Wednesday, 24 April 2013

Universal Public Credit Public Policy Submission - Final Update

Universal Public Credit Public Policy Submission

To whom it may concern,
Attempting to form public policy for equal economic opportunity of all citizens without a full knowledge of the function of money as invented and intended - that this submission details - is doing so by looking at 1/3 of a many piece puzzle forced together in frustrated confusion - thinking its complete - when 2/3 of the picture needed in the middle to make clear sense of it all - is in-fact one large piece that has been hidden by a self serving few to steal from wider society under false pretenses.

The Bank of England - 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.


Pg 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

It is absolutely the single most impacting issue relevant to the economic sovereignty of nations and the equal economic opportunity of those who live in them.

I Iain Parker have completed a NZQA level 3 Certificate of Public Service Sector Knowledge. Researched for over a decade the history of the impact of international high finance upon global social and economic development. Have read thirty odd different authors of New Zealand history including the National Overview and District Reports of the Waitangi Tribunal.

This submission is long, but please remember it is the reduction of the very best of many thousands of documents I have researched over many thousands of hours that I believe will assist greatly the cause of anyone seeking to further peace and stability for the greater good.

This is my standard change of public policy submission for reducing the seemingly impossible economic puzzle of downward pressure degradation facing most every public service sector and wider society in general, as currently without more debt we cant have growth, with less debt we have less currency causing economic contraction and what we need is more currency with less debt.

Without reform of the entirely interest bearing private loan based money system we currently suffer - the poverty among plenty downstream of it - leading to domestic and global instability - can never be fixed!

The information this submission contains is from the very mouths of the very highest levels of the international supply side of money what is presently discussed at those levels but kept quiet from wider society for reasons of the detrimental impact upon every aspect of their daily life.

The current money - banking and credit system we suffer is a relic of the days of British Imperialist Empire ruling over subservient colonies. Imperialism being the proceeds of a local pyramid system 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”


1764 – Benjamin Franklin 
is asked by officials of the Bank of England to explain the prosperity of the colonies in America. He replies;
That is simple. In the Colonies we issue our own money. It is called Colonial Scrip. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers. In this manner creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay no one.”
As a result of Franklin’s statement, the 
British Parliament hurriedly passed the Currency Act of 1764. This prohibited colonial officials from issuing their own money and ordered them to pay all future taxes in gold or silver coins.Referring to after this act was passed, Franklin would state the following in his autobiography, “In one year, the conditions were so reversed that the era of prosperity ended, and a depression set in, to such an extent that the streets of the colonies were filled with the unemployed…The colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the colonies their money which created unemployment and dissatisfaction. The viability of the colonists to get power to issue their own money permanently out of the hands of King George III and the international bankers was the prime reason for the revolutionary war.”


1863 Letter from Rothschild European investment banking pyramid scam pioneers to prospective US affiliates in New York;
Letter to: Messieurs. Iklheimer, Morton and Vandergould, No. 3 Wall St., New York, U.S.A.:
Dear Sirs: A Mr. John Sherman has written us from a town in Ohio, U.S.A., as to the profits that may be made in the National Banking business under a recent act of your Congress (National Bank Act of 1863), a copy of which act accompanied his letter. Apparently this act has been drawn upon the plan formulated here last summer by the British Bankers Association and by that Association recommended to our American friends as one that if enacted into law, would prove highly profitable to the banking fraternity throughout the world.
Mr. Sherman declares that there has never before been such an opportunity for capitalists to accumulate money, as that presented by this act and that the old plan, of State Banks is so unpopular, that the new scheme will, by contrast, be most favorably regarded, notwithstanding the fact that it gives the National Banks an almost absolute control of the National finance. The few who can understand the system will either be so interested in its profits, or so dependent on its favors, that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantages that capital derives from the system, will bear its burdens without complaint and perhaps without even suspecting that the system is inimical to their interests. Please advise us fully as to this matter and also state whether or not you will be of assistance to us, if we conclude to establish a National Bank in the City of New York… Awaiting your reply, we are.
Your respectful servants.
Rothschild Brothers.
London, June 25, 1863

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
 17 November 2012;
Our 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.”

