Rob Muldoon New Zealand Prime Minister 1975 – 1984 Made A Scapegoat For Private Central Banking Network Predatory Lending.

Rob Muldoon risked life and limb fighting for New Zealand in World War 2. His patriotism was unquestionable. He was one of very few outside of the backroom club of monied men who understood how the international supply side of money worked and the predatory lending nature of it. Muldoon thought he could outsmart private money as debt wholesalers but I dont believe he realised just how much global monopolist influence they had.

Rob Muldoons' 'Think Big' policies unlocked more of the natural resources of New Zealand for use than any other time in our history but just like many other nations before and since any increased standard of living gained under an entirely interest bearing private loan based money system such as the Anglo-Saxon private central banking network ends up being nothing but bait in a predatory trap!

The Rise and Fall of a Young Turk, by Rob Muldoon 1974

page 53-54;

My first bit of "Young Turkism" was a solo effort. Shortly after the change of government the Prime Minister told Caucus that Cabinet proposed that we should join the International Monetary Fund and the World Bank. This was not in our 1960s policy and I had never been particularly keen for New Zealand to join.

The fact that New Zealand had not joined after Bretton Woods was due to an adverse vote in the Labour Caucus and there is no doubt that the then Minister of Finance Walter Nash, who had been at Bretton Woods, was disappointed, as he was on record as congratulating the chairman of the Bretton Woods conference on his achievements The Holland Government. did not join because Sid Holland was not happy about it. He had been a monetary reformer in the 1930s and had committed himself firmly, as had Sid Smith from Hobson, who had also been close to Social Credit in those days. Most of the others favoured joining but there were a group that remained unconvinced.

page 54;

There was no doubt that members of the fund incurred obligations, and my argument was that as long as we could do our official borrowing from in Britain without tags we did not need these institutions. While Caucus generally approved the introduction several of us remained unconvinced and we knew that Labour would vote heavily against us even though some of them favoured joining.

Harry Lake finally got his two experts. Noel Lough, from Treasury, now deputy secretary, and Bob Familton from the Reserve Bank, now in Washington on the staff of the World Bank, to come up and discuss detail with the dissenters. One by one they were satisfied, Percy Allan and Bert Walker being the last, but I was left unconvinced. In the process we all, the departmental officers included, learned a lot about the working of the two institutions. Finally the bill was passed by Caucus to go into the house and I had said I would vote against it. On the night of the Caucus I had one last long session with the officials and we agreed on the obligations of membership and finally agreed that in the long run, that international lending would more and more be channelled through these organisations and that we could probably not rely on Britain to supply our needs. A year or two later that proved to be so and we could generally only refinance maturities in Britain, not raise new loans.

page 55;

Fate later made me a Governor of the fund and I became closely interested in its work and a great friend and admirer of its managing director, Pierre- Paul Schweitzer. Even the Labour Party, after ten years of opposition to the fund, finally reversed there stand in 1972............. over ten years later I find that my speeches on the bill set out my reservations clearly and my reasons for supporting it. In the main however they were devoted to destroying the fallacious arguments dredged up by the opposition, who were prepared to use the most preposterous material in what was really a play for the monetary reformers who had moved to Social Credit........As Keith had no doubt planned, we joined the Fund and Bank and by the 1963 election the issue was dead.

page 68-69;

I studied the United States taxation system as one of my subjects on a three month visit to the USA in 1965 as recipient of a US State Department foreign leader grant. I regard these agents as some of the best money the United States spends. Each year they bring up and coming politicians and potential leaders from other fields to the USA for a visit of two or three months. They are not restricted but must nominate the subjects they wish to study, and arrangements are made for them to meet top people and organisations in those fields. As one of my fields of study was finance and taxation I spent several weeks in Washington DC and met leading figures in the US Treasury, the Federal Reserve, the Bureau of the Budget(the US equivalent of the Audit Department, and the US Mint.....

The political system formulated two hundred years ago is totally unsuited to the modern world. A system of checks and balances devised when the fastest means of communication was the horse and sail, is an anachronism in a world of instant crisis. The American political system today is based on favours given and received, and is hopelessly corrupt. Some parts are more corrupt than others, but it is almost impossible to be a successful politician in the USA and remain an honourable man. The USA is not alone in this of course, and parts of Asia and Africa are very much worse. The political darlings of our so-called "Liberals" are in many cases unscrupulous thugs who could give lessons in brutality and corruption to the Mafia.

page 70;

Where do they go from here? I do not know, but unless America throws up a number of men of courage and genius in the next twenty-five years I believe that the classical symptoms of the decline of a civilisation will turn into a reality.

