From:
Mike Firth
Date: Thursday, July 31, 2014 7:25am
To: Parkers
Subject: RE: Please confirm you received my submission sent 18 July 2014
Dear Mr Parker
Apologies for not responding earlier
Yes your submission has been received
Thank you
Regards
Mike Frith
Reserve Bank of New Zealand
----- Original Message -----
Sent: Friday, July 18, 2014 5:50 PM
Subject: Iain Parker submission to Strategic review of the Reserve Bank of New Zealand's payment and settlement systems.
******************************************************************************
"This message (and any files transmitted with it) are confidential and
may be legally privileged. If you are not the intended recipient please
notify the sender immediately and delete this message from your system.
This message does not necessarily reflect the views of the
Reserve Bank of New Zealand. If the recipient has any concerns about
the content of this message they should seek alternative confirmation
from the Reserve Bank of New Zealand."
******************************************************************************
Iain Parker submission to Strategic review of the Reserve Bank of New Zealand’s payment and settlement systems.
RBNZ details of Strategic review of the Reserve Bank of New Zealand’s payment and settlement systems here http://www.rbnz.govt.nz/news/2014/5724020.html
To whom it may concern;
I Iain Parker wish to register my concerns at any suggestion of the passing of New Zealand's payment and settlement system into private hands – domestic or otherwise.
The RBNZ discussion paper often refers to knowing of the economic sovereignty issue of maintaining control of our payment settlement system – but then seems to attempt to soften the stance toward privatisation of the system by just as often pointing out the issue of ongoing financial cost of maintaining the system.
The economic sovereignty issues have been confirmed valid by events in other financial system ructions in other parts of the world at present – such as;
http://www.bdlive.co.za/opinion/columnists/2014/05/14/swift-way-to-get-putin-to-scale-back-his-ambitions in which it was stated;
“Western governments have the power to exclude Russia from the world’s financial system. The key to that system is based in Brussels. It is the Society for Worldwide Interbank Financial Telecommunication (Swift).”
I allege that much of the reason that the elements of the Anglo-Saxon heritage private central banking network that 'cooked the credit books' beyond the level of natural resource collateral in physical existence to ever cover leading to the greatest yet ever credit fraud crisis in history in 2008 not being held to account too the full extent of civil law within other nations of which the frauds were seated was because of the lack of any ready available other means of payment settlement system than that of which the criminals could flick the switch upon.
I already have grave concerns about the present structures of where New Zealand's base accountancy of credit and issuance of currency reside within our money system. My concerns are that I do not believe under present terms and conditions growth can ever exceed the debt you are forced to take on to attempt to achieve the growth.
So not only do I protest any thought of privatisation of New Zealand's payment settlement system – but I also advocate a reforming of our entire financial system as evidenced as too cause and solution below;
Cause;
Date: Thursday, July 31, 2014 7:25am
To: Parkers
Subject: RE: Please confirm you received my submission sent 18 July 2014
Dear Mr Parker
Apologies for not responding earlier
Yes your submission has been received
Thank you
Regards
Mike Frith
Reserve Bank of New Zealand
From:
Parkers
[mailto:parkersnz1@gmail.com] Sent:
Tuesday, 29 July 2014 5:35 p.m.To:
PASSreviewSubject:
Please confirm you received my submission sent 18 July 2014
----- Original Message -----
From:
Parkers
To:
PassReview@rbnz.govt.nz
Sent: Friday, July 18, 2014 5:50 PM
Subject: Iain Parker submission to Strategic review of the Reserve Bank of New Zealand's payment and settlement systems.
******************************************************************************
"This message (and any files transmitted with it) are confidential and
may be legally privileged. If you are not the intended recipient please
notify the sender immediately and delete this message from your system.
This message does not necessarily reflect the views of the
Reserve Bank of New Zealand. If the recipient has any concerns about
the content of this message they should seek alternative confirmation
from the Reserve Bank of New Zealand."
******************************************************************************
Iain Parker submission to Strategic review of the Reserve Bank of New Zealand’s payment and settlement systems.