What is Money?

Any public servant with integrity seeking to truly act in the public interest must learn the intricate dynamics of money or quite simply remain weak and useless!

Dr. David C. Korten worked for more than thirty-five years in preeminent business, academic, and international development institutions. Served for five and a half years as a faculty member of the Harvard University Graduate School of Business, where he taught in Harvard’s middle management, MBA, and doctoral programs. Asia regional adviser on development management to the U.S. Agency for International Development before he turned away from the establishment to work exclusively with public interest citizen-action groups.

Excerpt from David C Korten– How to liberate America From Wall Street July 2011;
“ Most people use money every day and rarely think to ask: What is money? Where does it come from? Who decides who gets it and for what purpose?
Money is essential to modern commerce as a medium of exchange. In earlier days, money took the form of material objects. As commerce grew, certificates redeemable in gold became popular. Most contemporary money is no more than a number stored on a computer hard drive and has value only because people agree to accept it in exchange for things of real value, like their labor.
The fact that most money is nothing but a number is not necessarily a problem, so long as we are clear that money itself has no intrinsic value and structure the money creation process to facilitate beneficial exchanges that build the real wealth of individuals, families, communities, and nature. The fact that money is only a system of accounting entries becomes a serious problem when the economy is managed to make the inflation of financial assets its defining purpose and a few individuals are allowed to game the system to enrich themselves free from the exertions of contributing to the production of real wealth.
When the system gives to an elite group of private bankers the power to determine who has access to money and who does not, it renders democracy impotent and virtually assures an extreme and growing gap between the profligate few and the desperate many. When the citizenry is uneducated in the nature of money and the implications of money system design, it is powerless to resist.
Our common future depends on educating ourselves regarding the true nature of money and the implications of the structure of the institutional system by which it is created and allocated. Only then will we create a democratically accountable money system that operates as our servant, not our master.
The most powerful master is the one who rules unseen and unmentioned. In modern societies, the money system is that master. Those who control the creation and allocation of money control the nation’s values and priorities.”

Former New Zealand Reserve Bank Governor 1988-2002 Don Brash has said;

(Nov 1996 reply to information request letter to David Coote)

"Commercial bank deposits are created by banks’ lending. When a bank makes a loan, it will, in the first instance , deposit the proceeds to the borrowers account. Of course, the the borrower invariably raises funds to spend them, so the proceeds (deposit) typically will end up in a bank account of someone other than the borrower – often at another bank than that which made the loan. However, it remains that bank loan transactions ultimately lie behind the deposit balances that banks hold. By influencing interest rates, the Reserve Bank is able to influence the rate of growth in bank lending and hence the rate of (bank deposit) money growth."


(Feb 2012)“ Every form of recognised money today is the obligation of some central bank”

(April 2009 ) “Banking crises are not new of course – they have been a recurring feature of the economic landscape for many decades, indeed for centuries. There have been scores of banking crises even since 1945, though of course none with such far-reaching impact as the present one.”

“There was also a failure to understand the complexity of, and risks involved in, many of the products which were widely traded in recent years. This failure was almost certainly widespread both in senior management and on bank boards.”

New Zealand Westpac Chief Economist Michael Gordon Radio New Zealand – Afternoon Panel with Jim Mora Thursday 25 October 2012 - this man does not stutter - he was very - very nervous;
Money is, is it doesn't have value in itself, but its a useful thing, so it, you know, its, its useful to have it in society. But you really need some sort of control on it so you don't have people, argh, effectively, sort of, granting themselves more of this, um, essentially valueless but useful product.......