The New Zealand Economy, A Personal view, by Rob Muldoon 1985

page 17-18;

It was during the 1930s that major changes occurred in the financial sector. The first trading banks in New Zealand were branches of Australian banks. Late in the 19th century the Bank of New Zealand was formed by local interests, but in 1894 the Government had to step in and save it from collapse and from that time the Government played a major role as shareholder until finally taking over compulsorily the whole shareholding immediately after World War 11.

The Reserve Bank was established by the Coalition Government in 1933 with a considerable degree of independence and some private shareholding. In 1936 however it was taken over by the Labour Government and required to give effect to the monetary policy of the Government as communicated to it by the Minister of Finance. This remains the position today, and although the degree of independence that the bank enjoys is less than is the case in some other countries, two factors at least make that lesser degree of independence desirable. The first is the limited number and range of experience of the policy making personnel of the bank, even though supplemented by a Board of Directors of a high calibre, drawn mainly from the private sector, and the second is the sensitivity of the New Zealand economy to changes in the world economy because of the importance in our economy of our external trade. These factors make it desirable that the whole range of advise and experience available to the Government is concentrated, even on day to day issues, and that the final responsibility for decisions rests with the elected Government.

page 25;

A curious feature of the Holland Government was its failure to join the International Monetary Fund and the World Bank.

During World War 11 the allied nations had discussed the prospects for the world economy after the war. They were determined that that there should not be another great depression of the 1930's, with massive unemployment, poverty and competitive devaluations of various currencies. The idea of an international currency was discussed. All this came together at a meeting of nations called Bretton Woods in New Hampshire 1944. The discussion was dominated by the United States and Britain and it was the American view that prevailed. There was no consensus on an international currency, but it was agreed to set up two institutions.

The first, the International Monetary Fund, would have certain powers of supervision over the relationship between the various international currencies and also the ability to make short term advances at low rates of interest to countries that were in temporary difficulties.

The second institution, the International Bank for Reconstruction and Development, or World Bank, was to operate in terms of its title and was essentially a means of mobilising funds, first for lending for post war construction, and subsequently for development generally.

Some years later it formed the International Development Association for soft loan lending to very poor countries, and the International Finance Association for lending to the private sector in the less developed countries. Membership to these bodies was by way of quota which determined the obligations to subscribe, partly in gold and partly in national currencies, as well as the amounts that could be drawn in times of difficulty from the fund. Borrowing from the bank was essentially project borrowing and limited to countries who were not classified among the wealthiest.

Membership of the fund clearly involved some loss of sovereignty although as voting in all of these bodies was related to quota, the wealthy countries were dominant and the United States in particular had a quota big enough to give it veto on matters of importance. The General Agreement on Tariffs and Trade resulted from the subsequent Havana Conference which was set up initially to do for trade what the Bretton Woods Conference had done for international finance.

Although Walter Nash had attended the Bretton Woods Conference in 1944 the Labour Party Caucus back in New Zealand was still a hot bed of old time socialist suspicion of international money power, indeed some Labour members were adherents of the Douglas Social Credit theories which had gained considerable support during the 1930s. 
The result was that Nash, then Finance Minister, was unable to persuade his colleagues that New Zealand should become a member of the Fund and the Bank, although we did become, curiously, a contracting party of the General Agreement on Tariffs and Trade.
At the very outset, in 1947, GATT was not supplemented by an international trade organisation, as perhaps by the time the Havana Conference met the fears for the post war economy that were apparent at Bretton Woods had subsided somewhat. a more enlightened attitude to international financial cooperation might have been expected from the Holland National Government, but the fact is that Sid Holland himself had been a monetary reformer in the 1930s when he first came into Parliament and felt, as so many politicians have done over the years on all kinds of issues, that a change in attitude would be politically damaging. There were others in his Government who were uneasy about the implications of joining the Fund and Bank, not the least Sid Smith, the member for the far north seat which has variously been called Bay of Islands and Hobson, and which for decades has been the principal home of the Social Credit theorists, Sid Smith himself being an adherent during the 1930s.

Keith Holyoake, however, was of a different view and in spite of the fact that it was not in our 1960 election policy we joined these organisations in 1961.

Page 33-34;

I well remember Keith Holyoake coming into Caucus in February or March of 1961 and the shock that it gave a brand new backbencher when he told us that the honeymoon was over and that we were faced with a serious situation, in respect of both Government accounts and our overseas transactions..............

