Friday, 12 June 2015

New Zealand Labour Party money system reform history and back down.

New Zealand Labour Party​ when first elected in 1935 implemented a real house price vs average income bubble solution of issuing sovereign public credit, to build state housing at cost price only, without the impost of private owners of banks interest charges, that can, and should be done again today, for the very same reasons.

But the New Zealand Labour Party of today in the main have not a clue of the party's very founding ideals of money system reform, that is chronicled below;

Michael Joseph Savage 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”

1933 manifesto wanted the state "to be sole authority for the issue of credit and currency" and in 1935 MP John A Lee wrote "The Labour Party affirmed that the government should have the sole right over the issue and control of new credit"

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 millennium 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.”

1954 Labour Party manifesto stated "Labour will take immediate and effective to ensure that the state will become the sole authority for the issuance of credit and currency. The public credit will be used to the fullest extent compatible with the public good"

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.

1964 Labour Party manifesto stated "Labour believes that measures taken before credit is issued are more effective than restrictions afterwards."

Former New Zealand Labour Party Minister of Finance Minister of Finance - 10 December 1999 > 19 November 2008 - Michael Cullen - said this in 2012;

'Govt wouldn't let the big banks fall over'

And in terms of the big banks, he says there has always been "a degree of pretence" around the idea the government didn't stand behind them.

"If they were systemically important in reality the government couldn't afford to let them fall over. But no Minister of Finance is ever going to say that as Minister of Finance. It's only when they're old and clapped out and out of a job that they can actually say that."

Yet New Zealand Labour still put Michael Cullen up on a pedestal and New Zealand National Party appoint him to run government departments in preparation for privitisation, go figure?

I have spent many hours, over many years, discussing with Andrew Little the crazy colonial era shortcomings of the money system funding structures of New Zealand that we still suffer. Of which his personal views are perhaps best summed up in a conversation by text we had that occurred after several scheduled phone calls had not taken place, I asked of Andrew Little this;
Iain Parker text sent 14-05-2013 7.23pm
"Hey A
I get it, your to busy to touch base because the issue of the issuance of our money supply has finally erupted into a full blown political brawl down there in the halls of power."
Andrew Little replied 14-5-2013 7.26pm
Hi Iain, no ! I wish ! I get your messages between meetings & then forget to get back to you. Am just about to head back to the house now. Can I call tomorrow evening? Have time between 7.30 & 8.
And this from Andrew to Iain Parker 18-1-2013 7.38pm after I had expressed my frustration at the lack of progress in taking the ball up on the money system funding structures of the nation issue;
"Fair point. We still have a long way to go to unshackle govt from being dominated by finance sector interests."
Iain Parker texts sent;
2 - 4- 2015 9.37am
Hi Andrew
Do you respect my efforts enough to let me know if the merits, or otherwise, of present money NZ money system funding channel at the wholesale credit level, are being discussed anywhere, by any elected members, or hired help of NZ public service in a meaningful way?
2 - 4 - 2015 4.03pm
Please Andrew,
A simple yes or no will tell me most all I need to know in regards too the very straight forward question I asked today re money policy debate.
Andrew Little reply;
2 - 4 – 2015 10.12pm
Hi Iain, yes, this question is discussed but not by everyone and not everyday.
Iain Parker sent text 2 - 4 - 2016 10.27pm
How would you rate progress?
How many talking?
Once a week, once a month or once a year.
3 - 4 - 2016 10.39am
Please Andrew, tell me straight.
How would you rate progress?
- How many talking?
- Once a week, once a month or once a year?
8 - 4 - 2015
Hi Andrew
I know you are busy - but it is a very simple set of questions.
End of text quotes
No answer to those particular questions was ever given via text - how ever we did discuss the questions during the phone call organised in these texts below;
Iain Parker sent texts;
8-7-2016 10.01am
Hi Andrew
Have you time today for a chat?
Andrew replied 8-7-2016 11.08am
Am in Somoa today.
Back tomorrow. Will have some spare time around 4pm. Can call
End of text quotes.
In the phone conversation organised above Andrew told me that the level of discussion being had within the halls of power of New Zealand Parliament could not be described as meaningful and in fact the level of knowledge of the deeper money system funding structure issue are so low it is almost impossible to push the issue.
In the conversation I made the comment that essentially the bankers who control our economy are essentially setting the terms of reference of what can or can not be openly discussed within New Zealand Parliament - to which he said "thats a good way of describing it"
For which you will have to take my word is exactly what he said.
I have a lot of sympathy for the pressure that pushing the money system funding structure issue would bring to bare upon Andrew - but at the same time I don't know that I can ever forgive him for in the end choosing the path of least resistance as so many before him - given what he knows the ever growing inequality it means for so many of us.

If as many as possible can tell any member of the New Zealand Labour Party that Andrew Little needs to keep taking note of the evidence that Iain Parker presented him of the shortcomings of the present money system funding structures of our nation - as he did unto recently - instead of now acting as though Iain Parker does not exist and he knows nothing of it - may boost his confidence to push the issue harder.

1 comment:

  1. A.L. seems to want the easiest road to power, and in order to facilitate this process, covers himself with grease. Well Andrew, it AIN'T GONNA WORK!