RBNZ details of Strategic review of the Reserve Bank of New Zealand’s payment and settlement systems here http://www.rbnz.govt.nz/news/2014/5724020.html
To whom it may concern;
I Iain Parker wish to register my concerns at any suggestion of the passing of New Zealand's payment and settlement system into private hands – domestic or otherwise.
The RBNZ discussion paper often refers to knowing of the economic sovereignty issue of maintaining control of our payment settlement system – but then seems to attempt to soften the stance toward privatisation of the system by just as often pointing out the issue of ongoing financial cost of maintaining the system.
The economic sovereignty issues have been confirmed valid by events in other financial system ructions in other parts of the world at present – such as;
http://www.bdlive.co.za/opinion/columnists/2014/05/14/swift-way-to-get-putin-to-scale-back-his-ambitions in which it was stated;
“Western governments have the power to exclude Russia from the world’s financial system. The key to that system is based in Brussels. It is the Society for Worldwide Interbank Financial Telecommunication (Swift).”
I allege that much of the reason that the elements of the Anglo-Saxon heritage private central banking network that 'cooked the credit books' beyond the level of natural resource collateral in physical existence to ever cover leading to the greatest yet ever credit fraud crisis in history in 2008 not being held to account too the full extent of civil law within other nations of which the frauds were seated was because of the lack of any ready available other means of payment settlement system than that of which the criminals could flick the switch upon.
I already have grave concerns about the present structures of where New Zealand's base accountancy of credit and issuance of currency reside within our money system. My concerns are that I do not believe under present terms and conditions growth can ever exceed the debt you are forced to take on to attempt to achieve the growth.
So not only do I protest any thought of privatisation of New Zealand's payment settlement system – but I also advocate a reforming of our entire financial system as evidenced as too cause and solution below;
Cause;
Here
is on the record official documentation making clear that the
Anglo-Saxon heritage private central banking network model is a
systemic pyramid fraud is stealing under false pretenses amounts of
the honest New Zealand citizen and business earners purchasing power
from income when it is understood who supplies the collateral -
where the risk in the system sits and just what that is;
1
- the Bank of England is one of the senior most international
financial institutions recently made this amazing - amazing
historical admission in its March 2014 quarterly bulletin that what
they tell government officials about how the private central banking
network funds itself has been a
lie;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.
Page 2
Two misconceptions about money creation
The vast majority of money held by the public takes the form of bank deposits. But where the stock of bank deposits comes from is often misunderstood. One common misconception is that banks act simply as intermediaries, lending out the deposits that savers place with them.......Saving does not by itself increase the deposits or ‘funds available’ for banks to lend.
Indeed, viewing banks simply as intermediaries ignores the fact that, in reality in the modern economy, commercial banks are the creators of deposit money. This article explains how, rather than banks lending out deposits that are placed with them, the act of lending creates deposits — the reverse of the sequence typically described in textbooks.(3)
Another common misconception is that the central bank determines the quantity of loans and deposits in the economy by controlling the quantity of central bank money — the so-called ‘money multiplier’.......In reality, neither are reserves a binding constraint on lending, nor does the central bank fix the amount of reserves that are available. As with the relationship between deposits and loans, the relationship between reserves and loans typically operates in the reverse way to that described in some economics textbooks.
End
Page 2
Two misconceptions about money creation
The vast majority of money held by the public takes the form of bank deposits. But where the stock of bank deposits comes from is often misunderstood. One common misconception is that banks act simply as intermediaries, lending out the deposits that savers place with them.......Saving does not by itself increase the deposits or ‘funds available’ for banks to lend.
Indeed, viewing banks simply as intermediaries ignores the fact that, in reality in the modern economy, commercial banks are the creators of deposit money. This article explains how, rather than banks lending out deposits that are placed with them, the act of lending creates deposits — the reverse of the sequence typically described in textbooks.(3)
Another common misconception is that the central bank determines the quantity of loans and deposits in the economy by controlling the quantity of central bank money — the so-called ‘money multiplier’.......In reality, neither are reserves a binding constraint on lending, nor does the central bank fix the amount of reserves that are available. As with the relationship between deposits and loans, the relationship between reserves and loans typically operates in the reverse way to that described in some economics textbooks.
