the Jews. While the Jews were not allowed to take interest from each other, they could do so from the gentiles. If they took interest from each other they allowed a remission of debts every seventh year. Islamic banks, which follow Muslim law, are not allowed to take interest from their clients. Instead they become partners in the business to which they make a loan. Whether or not this is a better solution depends on the partners, but it certainly creates a more direct link between creditor and debtor.

3. A last misconception relates to the role of inflation in our economic system. For most people, inflation seems like an integral part of any money system, almost natural, since there is no country in the world without inflation. Few realize that this is just another form of taxation through which governments manage to overcome the worst problems of an increasing interest burden. Between 1950 and 85 the GNP in Germany increased 18 times, interest paid on debt, however, 51 times (Figure 5). Since the largest borrower on capital markets is the government, it pays the highest share of interest.
Obviously the larger the gap between increases in government income and government debt the higher the inflation needed. Printing money enables the government to reduce its debts. This is another way of making those 80% of the people who pay more interest than they gain, pay even more, since they cannot withdraw their assets into inflation resistant investments like those who are in the last 10% income bracket.
Two Further Effects:
Arms Race and Ecological Exploitation
Besides the social injustice of a constantly widening gap between the rich and the poor in industrially developing and industrialized nations alike, two further problems associated with the interest system need to be identified: the arms race and ecological exploitation of the earth.
1. The present concentration of money in the hands of ever fewer people or large multinational corporations creates a constant pressure for large-scale investments, e.g. atomic power plants, huge dams for hydroelectric power, and arms. Seen from a purely economical angle, the politically contradictory behaviour of the U.S. and Europe installing bigger and better weapons against Russia on the one hand, and sending butter, wheat and technological know-how to Russia on the other, made perfect economic sense: military production was one area where the saturation point could be postponed indefinitely as long as the enemy was equally able to develop faster and better weapons. And profits in the military sector were far beyond any profits made in the civil sectors of our economy. While capital investments in the latter often have returns around 2-5%, the military sector often averages returns around 50%.
2. A further problem may be seen in the vast field of ecological investment. Let us take an investment in solar collectors as an example. If they only allow a 2% return on our money, it would be economically unwise to invest in this sensible, ecological technology for preparing hot water, since in a bank it returns at least 6%.The bank in turn usually has to invest it in less ecological projects. Therefore, as long as every investment must compete with the money making power of money on the money market, most ecological investments, aimed at creating sustainable systems (i.e. stopping quantitative growth at an optimal level, see curve a Figure 1), don't have a chance.

The Solution 
At the beginning of this century, a practical solution was formulated by a German merchant, called Silvio Gesell, which would eliminate the problems caused by interest. Instead of paying people a reward (= interest) in order to bring surplus money back into circulation he suggested that they would have to pay a small penalty if they did not. He proposed to use money as a public service instead as a private good.

An Example
Between 1932 and 1933, the small Austrian town of Worgl started one of the first model experiments, which has been an inspiration to all who have been concerned with the issue of monetary reform, up to this day. Within one year, the 12 .600,- “Free Schillings”(i.e. Interest free Shillings) circulated 463 times, thus creating goods and services worth over 2.547.360,- Schillings.(valued in 1995 at approx. 63.684.000,- Schillings) At a time when most countries in Europe had severe problems with decreasing numbers of jobs, Worgl reduced its unemployment rate by 25% within this one year. Income from taxes increased by 35% and investments in public works by 220%. The fee collected by the town government
which caused the money to change hands so quickly amounted to a total of 12% of the12.600,- Free Schillings, which is 1.512,- Schillings. This was used for public purposes and thus no single individual gained by it, but the community as a whole. In addition, the need for exchanging goods and services determined the pace of circulation and not the fee. If the town would had borrowed the 12.600,-Schillings on the money market they would have paid back three to four times the same amount over 10 to 20 years.
When, however, over 300 communities in Austria began to be interested in adopting this model, the Austrian National Bank saw its own monopoly endangered. It clamped down on the town and prohibited the printing of its own money.

Practical Possibilities Today
As 90% of all monetary transactions are just numbers in a computer, the payment modalities of today would make a “use-fee”on money technically a much simpler issue. Everyone would have two accounts: one current account and one savings account. The money on the current account which is at the disposal of the owner continually would be treated like cash and lose as little as 1/2% per month or 6% per year. Anyone with more money in his current account than needed for the payment of all expenses in a particular month would be prompted by this small circulation fee or demurrage to transfer the amount not needed for some time to a savings account. From there, the bank would be under the obligation to pass this money on to those who needed it for a certain amount of time and, therefore, on the savings account it would not be debited with a fee.
By the same token, the money owner would not receive any interest on his or her savings account - but the money would retain its value. (As soon as interest is abolished, inflation becomes unnecessary - see above.) Equally, the person receiving credit would not pay interest, but a risk premium and bank charges quite comparable to those contained in every bank loan today. It amounts to about 2.5% of normal credit costs.
Thus, very little would change in practice. Banks would operate as usual, except that they would be more interested in giving loans, because they too would be subject to the same use fee that everyone else would have to pay, were they to sit on their money. In order to prevent the hoarding of cash, one additional technical aspect of the implementation of such a monetary reform would be to recall one particular series of banknotes once a year, or all bank notes every second year without prior announcement.
The basis of this reform would be a fairly accurate adaptation of the amount of money created to the amount of money needed to handle all transactions in the exchange of goods and services within and without a given geographical area, region or nation. Money would now follow a “natural” physical growth pattern (curve a, Fig. 1 ) and no longer an exponential one. When enough money has been created to serve all transactions, no more would have to be produced.

Prospective Results
Within the larger context of a global transformation of values and behavioural patterns as well as other changes such as land and tax reforms the change in our monetary system will hopefully assist the switch from quantitative growth to qualitative growth. As people would have the choice of leaving their money in a savings account where it would keep its value, or to invest it in a beautiful piece of furniture, an art work or a solidly-built house which equally would keep their respective values, they might well opt for those investments which would enrich their daily lives. Moreover, the more that lasting quality is asked for, the more it would be produced.

My question for any public representative that has shown the respect of my efforts to read the above is;

“If you continue to support the status quo of New Zealand's entirely interest bearing private, mainly foreign originated, loan based money system, can you please give me your explanation of how under the current terms and conditions that growth can exceed the debt you are forced to take on to attempt to achieve the growth.?”

If you cant? Can you please use the time, money and resources the citizens and businesses of legitimate enterprise provide for you - to protect them from financial free raiders!

Thank you for your time
Iain Parker

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