Um there is all these different ways of arranging it but ultimately someones got to be the adult and sort of say, um, e,e,e, establish some discipline about it.
Which is why for example we have independent central banks so that this issue of the growth in the money supply doesn't get politicised, and I think, um, argh, we've kind of been through atleast a decade or so of a period where, um, central banks, while being independent were probably a little bit lapsed.
They ran very loose monetary policy. We had very rapid growth in the money supply, um, very rapid growth in asset prices, but they kind of said its not our problem we deal with consumer prices, and I think there is a little bit of soul searching going on all around the world in that aspect of it.........
I guess the issue about, about bank profits, I mean, I guess my starting point for that is New Zealand, um, still has this imbalance between saving, saving and investment here, were still um effectively, you know, borrowing a lot more than the nation saves , um, you know, argh, that gets funded from offshore, argh, by and large that gets channeled through banks because they have the name out there and the reputation to, um, raise the money from overseas.
And I think to some degree bank profits kind of reflect the fact that they have, um, access to international markets, but the bottom line is, um, even if that wasn't the case I think we would still be paying a lot of money offshore, it would just be less in the form of bank profits and more in the form of interest, argh the fundamental problem is, is, is the fact that we, we have this great need to, or I guess, this great desire to borrow from overseas in the first place. ”

Dr Alan Bollard Governor of the Reserve Bank of New Zealand 2002 - 2012.
Excerpts from a book Alan Bollard published 1 Sept 2010;
Crisis: One Central Bank Governor and the Global Financial Collapse
Pg 20
Banking practices differ around the world, but we ensure ours meet international standards. These are set by a somewhat shadowy group called the Basel Committee on Banking Supervision. Comprised of representatives of large countries( not including New Zealand ), the group meets in Switzerland at the Bank of International Settlements (BIS). 
Pg 96
The Bank of International Settlements is an important institution, acting as a sort of central bank for central banks. Set up in 1930, originally to facilitate German World War 1 reparations, it has a checkered history but today offers modern banking services and provides a forum for central bankers.
Pg 183
In self-interest, banks may encourage New Zealanders to take on more debt than is good for them individually or deliver more external liability than is good for the country.”
Pg 157
Another governance worry related to the power and competence, or lack thereof, on the part of banks chief risk officers and risk committees. These officers assess the possible outcomes from any deal and decide whether the risks are acceptable under the banks mandated policies. We were now hearing about cases where risks had been miscalculated, procedures bypassed and officers overruled, all in the race for higher earnings.”
Pg 165
In the case of some of the agricultural defaults, we felt that certain banks had been over-optimistic and under-analytical in their lending, and we moved to tighten some of the relevant capital requirements for the future.”
Pg 120-1
“Meanwhile, on 6 March a senior team from the Wellington made its three-monthly trek across Bowen Street, along the walkway above the Cenotaph, through security checks in the Beehive and across to the ornate old Parliament Building to Committee meeting rooms. Here, committees of parliamentarians from across all parties routinely advise on upcoming legislation and examine public bodies on their use of public funds. We are used to appearing before them as they regularly examine our Monetary and Financial Stability Reports. But this session was different. As was their duty on behalf of the taxpayer, they wanted to talk about the crisis, the steps we were taking and the costs and risks for government. The 2008-intake Finance and Expenditure Committee under the chairmanship of Craig Foss was seriously focused and prepared to put aside political differences during the crisis.
I was worried about what might happen at the session. Proceedings are on the record with journalists sitting in the back, television cameras rolling, digital recorders running and even media blogging live from the room. Select Committees have strong powers – they can require people to attend and answer questions. I knew that I might be asked questions about exchange rates, foreign reserves, bank liquidity and a whole range of topics on which straight-forward answers could upset financial markets. The day before the hearing I rang the chairman and explained my concern. Craig Foss has a background in financial markets; he readily understood the dangers and assured me that he would guide the Committee away from dangerous questions in public.”


John McDermott Deputy New Zealand Reserve Bank Governor said 5 May 2011;
The crisis had also prompted a revival of interest by central banks in money and credit, whereas in previous decades central banks had paid less attention to monetary and credit aggregates”
“Overall, there has also been a recognition that credit growth over the past decade was excessive and a potential risk to financial stability given the build-up in leverage and rising asset prices that accompanied it. We are continuing to build our understanding of money and credit at the RBNZ, and its inter-relationship with both sectoral financial decision making and potential risks for the banking sector.”