End
2
- Official Bank of England Central Banking Handbook makes very clear
New Zealand's place in the
scheme;http://www.bankofengland.co.uk/education/Documents/ccbs/handbooks/pdf/ccbshb06.pdf
International And Local Level Lending Practice Secrecy
Centre For Central Banking Studies Bank of England
Primary Dealers In Government Securities Markets
Handbooks In Central Banking No6 1996
Pg 6-7
PRIMARY DEALERS IN GOVERNMENT
SECURITIES MARKETS
1 General
The basic objective of a government debt manager is to cover the government's borrowing needs as cheaply as possible....There are several ways of trying to achieve this but many OECD countries appoint a group of highly qualified financial firms to play a role as specialist intermediaries in the government securities markets between the authorities on the one hand and the market on the other. These are generally called primary dealers - as for example in. the United States - but they are sometimes referred to simply as market-makers. In the government securities market in the United Kingdom they are known as gilt-edged market-makers (or GEMMS - the term "gilt-edged" is used to describe government securities), while in France they are called specialists in Treasury securities (SVTs). In this Handbook the terms "primary dealer" and "market- maker" are used largely without distinction.
In return for a set of obligations, such as making continuous bid and offer prices in marketable government securities or submitting reasonable bids in the auctions, these firms receive a set of privileges in the market. The nature and content of these obligations and privileges varies greatly from country to country. In some cases there are firms which play the role of primary dealers without formal official recognition but nevertheless with a degree of official encouragement.
2 International practice
Primary dealers have existed for some time, for example in Canada, France, Italy, Spain, the United Kingdom and the United States of America. These countries all use official recognition as an incentive: it is granted under specific conditions and the "licence" thus created is reviewed from time to time. Ireland has recently introduced this system as appropriate to the stage of development of its market.
By contrast, in Australia, Germany, Japan, Netherlands and New Zealand there are no formally designated primary dealers, although in these countries a group of firms do collaborate in the allocation and proper development of the market in an informal way.
end
International And Local Level Lending Practice Secrecy
Centre For Central Banking Studies Bank of England
Primary Dealers In Government Securities Markets
Handbooks In Central Banking No6 1996
Pg 6-7
PRIMARY DEALERS IN GOVERNMENT
SECURITIES MARKETS
1 General
The basic objective of a government debt manager is to cover the government's borrowing needs as cheaply as possible....There are several ways of trying to achieve this but many OECD countries appoint a group of highly qualified financial firms to play a role as specialist intermediaries in the government securities markets between the authorities on the one hand and the market on the other. These are generally called primary dealers - as for example in. the United States - but they are sometimes referred to simply as market-makers. In the government securities market in the United Kingdom they are known as gilt-edged market-makers (or GEMMS - the term "gilt-edged" is used to describe government securities), while in France they are called specialists in Treasury securities (SVTs). In this Handbook the terms "primary dealer" and "market- maker" are used largely without distinction.
In return for a set of obligations, such as making continuous bid and offer prices in marketable government securities or submitting reasonable bids in the auctions, these firms receive a set of privileges in the market. The nature and content of these obligations and privileges varies greatly from country to country. In some cases there are firms which play the role of primary dealers without formal official recognition but nevertheless with a degree of official encouragement.
2 International practice
Primary dealers have existed for some time, for example in Canada, France, Italy, Spain, the United Kingdom and the United States of America. These countries all use official recognition as an incentive: it is granted under specific conditions and the "licence" thus created is reviewed from time to time. Ireland has recently introduced this system as appropriate to the stage of development of its market.
