Monday 2 January 2017

The undeniable truth of New Zealand colonial era money system funding structure it still suffers.

The Reserve Bank (RBNZ) is starting to more openly tell the truth of the nations colonial era money system funding structures that we still suffer.

Which means they are beginning to feel an increase in wider public knowledge and how it will look if they keeps hiding behind lies.

This paper:

http://www.rbnz.govt.nz/financial-stability/financial-stability-report/fsr2015-11/implications-of-global-liquidity-developments-for-new-zealand

Titled - Implications of global liquidity developments for New Zealand - from the Nov 2015 Financial Stability Report, is the closest to the whole truth I have yet seen from the establishment, in regards to the fact that every unit of NZ credit or currency (not just significant proportion as it says) can be traced back to originating somewhere in the NZ economy as a loan of interest bearing credit owed to a non NZ Government, foreign lending institution, and that the OCR follows external influence, not leads;

"There are three key channels through which New Zealand could be affected by declining market liquidity: the impact on New Zealand banks’ funding markets; the impact on short-term interest rates and monetary policy implementation; and the impact on the New Zealand government bond market.

New Zealand banks fund a significant proportion of their balance sheets by accessing offshore wholesale debt markets. They do this by borrowing in foreign currency, then ‘swapping’ this back into NZD. Conditions in global financial markets are therefore an important determinant of New Zealand bank funding. New Zealand banks tend to focus on the primary market (new issues) rather than the secondary market for debt. Hence, funding liquidity is of more immediate importance than market liquidity. Funding liquidity refers to the ability of the banks to raise debt as required at a reasonable cost. Reserve Bank discussions with bank treasurers suggest that funding liquidity conditions have deteriorated somewhat in 2015, owing largely to greater market volatility caused by events such as the Greek crisis mid-year and recent turbulence tied to China.

New Zealand banks typically use market makers to help facilitate the foreign currency swap leg involved in borrowing from offshore. Market makers take the other side of the transaction with New Zealand banks (providing NZD in exchange for foreign currency that the banks have raised), while charging a spread. This spread has widened as costs have increased for the institutions providing these market making services for the reasons described above. Overall, the cost increases have been manageable thus far, but this highlights the flow-on effects of changes in market liquidity to New Zealand entities seeking offshore funding."
end

Now please consider the above, in relation to (below) how these Primary Wholesale Credit Institutions admit that they fund themselves and what that means for us;

To learn how a rogue few within the banking sector, have turned criminal, in using the 1980's deregulation of banking, as an opportunity to commit control frauds, that steal the wealth of wider society into their own personal trust accounts, please read on;

Although it is clear that over cooked unwise immigration and foreign criminals looking to launder their proceeds of crime into New Zealand assets, has had a detrimental impact upon the economy, when you know the truth of banking, you know that the criminal rogues within banking have had the greatest detrimental impact of all.

The rogues have used the extraordinary privileges of banking that are little known by wider society, to rob society blind. By pursuing personal gains from commission and bonus based wage structures, share holder dividends and buy backs, that are tied to bank profits.


They have cooked the credit books and loaned society massive amounts beyond fundamental normal course of business basis, than they knew there was ever the physical means to clear.

Now as the penalty compound interest charges upon the massive amounts of private and government debt, that is counterfeit credit based, that is now priced into everything, it is sucking the lifeblood out of the economy.(Debt deflation)

Counterfeit credit based purchasing power has also inflated the cost of land based assets beyond any fundamental normal course of business basis (Debt inflation) It is removing dignified access to them, for those left behind, attempting to make ends meet within the normal course of business real economy.

The Truth about Banks

IMF FINANCE & DEVELOPMENT, March 2016, Vol. 53, No. 1

http://www.imf.org/external/pubs/ft/fandd/2016/03/kumhof.htm

To summarize, our work builds on the fundamental fact that banks are not intermediaries of real loanable funds, as is generally assumed in the mainstream neoclassical macroeconomics literature. Rather, they are providers of financing, through the creation of new monetary purchasing power for their borrowers. Understanding this distinction has important implications for a host of practical questions......

