Wednesday 20 March 2013

5Th New Zealand Labour Government economic executive did not have a clue of the dynamics of what they were being given by officials to read out, or even worse as they are still in the so-called public service today, did they?


On the 13th May 2007, I asked these questions of Minister of Finance Michael Cullen;
Regards minister Cullen,
I am requesting for as long as records have been kept, an annual
breakdown of the number of trust funds that have been investigated as to their legitimacy, the number of funds that were found to be shams, and the number of individuals who were prosecuted for setting up trusts as shams?
Also, to your knowledge Sir, is it correct to say that under the system referred to as "money creation" that the very rich and powerful privately owned banks that are stakeholders in the collective privately owned institutes US Federal Reserve and the Bank of England, have been entrusted with the ability to create money out of fresh air as bits on a computer, then lend it to governments and commercial banks as interest bearing debt, as long-term loans known as Bonds, which have the interest payable on this counterfeit principle secured against the future taxes of the nation?
yours
Iain Parker

May 2007;
Regards MR Cullen,
I am still awaiting your explanation of the international monetary lending system, especially confirmation that our Govt Bonds are long-term loans from the private stakeholders of the US federal reserve and the Bank of England, who have the ability to create the principal of these loans out of nothing, that is the money is neither created by labour, productivity or is convertible to tangible assets?
Thank you
Iain Parker

I then received a reply from Michael Cullen 19 June 2007;
Dear Iain Parker
In your email of 13 May 2007 you asked whether privately owned banks in the UK and US have the ability to create money in the form of bonds issued to their governments.
As I have no responsibility for any institutions in the UK or US I am unable to comment on the process of creating bonds in those countries. However, I am able to explain the situation that applies in New Zealand.
In New Zealand, our central bank, the Reserve Bank, is wholly owned by the crown. Its institutional direction is explicitly set through the Reserve Bank of New Zealand Act 1989(the Act), and for monetary policy in an ancillary agreement between myself and the Governor of the Reserve Bank, known as the Policy Targets Agreement. The act has limited the governments ability to finance expenditure through credit creation; in the past , governments borrowed from the Reserve Bank to finance a portion of their deficit. (This way of financing government expenditure persisted until a Labour government was elected in 1984).
In effect, this meant that the government printed money to pay for its expenditure instead of raising taxes or borrowing from the private sector. While this method of financing can be used to pay for infrastructure or social services like health, ultimately the process tends to be inflationary. This type of borrowing was one of the main factors behind New Zealand's very high rates of inflation in the 1970's.
As a result, the Act sets out that the primary purpose of the Bank is to ensure stability in the general level of prices. More specifically, the Policy Targets Agreement states that the Reserve Bank Governor must keep inflation within a band of 1-3 percent over the medium term. The main tool the Governor has to keep inflation within this band is the Official Cash Rate (OCR).
Issuing of bonds is an accepted method of financing investment. Regardless of where a bond originates, it is essentially a certificate of indebtedness. The New Zealand government, through the Debt Management Office, maintains a programme of bond issuance to finance its investment programme. There are no requirements on the Reserve Bank to purchase these bonds, although it may from time to time when necessary to meet its objectives. The financial reporting requirements of the Public Finance Act provides for the public disclosure of all financial transactions between the government, the Reserve Bank and the wider economy, and ensures that I and the Reserve Bank are accountable for the outcomes.
I trust this has helped to answer your question.
Yours sincerely
Hon Dr Michael Cullen
Minister of Finance

- I would like to add a foot note here. Michael Cullen states above - "The financial reporting requirements of the Public Finance Act provides for the public disclosure of all financial transactions between the government, the Reserve Bank and the wider economy, and ensures that I and the Reserve Bank are accountable for the outcomes". - yet if you read the State Sector Act 1988 then go to the website of the New Zealand Securities Commission, you will discover that the CEO of the Securities Commission has almost autonomous power to issue exemptions to multinational corporations that circumvent our protecting financial regulations, including a disclosure exemption to the New Zealand Debt Management Office that makes a mockery of the above statement. At the time of printing, if you go to internet web address -
http://www.seccom.govt.nz/notices/summaries/2004/ - then scrolled down to find - Securities Act (Crown Wholesale Debt Securities) Exemption Notice 2004 -
This exemption prevents the NZDMO from having to openly disclose that a bunch of privately owned foreign central banks have a monopoly on the issuance and on selling of our Government Bonds.