By contrast, in Australia, Germany, Japan, Netherlands and New Zealand there are no formally designated primary dealers, although in these countries a group of firms do collaborate in the allocation and proper development of the market in an informal way.
end
3
- 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 owed to a private owned
lending institution and - that New Zealand's money system is
presently administered by an international private central banking
network - of which currently sits at the end of a wholesale credit
liquidity discount interest chain - an accountancy system of credit
weighed against available natural resources - as opposed to the
re-lending of already existing pools of liquidity as often portrayed
- Chapter 4 - The Creation of Money and Credit - is especially
enlightening;http://www.johnpemberton.co.nz/Banking_in_NZ-06-final.pdf
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
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
4
- The contracting out of central banking in New Zealand by its public
money system administration authority - the Reserve Bank of New
Zealand (RBNZ) - to the international private central banking network
- represented in New Zealand by the New Zealand Debt Management
Office (NZDMO) that operates under the umbrella of the New Zealand
Treasury advisers - is acknowledged by New Zealand Treasury in
official document
here;http://www.nzdmo.govt.nz/securities/tendering/pdfs/info-tendering-18feb08.pdf
18 February 2008
GOVERNMENT SECURITIES TENDERING IMPORTANT CHANGES IN TENDERING OPERATIONS
The New Zealand Debt Management Office (NZDMO) will be assuming responsibility for the tendering of New Zealand Government Bonds and Treasury Bills from the Reserve Bank of New Zealand (RBNZ). The transfer will be a staged process that will take place over the next two months. This follows many years of the RBNZ acting as an agent for the NZDMO.
end
18 February 2008
GOVERNMENT SECURITIES TENDERING IMPORTANT CHANGES IN TENDERING OPERATIONS
The New Zealand Debt Management Office (NZDMO) will be assuming responsibility for the tendering of New Zealand Government Bonds and Treasury Bills from the Reserve Bank of New Zealand (RBNZ). The transfer will be a staged process that will take place over the next two months. This follows many years of the RBNZ acting as an agent for the NZDMO.
end
5
- The identity of the foreign Wholesale Credit Liquidity Providers
that supply our entire currency in circulation as interest bearing
loans for all production and consumption - thus making our national
debt as a whole mathematically unrepayable and natural abundance will
never be able to head off the compounding interest hurdle as they
tell us it will - is kept secret by this parliamentary legislation
meaning you will not even be told when asking under the Official
Information Act
here;http://www.legislation.govt.nz/regulation/public/2009/0224/latest/DLM2303519.html
Statement of reasons
This notice, which comes into force on the day after the date of its notification in the Gazette, amends the Securities Act (Crown Wholesale Debt Securities) Exemption Notice 2004 (the principal notice) to extend the expiry date of the principal notice from 31 August 2009 to 31 August 2014. The principal notice exempts the Crown, and certain other offerors of specified debt securities, from regulation 7A(1) and clause 5(1)(b) of Schedule 3D of the Securities Regulations 1983. These provisions relate to the content of investment statements.
The Securities Commission considers it appropriate that the principal notice be renewed because the reasons justifying the original exemptions remain valid. They are as follows:
where Part 2 of the Securities Act 1978 applies to an offer of previously allotted securities to the public, both the person offering the securities and the original allotter of the securities have a responsibility for the offer as issuers. In this case, the more relevant information for disclosure to investors is about the Crown. Information about the wholesale investors (being the persons offering the securities) as issuers may not be useful to the retail investors and may also be confusing. The conditions of the exemption from regulation 7A(1) of the Securities Regulations 1983 require potential investors to be advised that the offerors remain legally responsible as issuers:
the investment statements for the offers of debt securities to the public made by the wholesale investors are prepared by the Crown. The exemptions in the principal notice recognise that certain information relating to the wholesale investors is not available to the Crown at the time the investment statement is prepared. The exemptions enable information to be given to investors in a form other than the investment statement, so long as it is given prior to subscription.
End
Statement of reasons
This notice, which comes into force on the day after the date of its notification in the Gazette, amends the Securities Act (Crown Wholesale Debt Securities) Exemption Notice 2004 (the principal notice) to extend the expiry date of the principal notice from 31 August 2009 to 31 August 2014. The principal notice exempts the Crown, and certain other offerors of specified debt securities, from regulation 7A(1) and clause 5(1)(b) of Schedule 3D of the Securities Regulations 1983. These provisions relate to the content of investment statements.