Mr. Alan R Holmes was Senior Vice President, Federal Reserve Bank of New York.
Mr. Holmes had worked for 33 years at the Federal Reserve Bank of New York, where from 1965 to 1979 he was manager of the Federal Reserve System Open Market Account. In that position, he was responsible for the creation of money in the United States.

Excerpt from 1969 speech – Operational Constraints On Stabilization of Money Supply;
"The idea of a regular injection of reserves-in some approaches at least-also suffers from a naive assumption that the banking system only expands loans after the System (or market factors) have put reserves in the banking system. In the real world, banks extend credit, creating deposits in the process, and look for the reserves later.

In answer to a letter from Byron Dale in 1982 John M. Yetter Attorney-Advisor Dept. of the U. S. Treasury said;
“Money that one borrower uses to pay interest on a loan has been created somewhere else in the economy by another loan.”

Adair Turner - In September 2008 Lord Turner became Chairman of the Financial Stability Authority (FSA) financial regulator of England.
Prior to September 2008 Lord Turner was a non-executive Director at Standard Chartered Bank, United British Media and Siemens; from 2000-2006 he was Vice-Chairman of Merrill Lynch Europe, and from 1995-99, Director General of the Confederation of British Industry. He was with McKinsey & Co. from 1982 to 1995, building McKinsey’s practice in Eastern Europe and Russia as a Director. He was previously Chair of the Overseas Development Institute (2007-10).
Lord Turner studied History and Economics at Gonville and Caius College, Cambridge from 1974-78.


This below is from an April 2013 interview from http://www.fungglobalinstitute.org/
"One of the main things to learn for any emerging markets in Asia or elsewhere is to avoid some of the completely unnecessary financial instability which we allowed to occur in the West by falling in love with some intellectual delusions about the nature of finance capitalism. 
Finance is very different from other sectors of the economy, I mean essentially if you want good restaurants there is no better formula than a completely free market, you know, some will fail, some will succeed. Some will develop new styles, new ambiances, new menus that satisfy consumer expectations. Any attempt to plan or regulate it, other than in health and safety fashions just doesn't help at all.
Finance is different. There's some things about the nature of finance and particularly about when finance creates debt instruments in excessive quantities which can create risks, which can create what economists call rent extraction, people essentially making lots of money from activities which are not socially useful, are not a useful part of the market economy.
We failed to realise that in the developed world before the financial crisis. We fell in love with economic theories which believed you could apply completely free market principals to finance as to any other sector of the economy and that was a major intellectual delusion and one needs to be very careful of it, finance needs very careful regulation and in particular the processes of banking and credit creation need very careful regulation and control.”


Adair Turner had a keynote speech at The Institute for New Economic Thinking (INET) annual plenary conference in Hong Kong (April 7-4-2013) entitled - Private Debt and Fiat Money: Lessons from the crisis and from some old economic texts – in which he said;
"Banks are different, and I think this is a crucial insight that we often miss but which Fisher, Symons and Friedman really focused on. It is often said in general text books or discussion's 
'what do banks do?' and you will often hear this description 'well they take deposits and they intermediate it to investment' This is a lousy description of what banks do. The idea that banks intermediate a pre-existing set of liquid asset savings is wrong!. Banks simultaneously create new private credit and new money."

Why the above needs to change!

Michael Hudson former balance of payment analyst for massive international banker Chase Manhattan and decades veteran of international level supply side of money included this in a paper he presented at an Institute For New Economics conference attended by many high level economists throughout the international spectrum held in Berlin over weekend of 12-15 April 2012;
The fraudulent conveyance principle
“A broad guideline for writing down debts was developed more than two centuries ago in the American colonies. British speculators and sharpies eyed the rich farmlands of upstate New York and refined the practice of making loans to farmers against their crops. Their strategy was to call in loans at an inconvenient time (e.g., just before harvest), or simply to loan the farmer more than could realistically be repaid in the epoch’s low-surplus economy. They then would foreclose.