I sent this email to Minister of Finance Michael Cullen 4 September 2007 ;
Regards Dr Cullen,
1) I am seeking any information now eligible for release, regarding the secret Memorandums of understanding, or Structural adjustment programs imposed upon us by the IMF/World Bank during the restructuring of our(NZ) nations debts or what was essentially liquidation, in 1961 and 1984?

2) To your knowledge, the money used by registered bond traders, who are the only ones eligible to purchase the larger blocks of our govt bonds, all of whom are the private stakeholders of what is referred to as the "Central banking system", to your knowledge does this so called "Power money" have any net tangible backing, or is it merely created as digital bits on a computer, then loaned into the system as interest bearing debt, only given its value by the promised repayment out of the future taxes of the nation.?
Yours sincerely
Iain Parker

I received this reply from the Acting Minister of F inance Trevor Mellard 2 October 2007 ;
Dear Iain Parker
Thank you for your letter which was received on 5 September 2007 concerning an Official Information Act request. You requested:
1) I am seeking any information now eligible for release, regarding the secret Memorandums of understanding, or Structural adjustment programs imposed upon us by the IMF/World Bank during the restructuring of our(NZ) nations debts or what was essentially liquidation, in 1961 and 1984?

2) To your knowledge, the money used by registered bond traders, who are the only ones eligible to purchase the larger blocks of our govt bonds, all of whom are the private stakeholders of what is referred to as the "Central banking system", to your knowledge does this so called "Power money" have any net tangible backing, or is it merely created as digital bits on a computer, then loaned into the system as interest bearing debt, only given its value by the promised repayment out of the future taxes of the nation.?

New Zealand joined the IMF and the World Bank in 1961. There was no financial crisis in New Zealand at the time and New Zealand did not restructure its debt as a result of joining. There are no secret memoranda of understanding and no structural adjustment programmes were imposed on New Zealand. All the documents related to the decision to join the two institutions are publicly available from Archives New Zealand.
In June 1984, New Zealand drew down its Reserve Tranche at the IMF. The Reserve Tranche is essentially a countries foreign currency deposit with the IMF and can be drawn on at any time for balance of payments reasons without requiring approval from the IMF board. There is no conditionality attached to such a drawing and so no structural adjustment programme was imposed. Once again, all relevant documents are publicly available at Archives New Zealand.
Accordingly, I have decided to refuse your request under section 18(d) of the Official Information Act 1982 - that the information you requested is or will soon be publicly available.
In response to your second question, registered bidders in New Zealand government Bond tenders purchase New Zealand government bonds using cash which they get from their shareholders, from profits on their operations or from borrowing against future income. Please note that bidders may purchase bonds on their own behalf or on behalf of other investors. The bonds are issued on behalf of the Crown by the New Zealand Debt Management Office (NZDMO). The Reserve Bank conducts the bond tenders as agent for the NZDMO. When the bonds mature, the Crown repays them with funding from a variety of sources, such as its cash surplus, revenue from taxation and other sources or by undertaking new borrowing. Interest on the bonds is paid from the same sources.
This fully covers the information you requested.
Yours sincerely
Hon Trevor Mellard
Acting Minister of Finance.

On the 5 October 2007 I sent this reply to Trevor Mellard;
Regards Hon Trevor Mallard,
could you please advise me, as to whether you researched and provided this answer yourself, thus are prepared to stake your present and future political reputation on it, or was it provided by one of the many State Sector advisers at your disposal. If the latter is the case, could you please provide me with the name and department of the author.
Thank you
Iain Parker

I then received on 10 October 2007 this reply from Michael Cullen;
Dear Mr Parker
I have received your email regarding the answer to your Official Information Act Request which was signed out by the Hon Trevor Mellard in my absence.
I am satisfied with the contents of the reply that you received from my acting minister. This request was dealt with under the standard procedures for replying to requests under the Act.
In this case, the draft reply was prepared on my behalf by Andrew Turner, Head of Portfolio Management at the Treasury.
Yours sincerely
Hon Dr Michael Cullen
Minister of Finance

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