The Securities Commission considers it appropriate that the principal notice be renewed because the reasons justifying the original exemptions remain valid. They are as follows:
where Part 2 of the Securities Act 1978 applies to an offer of previously allotted securities to the public, both the person offering the securities and the original allotter of the securities have a responsibility for the offer as issuers. In this case, the more relevant information for disclosure to investors is about the Crown. Information about the wholesale investors (being the persons offering the securities) as issuers may not be useful to the retail investors and may also be confusing. The conditions of the exemption from regulation 7A(1) of the Securities Regulations 1983 require potential investors to be advised that the offerors remain legally responsible as issuers:
the investment statements for the offers of debt securities to the public made by the wholesale investors are prepared by the Crown. The exemptions in the principal notice recognise that certain information relating to the wholesale investors is not available to the Crown at the time the investment statement is prepared. The exemptions enable information to be given to investors in a form other than the investment statement, so long as it is given prior to subscription.
End
6
- The foreword to this 2007
New Zealand Auditor-General report Effectiveness of the New Zealand
Debt Management Office. makes
very clear how dependent upon second hand advice the New Zealand
public service are and - how susceptible to being mislead that they
are;
Foreword
The New Zealand Debt Management Office (NZDMO) is a unit within the Treasury. It is responsible for the efficient management of the Crown’s debt and associated financial assets within an appropriate risk management framework. Its broader responsibilities include providing capital market advice and financial transaction services to other agencies of the Crown. NZDMO manages gross debt of about $40,000 million and financial assets of approximately $18,000 million.
In carrying out a performance audit of NZDMO, my overall objective was to determine NZDMO’s level of performance, under the authority of the Minister of Finance, in managing the Crown’s public debt and financial asset portfolios.
Given the specialist technical functions of NZDMO, I sought expert technical assistance with the audit. I appointed KPMG under section 33(1) of the Public Audit Act 2001 to carry out the performance audit on my behalf under section 16(1) of the Act.
The material in my audit report is of a very technical nature because of the specialist functions undertaken by NZDMO. The non-technical reader can be assured that the audit did not identify any fundamental concerns with the performance of NZDMO.
Foreword
The New Zealand Debt Management Office (NZDMO) is a unit within the Treasury. It is responsible for the efficient management of the Crown’s debt and associated financial assets within an appropriate risk management framework. Its broader responsibilities include providing capital market advice and financial transaction services to other agencies of the Crown. NZDMO manages gross debt of about $40,000 million and financial assets of approximately $18,000 million.
In carrying out a performance audit of NZDMO, my overall objective was to determine NZDMO’s level of performance, under the authority of the Minister of Finance, in managing the Crown’s public debt and financial asset portfolios.
Given the specialist technical functions of NZDMO, I sought expert technical assistance with the audit. I appointed KPMG under section 33(1) of the Public Audit Act 2001 to carry out the performance audit on my behalf under section 16(1) of the Act.
The material in my audit report is of a very technical nature because of the specialist functions undertaken by NZDMO. The non-technical reader can be assured that the audit did not identify any fundamental concerns with the performance of NZDMO.
end
Please
just type - KPMG fines - into Google search - read the many cases of
financial fraud that KPMG and the often referred to 'big four' global
accountancy houses have been involved in and - then please consider
how prudent it is to be taking second hand auditing advice from them
upon financial system issues so crucial to the equal economic
opportunity of our society?
Flawed
statistic methodologies designed to make things appear that they
better than they actually are – Employment stats and Consumer Price
Index Interest Inflation Rate Targeting;
7
- Bogus employment statistics
-
On the 8th November 2004 I sent an e-mail to Steve Maharay, the then
Minister for Social Development and Employment, asking him what the
minimum number of hours you have to have worked in a week to be
deemed to be employed?
-On
the 3rd December I received a reply from Steve Maharey;
Dear
Iain
Thank
you for your e-mail 8th November 2004 concerning the definition of
employment.
For
benefit purposes section 3 of the Social Securities Act 1064 defines
"employment" as paid employment.
The
Social Security Act also defines full employment and part-time work
as;
Full
employment or part-time, in relation to any person, means-
(a)employment
under contract or service or apprenticeship which requires the person
to work, whether on time or piece rates, no less than an average of
30 hours each week; or
(b)self-employment
of the person in any business, profession, trade, manufacture, or
undertaking carried on for pecuniary profit for no less than an
average of 30 hours each week; or
(c)employment
of the person for any number of hours which is regarded as full-time
employment for the purposes of any award, agreement, or contract
relating to that employment.
part-time
work[...]means work that averages not less than 15 hours a week when
calculated over the preceding 3 months...