In May 1961 we raised a sterling loan of 20 million pounds, a substantial sum for those days.

In February we had gone on the domestic market for 10 million pounds and taken 13.7 million. We were on the market again in June for 15 million pounds. In March the Reserve Bank moved to reduce the level of bank overdrafts. We brought in hire purchase regulations and restrained public expenditure to the greatest possible extent. We put a restriction on the allowances for overseas travel and we tightened up import licensing. If the figures sound small today then the March deficit, which continued to increase for sometime, was a record at that particular time.

We announced that we would be joining the International Monetary Fund and the World Bank and a principal reason was that it would give us access to drawing rights. Although this had not been in our election policy, we carried out our policy by appointing various advisory bodies in the economic field, the principal one being the Monetary and Economic Council, a three member council with supporting staff which had the task of advising the Government on matters of economic policy, but most importantly, the right to publish its advice, in various forms, with various amendments to its composition and order of reference, the Monetary and Economic Council and its successors have continued up until the present time.

page 35;

In recent years the deliberate move to a more broadly based economy has provided part of the longterm answer. One attempt by the Holyoake Government to help alleviate the problem was as I have mentioned to join the International Monetary Fund and World Bank. If Keith Holyoake had any idea of doing this prior to the 1960s election, and I believe that he probably did, then he gave no hint of it. It would have been highly controversial, politically, even within his own party.

Harry Lakes analysis of the move in his 1961 budget involved freeing up our gold reserves of 12.3 million pounds, most of which was pledged for a loan of $US34.5 million which it was proposed to repay in August 1961 two months early.

The use of gold as part of our subscription to the fund would give us a fund quota of $US125 million, and potential drawing rights of 55.8 million pounds at low rates of interest. A number of National Party members, of whom I was one, had not been convinced that we should join the fund with the consequent loss of sovereignty, so long as we could continue to borrow from time to time for temporary balance of payment reasons from Britain. Perhaps the writing was on the wall when Arnold Nordmeyer went to the United States for the US dollar loan in the time of the Nash Government and after earnest and detailed study the dissenting members became convinced that we could no longer look to Britain for our needs in all circumstances.

page 48;

The 1960s were a time of expansion for savings banks. In 1964 the Government introduced a bill to authorise trading banks, to establish savings banks. This was in response to representations from the trading banks that the proliferation of trustee savings banks which had commenced some years earlier, was likely to effect their business, and that if they were given the opportunity to operate savings banks, the total of small savings would be increased as had been the case in Australia, and in earlier years under similar circumstances.

page 49;

The history of trustee savings banks in New Zealand, although long, has been a chequered one.

Generally it has been a story of success, in spite of the fact that their pattern over the years has very largely been in that dangerous area of borrowing short and lending long. Treasury has always taken the view that trustee savings banks are an inefficient method of mobilising savings and in the time of the Kirk/Rowling Government, the overseeing of trustee banks was moved from

Treasury to the Reserve Bank by the Reserve Bank Amendment Act of 1973. On its return to office in 1975, the National Government did not alter this as the change had little effect on banks.

Trustee savings banks as a repository for workingmen's savings were authorised by a Legislative Council Ordinance in 1847. The Wellington Bank had in fact been formed in 1846, with Auckland following in 1847, and subsequently banks opened at New Plymouth, Lyttelton, Nelson, Napier, Dunedin, Invercargill and Hokitika. The Lyttelton branche bank moved later to Christchurch.

The establishment of the Post Office Savings Bank, which began operations in 1967, was a major set back to trustee savings banks; indeed, in the minds of some politicians it was intended to be just that. It impinged on the issue of centralism as against provincial Government and the centralists did not favour the local provincial nature of the trustee banks.

page 52;

The fact that even in good years we did not show an overall surplus on our external current account and had to borrow and even draw from the IMF was also of concern, so that we were forced to move to restrain not just consumption, but capital development as well.

page 61;

It was in 1967 that, as a result of the wool slump, we borrowed into the higher tranches by way of drawings from the International Monetary Fund and gave the fund a controversial letter of intent. The semantics of a letter of intent as debatable then as they are today when the Fund has some 40 such arrangements. When the leftwing politicians and academics claimed that the Fund had laid down conditions before permitting us to draw in the higher tranches, I insisted, as did the Fund, that it was up to the Government of the member country to indicate the policies that it would pursue in order to restore balance to its economy, while the Fund made its decision on whether or not to agree to the drawings in light of the policies that were proposed.

page 62-3;