Practical implication

Many policy prescriptions aim to encourage physical investment by promoting saving, which is believed to finance investment. The problem with this idea is that saving does not finance investment, financing and money creation do. Bank financing of investment projects does not require prior saving, but the creation of new purchasing power so that investors can buy new plants and equipment. Once purchases have been made and sellers (or those farther down the chain of transactions) deposit the money, they become savers in the national accounts statistics, but this saving is an accounting consequence—not an economic cause—of lending and investment. To argue otherwise is to confuse the respective macroeconomic roles of real resources (saving) and debt-based money (financing).

The Bank of England is one of the senior most international financial institutions in the world. This from its March 2014 quarterly bulletin;
http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf

• This article explains how the majority of money in the modern economy is created by commercial banks making loans.

• Money creation in practice differs from some popular misconceptions — banks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’ central bank money to create new loans and deposits.

• Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.
end

Banking in New Zealand Fourth Edition - published by the New Zealand Bankers Association in 2006 - makes it very clear that presently every dollar of currency circulating in New Zealand's money system originates as an interest bearing loan of credit owed to a private owned lending institution. That supplies brand new credit and currency that did not already exist. Domestic banks act as a middleman organiser for larger foreign banks. There is no third party, ultimately only the lender and the banking institutions that sit at the end of the wholesale credit supply discount chain.

Chapter 4 - The Creation of Money and Credit - is especially enlightening;

https://issuu.com/iainparkerpubliccreditorbust/docs/nzba_banking_in_new_zealand_fourth_

THE CREATION OF MONEY AND CREDIT

what Actually Happens in reality, although the process outlined in the previous sections could occur, cash balances in bank vaults no longer act as a constraint on bank lending in the way that they might have up until the latter part of the 20th century.......
in such an environment, there is still scope for a bank to expand its lending and create credit, but it is dependent on there being net inflows of funds into the banking system as a whole. These inflows of funds may come from depositors from outside new Zealand (and we have seen significant inflows of funds from such sources in recent years), or from the government making net deposits of funds into the banking system (through its fiscal policy, as outlined below).

We also have a situation where, since 1985, new Zealand banks have not had any specific reserve requirements applied to their deposit liabilities. This means that, in theory, banks could keep on creating credit and expanding their loan portfolios indefinitely. in such an environment, it is the cost of credit, based upon the costs that banks have to pay to raise the deposits, that becomes the constraint on the quantity of credit that is created.
end

Back in 2010, Alan Bollard, the former New Zealand Reserve Bank Governor stated as plain as day in a book that he wrote, that some within the banking sector had used their position within banks to commit control frauds against New Zealand society. Yet only superficial band aids were ever applied and the scams have marched on regardless;

Dr Alan Bollard Governor of the Reserve Bank of New Zealand 2002 - 2012.

Excerpts from a book Alan Bollard published 1 Sept 2010;

Crisis: One Central Bank Governor and the Global Financial Collapse

Pg 20
Banking practices differ around the world, but we ensure ours meet international standards. These are set by a somewhat shadowy group called the Basel Committee on Banking Supervision. Comprised of representatives of large countries( not including New Zealand ), the group meets in Switzerland at the Bank of International Settlements (BIS).

Pg 96
The Bank of International Settlements is an important institution, acting as a sort of central bank for central banks. Set up in 1930, originally to facilitate German World War 1 reparations, it has a checkered history but today offers modern banking services and provides a forum for central bankers.

Pg 183
“In self-interest, banks may encourage New Zealanders to take on more debt than is good for them individually or deliver more external liability than is good for the country.”

Pg 157
“Another governance worry related to the power and competence, or lack thereof, on the part of banks chief risk officers and risk committees. These officers assess the possible outcomes from any deal and decide whether the risks are acceptable under the banks mandated policies. We were now hearing about cases where risks had been miscalculated, procedures bypassed and officers overruled, all in the race for higher earnings.”
Pg 165
“In the case of some of the agricultural defaults, we felt that certain banks had been over-optimistic and under-analytical in their lending, and we moved to tighten some of the relevant capital requirements for the future.”
end