(a)under
a contract of service, whether on time or piece rates ; or
(b)as
a self-employed person in any business, profession, trade,
manufacture, or undertaking.
I
trust this has been helpful.
Yours
sincerely
Steve
Maharay
Minister
for Social Development and Employment.
-To
which I replied 3rd December 2004;
Hi
Thanks
for replying to my question.
What
I am really wishing to know is, what is the minimum number of hours a
person would of had to of worked, in any fashion deemed to be work,
before they are deemed able to be presented to the public in
government statistics, as employed.
Is
it as per the statistics methods used on www2.stats.govt.nz which
explains -(a)worked for 1 hour or more for pay or profit in the
context of an employee/employer relationship or selfemployed.
Cheers
Iain
-I
then received an e-mail 6th December 2004;
Iain,
can I have your postal address so the Minister can respond to the
issue you raised.
Margaret
Monks
Ministerial
Secretary
Office
of Hon Steve Maharay
-
I then supplied my postal address.
-
I then received this letter in the post dated 7th December 2004;
Dear
Mr Parker
On
behalf of Hon Steve Maharay, Minister for Social Development and
Employment, thank you for your letter 3rd December 2004 regarding
employment statistics.
The
matter you have raised falls within the portfolio responsibilities of
the acting Minister of Statistics. I have therefore referred your
letter to Hon DR Michael Cullen for his consideration.
Yours
sincerely
Scott
Josling
Private
Secretary(Social Development)
-
I then received a letter by post(not dated) from Michael Cullen;
Dear
Mr Parker
Thanks
for your e-mail of 3 December, enquiring about employment statistics
and the definition of an employed person.
In
short, the answer to your question is yes, it is as per the
definition on Statistics New Zealand's website.
New
Zealand's official employment counts are sourced from Statistics New
Zealand's quarterly Household Labour Force Survey. In this survey, a
person is deemed to be employed if they worked for 1 hour or more,
for pay or profit, in the context of an employee / employer
relationship, or self-employed.
This
definition is used as the measurement of employment because it aligns
with the standard definitions of the International Labour
Organisation.
I
hope this response is helpful.
Yours
sincerely
Hon
Michael Cullen
Acting
Minister of Statistics
7
- Housing removed from CPI of New Zealand and England has allowed
senior elements of the Anglo-Saxon heritage private central banking
network to saturate these nations with counterfeit credit without it
registering as inflationary on official inflation measurement in
order to rule them via enforced bankruptcy receivership under false
pretenses in order that they then use their proceeds of crime excess
interest repayments received to buy up the liquidated assets at
distressed prices in order to then be able to toll booth the target
societies for access to their necessities of life;
20 February 2012 Deirdre Kent put this Official Information Act question to New Zealand Minister of Statistics;
- Despite the fact that section prices tripled in fifteen years to 2007, land is not now included in the Consumer Price Index. This means that the official measure of inflation is unreliable as it is far lower than the actual figure.
and received this reply;
Today I received a letter back from the Minister of Statistics, Hon Maurice Williamson. I had heard that land went out of the CPI but couldn’t remember when or why so I sent in an Official Information request. The Minister dates the letter 14 Mar 2012 and says
Dear Ms Kent
Thank you for your letter of 20 February regarding the exclusion of the price of land from the Consumers Price Index (CPI) basket of goods.
I am advised by Statistics New Zealand that land (i.e. residential section) was included in the CPI until the June 1999 quarter. Following a review of the CPI in 1997 land was excluded, taking effect from the September 1999 quarter.
The 1997 review by an external advisory committee confirmed the CPI’s main purpose as being informing monetary policy setting, and that the CPI should be focussed on the concept of acquisition. The reason given for excluding land from the CPI from 1999 was that it was considered to represent the investment component of home ownership (with dwellings representing the shelter component).