In February 1985 at a seminar of the Association of Economists the academic economists from the universities attacked the Treasury colleagues for giving simplistic and indeed bad advice to the incoming Labour Government of 1984. Curiously they were saying what I had been saying since the time of the 1984 election. In reply the Treasury economists explained that where as in earlier years Treasury advice was Keynesian, they had gradually moved to new theories which were not, they claimed, simply monetarist, but which basically favoured an open economy, even though, in a move towards that economy, there would be some pain............ To blandly say, as the Treasury economists did, that, "we were formerly Keynesians, but we have now moved and support the mainstream of economic thinking," is an appalling admission. The truth is that in terms of the economic management of the New Zealand economy both theories are inadequate.

page 66;

In my 1968 budget I referred to the establishment by the International Monetary Fund of a new international reserve asset, the special drawing right(SDR) and the problem of smaller countries which depend for their export earnings on commodities, the prices of which fluctuate violently. I have spoken on that theme at IMF meetings and elsewhere ever since.

page 69;

The early 1970s saw a changing world economy and those changes had a massive impact on a country so dependent on world trade as New Zealand. On 15 August 1971, President Nixon closed the gold window. In plain language, American dollars were no longer convertible into gold and the fixed price of $35 an ounce, which dated back to the 1930s was ended.. The date of this move can be taken as the date on which the Bretton Woods system of fixed but managed currency relationships finally ended.

page 70;

Immediately following the collapse of the Bretton Woods system, moves were made to bring together a new system and the concept of the Committee of Twenty, was devised. This was a committee based on the membership of the Executive Boards of the International Monetary Fund and the World Bank under which some 120 nations(nearer 150 today) were grouped together into 20

groups, each having some community of interest and a total quota of approximately a the same size.

The effect of this was that the countries with the largest quotas formed a group of one, while the smaller countries were grouped in numbers that made up the approximate quota total and represented by one of their members. Voting on the Executive Board is by quota and in the manner in which the rules are drafted the United States has an effective veto because of the size of its quota on matters of major importance.........

page 71;

The first meeting of the Committee of twenty was held in Washington at the time of the IMF meeting of September 1972. We had high hope that it would bring together some new rules that would take the place of the former Bretton woods system. These hopes were not realised and some two years later, after the first oil shock, the committee changed its name Interim Committee enlarged it membership to 22 to admit Saudi Arabia and later China and continued as a policy making body which in the first decade of its existence did little that warranted its continuing operation.

In particular, it made no progress on the establishment of a new set of rules for the worlds monetary system, although it considered and discarded several worthwhile initiatives mainly

because of objections to each by the United States. One was the proposal that the SDR should be established as the major international currency by substituting it for externally held currencies, principally US dollars. This tripped over the requirement that the United States should give some kind of guarantee in respect of the dollars that were substituted, which they were not prepared to do. Another proposal which was not acceptable was 'symmetrical surveillance' that is to say, that the IMF should exercise surveillance over surplus countries as well as deficit countries, given that each dollar of surplus creates a dollar of deficit - atleast in theory, because the statistics do not add up by something of the order of $100 billion. It was held to be unreasonable that the whole burden of adjustment should fall on the deficit countries. The proposal was eminently fair and is an issue that I believe must be addressed again for it is inevitable that it form part of any stable system for world monetary relationships..........

New Zealand has a record that is second to none in its support of international institutions of which we have been members, and our willingness to obey the rules, both in letter and in spirit. We have been constantly disappointed however, by the fact that so many countries - and among them some of the most affluent - have for domestic political reasons been prepared to bend or even ignore the rules when it suited their purpose. The history of the IMF and its
sister organisations since the break down of the Bretton Woods system has unfortunately been one were short term self interest has overridden long term wisdom. That this has now apparently been recognised can not alter the unfortunate history of the years since 1971.

page 109; 
Following the second oil shock in 1979 the volume of petro dollars increased but the position of the non oil developing countries began to look less attractive, particularly as some of the new industries that were being developed found that when they came on stream their products, and steel was an example, were facing, protectionist barriers in their natural markets in the wealthy industrialised countries, in some cases the very countries that had provided the loans to build the plants.

page 153; 
The international institutions must be reformed with a mandate that fits the needs of the 1980s and into the 21st century. The immediate debt crisis must be dealt with, not as a bail out of either the heavily indebted countries or commercial banks but as a means of averting the collapse of the worlds financial system with a resulting world wide depression such as we have not had since the 1930s, a depression from which no countries economy would be immune.