To cope with this problem, the colony of New York passed the Fraudulent Conveyance law. This was retained when New York joined the United States, and remains on the books today. Its principle is that if a lender makes a loan that the borrower cannot reasonably be expected to pay off in the normal course of business – that is, without forfeiture of property – the loan should be declared null and void, and the debt canceled. The legal assumption is that such a loan was a ploy to gain control of property pledged as collateral, over and above simply earning interest.

The aim is to keep debts within the ability to pay, by placing an obligation on bankers and other creditors to make viable loans rather than covert property grabs. This principle has two major implications for today’s debt-strapped economies. It was cited in the 1980s as a defense against corporate raiders buying out stockholders with high-interest “junk” bonds. Victims of debt-leveraged buyouts claimed that there was no way that the loan could have been expected to be paid in the normal course of business and subject to existing employee contracts without selling off assets and, as noted above, downgrading their pension contracts with employees. The aim was to loot the company and leave it a bankrupt shell. The best-known recent case is the suit brought by Chicago Tribune employees against the real estate magnate Sam Zell who drove the company bankrupt and emptied out the Employee Stock Ownership Plan to pay his creditors. About half such ESOPs typically end up in bankruptcy through such financial sleight of hand.

The Fraudulent Conveyance principle may be applied to the public sector with regard to pressure brought on debt-strapped governments to sell off public enterprises to pay debtors. This situation is much like that of colonial farmers in upstate New York. Banks and bondholders have lent governments credit as if this were risk-free. This was done in the belief that if these governments have difficulty paying bondholders – especially in foreign currency – the IMF and other Washington Consensus institutions will step in and lend governments the foreign exchange to pay private-sector bankers, or simply strong-arm the sovereign debtor into paying, willy-nilly. Bondholders and banks are thus in the position of the British financial sharpies making ostensibly reckless loans in the belief that the local sheriff and other colonial officials would back up their property grab.”

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;
FOREWORD
I who write this, need no proof of the importance of the money system upon the very lives of the people and even to the future existence of the British race, so long as that system fills the position which it now holds in our National Economy.
There are many thousands of well-educated men and women who, I believe, endorse my views in their entirety. But even for the most zealous of money reformers to attempt to write upon so vast and momentous a subject as our monetary system and the management of our national finances, such attempt would appear doomed to failure unless it were supported by great financial experts whose names were a by-word in the country. The next best alternative was that the author should himself be qualified by past experiences to express an opinion worth reading.
I therefore decided to take the unprecedented course of offering to my readers my own qualifications for putting down before the British people the very precarious condition of our monetary system as it exists in this country to-day; that this our money system forms the most important part of our, economic system, and that the nation’s economic system forms part of our social system.......
Let us acknowledge the truth. Humanity is not suffering from unavoidable circumstances over which it has no control, but from the results of deliberate and dishonest actions of its own creation and invention. Fundamental laws, originally designed for the common welfare of the individuals of a community, have been broken – community laws which were never intended to permit the individual to grow fat upon the poverty of others; nor to permit him, in pursuit of his own personal profit, to base his standard of honesty upon his own flexible conscience, consoling himself with gratitude that he is within the law. Nevertheless, just as man has brought, upon himself, or has permitted, this world tribulation, so can he play his part in undoing the harm that has been done.
But how is this possible? How can the ordinary individual change the world? Shall the man in the street become an expert economist, or a banker, or a cabinet minister and control the press and public opinion? How otherwise can he assist in the regulation of mankind? What is meant by ‘lack of economic equilibrium’, ‘sound finance’, ‘stability of foreign exchanges’, ‘currency restrictions’, ‘the creation of credit’, ‘the inverted pyramid of credit’, and a host of other such phrases? They smell of long study, special technical ability, and great learning. Surely, then, it is commonly felt, it is better that ordinary individuals should leave economics to the economists, finance to the bankers, and national policy to the politicians? But, alas, that is exactly what we have for too long been doing. Look at the result! The experts have hopelessly failed. What is needed is a little less economics and a little more common sense.
All that is necessary for us ordinary men is that we should make use of the knowledge that is already ours – that is to say, the knowledge of good and evil; so that we may recognise, not only in others but in ourselves, those habits and customs and practices which are definitely harmful to the community as a whole, however advantageous they may appear to be to the individual or to some particular section of the community. For it is these habits and practices which have twisted scientific development into fetters upon the arms of society and turned the immense advantages of improved education into a growing discontent amongst the mass of the people. The future of the world is the future of the human race; the human race is the world; and the character and the welfare of Britain is the sum of the character and welfare of its population.
In so far as we are able, we must try to assist our fellow men to understand. This we can do fearlessly; for that which is mistaken or false will carry no weight and will be lost and forgotten, whilst that which is true will prevail.
What follows is certainly no economic treatise for experts to smile at. It is merely an attempt to show clearly that every man and woman in the country has his or her part to play in building up the future of the world; and it is primarily for them that this book is written.
If the country were happy and contented, with its agriculture and its great basic industries at full swing, full of confidence in the future; if the numbers of our unemployed stood at something approaching the unavoidable minimum, with the standard of living of the people far above any threat of starvation, malnutrition or real poverty – then it might be possible for the nation to overlook some of the difficulties which are imposing such heavy handicaps upon its progress. But, as things are, the nation cannot continue to carry unnecessary burdens and can no longer afford to let these adversities pass unnoticed and untouched.
If it be true that we have, in fact, a democratic government, the will of the people will prevail; and if it be not true, then it is best that this should be realised. For, in the latter case, still greater changes are inevitable.
Although it is the money system which is to be accused of dishonesty, those who use and depend upon a dishonest system, knowing that system to be dishonest, cannot themselves be regarded as honest men. Moreover, it may be that the present system, which international finance has forced our democratic government to adopt, uphold, and protect by every possible means, has undermined the character of the people and forced them to alter their definition of the word honesty so that it may be made to comply more nearly with modern practice.........