The September 1999 quarter CPI information release explained it as follows: A dwelling provides shelter over a long period of time. Over time land is not consumed and so can be considered to represent the investment component of home ownership. As investment expenses are outside the scope of the CPI the rebased CPI excludes expenditure on residential sections.
Information on the sale of land is available from QV (www.qv.co.nz) and the Real Estate Insititute of New Zealand (www.reinz.co.nz).
I trust this information meets your needs and thank you again for taking the time to write.
Yours sincerely
Hon Maurice Williamson
Minister of Statistics.
BoE boss wants house prices in inflation
This is Money
22 July 2007, 12:00am
The Governor of the Bank of England has admitted he is ‘surprised’ that rising house prices are not included in the official inflation figures, according the BBC.
Mervyn King told Radio 4’s Money Box programme that he wished the Consumer Prices Index (CPI) – the measure that tracks the cost of goods and services – did include house prices, as the previous official measure, the Retail Price Index (RPI), used to.
He said: ‘Some of these issues are controversial. I wish it did include housing, but it doesn’t – at least at present. Maybe one day it will.’
Since 1997 Mr King and the Monetary Policy Committee at the Bank of England has had the task of keeping the CPI around a target of 2%. It has raised interest as a method to reduce inflation if prices climb too sharply.
However, critics have said that because the CPI does not include the cost of mortgage repayments, official inflation figures are artificially low. Some say this has created a bubble in the property market as house buyers are able to over-borrow with cheap loans.
Currently the CPI stands at 2.4%, but the RPI – which includes mortgage repayments – stands at 4.4%.
Economists expect the Bank of England to raise interest rates to 6% by September, something that could prove a problem for some homeowners struggling with large mortgages.
Mr King said: ‘CPI is meant to be constructed in the same manner in all European countries, and so far the European statisticians have not worked out a way of how they can calculate the cost of housing in a way that can be done uniformly across Europe.’
Notwithstanding the limitations of the CPI, Mr King defended the record of the Bank of England in setting rates. He said: ‘The track record is pretty good, so if we have made wrong decisions from time to time, there can’t have been very many of them and they can’t have been that wrong.’ ‘The Monetary Policy Committee I think was well designed. I think it’s been successful for 10 years and I see no reason to believe that it cannot be successful for another 10 years and decades after that.’
John Fullerton former Managing Director
of JP Morgan after an 18-year career at JP Morgan
said in a 2011 interview;
said in a 2011 interview;
“ I learned that a lot of what we
practiced in finance through no ill intent, this is unrelated to the
financial crisis, and the ethical
challenges of the financial system, but that the system itself is
designed to propel growth in the
economic system with no regard to the physical boundaries of the planet and with little regard to the
social criteria, social constraints of human well being and so it struck me that a lot of the symptoms
that we talk about such as climate change obviously being on top of everyone’s agenda, but
ecosystem degradation, soil degradation, biodiversity loss. All of these issues are symptoms of an
economic system that is essentially bumping into the boundaries of the biosphere, and if you think about
finance and even our money system, which is built on a money system which is created through
expanding money that has interest associated, so as the money supply grows the requirement
to service money grows at a compound rate. That forces at a systemic level the economy
to continue growing which if the economy is related to material throughput eventually creates
this conflict with the boundaries of the biosphere. So its been a very profound realisation
and what I have discovered is that there are an increasing amount of people thinking about this
question, but its very much outside the halls of conventional economics and very much new economic
thinking.”
Reform solutions to address New Zealand's ongoing chronic balance of payments crisis;
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
money 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”
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?
Definition
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;
THE
DIRECTION OF FUTURE POLICY
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:
http://archive.org/stream/financiersandthe033017mbp/financiersandthe033017mbp_djvu.txt
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.
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.)
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) 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. 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 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. 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.”
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?
http://sustento.org.nz/wp-content/uploads/2013/02/The-Manning-Plan.pdf
(for
full detail of below)
THE
MANNING PLAN FOR PERMANENT DEBT REDUCTION IN THE NATIONAL ECONOMY
EXECUTIVE SUMMARY
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.
http://userpage.fu-berlin.de/~roehrigw/kennedy/english/Interest-and-inflation-free-money.pdf
(for
full details of below)
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