DEMOCRACY OR FINANCIAL DICTATORSHIP?
AGREEMENT amongst the nations to co-operate in the avoidance of war, so that the temptation to regard might as right may be eliminated for ever, and the consciousness of offensive or defensive superiority no longer exist in our mentality as a weapon to add force to national diplomacy, is an ideal which will always remain the aim of the civilized world. But democracy is in danger for the very reason that democratic government itself is subservient to the sectional interests which control finance, and which have it in their power to inflict a financial crisis upon the nation should they anticipate Legislation inimical to their own particular interests.
Such are the economic conditions which are declared to be unavoidable and which only circumstances can in time eradicate. The time has come when we must create those circumstances and change those adverse economic conditions; for, until this is done, war and the menace of war will continue to hover over us. General uncertainty, leading to discontent with existing forms of government, has increased the tendency towards dictatorship and of temporarily benefiting one nation at the expense of others. We have seen nation after nation, each in its own particular way, attempting to defend itself against the unnecessary hardships imposed upon it by a wrong monetary system. Whilst at any moment there may be currency reactions, it must remain difficult to contemplate any permanent recovery until the great creditor nations are willing to adopt a uniform policy.
No greater threat to humanity and the progress of civilization can be conceived than the general spread of the Hitler regime of brute force. To crush out that regime for all time even if it stood alone as our sole war aim, would seem enough in itself without the necessity of searching for other objectives. Although we recognise how serious and how immense is the task that we have undertaken, the vast majority of us gain added strength from the knowledge that righteousness and justice are on our side. The nation has reached a state of preparedness, both mentally and physically, both for offence and defence, which will render the sacrifices and hardships and swift calamities that we must inevitably endure powerless to divert it from the set course which it has determined to pursue to the end. Yet even then, even when this first great objective shall have been gained, our labours will by no means be over. There is still a long way to go before we can begin to contemplate that promised land of peace and justice for mankind which no destructive war can ever of itself attain, and there remains vital work of preparation and reconstruction at home which cannot be neglected or delayed.
Unless we can contrive to design and establish an improved and reformed financial system, which is the first essential towards a new and better economy in our own country, no satisfactory outcome of the war is possible; for where there is still widespread injustice and discontent there can be no ending to that war, unless it be a tangle of internal revolts and revolutions. How can we presume to hold up our own social System as a pattern for other nations to follow, whilst it breeds selfishness, unrest, and dishonest competition amongst our own people, and whilst it is dominated by a decadent financial system in which we possess an ever-diminishing confidence and which is not even under the unbiased control or management of Government chosen by the will of the people? How can we hold out to the German people or to the world, the promise of justice under a new and better economic system that will eliminate poverty, malnutrition, and unemployment, whilst no such system exists, and whilst our own system is still permeated with these same evils?
On the other hand it is unthinkable that we should pretend to ourselves that we can, first of all, and by the successes of our arms, create in Germany an economic vacuum and, having done so, compel her to adopt a money lending system of international finance, designed for the benefit of international financiers who will become more and more anxious to preserve their monopoly and their immunity from governmental control. Are we now fighting to uphold freedom and democracy, or are we fighting to uphold and strengthen the dictatorship of international finance?
The mere conception that His Majesty’s Forces should fight for the benefit of such dictatorship, which already wields an independent power in exact opposition to social progress throughout the world, is wholly incompatible with the defence and maintenance of democratic freedom and seems utterly absurd. But this world power, with its permitted control of the national money supply and with its support of a monetary System that has plunged every nation into the miseries of irretrievable debt and the world into economic strife, should not be underestimated.
It would have been wise to have expended some of our energies in strengthening our home defences by placing democracy in an impregnable position under a money machine managed and controlled by its Government and worthy of the public confidence. But although it is simple and obvious enough to suggest that the time for constructive reform is long overdue, this is a problem entailing war against a dictatorship of international finance which holds every key position on the battle front and the power to cut off essential supplies at the mere threat of attack. We have only to remember the fate of President Roosevelt’s policy in the United States, which aimed at the introduction of the ‘honest dollar’ and a better standard of living for his people. Yet even these considerations must not be allowed to prevent us from making an endeavour to free democracy from the one great obstacle standing in the way of social progress; and we must also bear in mind that the alternative path leads to revolution and bolshevism and the break-up of what we call World Civilisation.
In modern times there should exist no such thing as an economic system without a money supply System. All the business interests of the country, progress, trade, industry, and the well-being of the people, are dependent upon certain essential supplies without which the whole economic structure would collapse. We see how, in the case of all essential supplies, the greatest care is taken to protect the best interests of the community by just and adequate Legislation and Government control. But we find the one outstanding and most important exception in the national money supply, upon which all other essential supplies are dependent for their sale and their purchase. The money supply and the management of the money system are almost entirely outside the control of the Government and are operated by an outside, individual, section of the community, working for profit and possessing a virtual monopoly of lending credit to the community at high interest – a credit based upon the community’s own money; this indeed being the only means, under the existing system, of distributing such credit as may be available, so that goods may continue to change hands and so that those in need of money can borrow the use of it, provided they are credit-worthy borrowers. Above and beyond this, we discover that, in the progress of time and through our own base carelessness and ignorance, we have permitted the money industry, by the very virtue of its business, gradually to attain a political and economic influence so wide and powerful that it has actually undermined the authority of the State and usurped the power of democratic government.
There is nothing new in this emphatic assertion, and it does not emanate from a distorted imagination but expresses without exaggeration the sane belief held by many thousands of thinking individuals in this country and throughout the Empire, and, for that matter, throughout the world. It is shared also by many a score of highly intellectual business men in the City of London; the majority of whom, however, would no more dare – (and no one could blame them) openly to declare their views than they would tweak the noses of their bank managers, but who are certainly not solely guided by the profit motive and who would willingly sacrifice the present monetary policy in order that a reformed system should safeguard the future of the Empire and all the peoples who constitute it – employers and employed alike.
The object and existence of money is to enable and facilitate the exchange of goods and services. The only value in money lies in the value of the goods which it enables us to exchange with other goods; where there are no goods to be exchanged money is completely valueless. A sack of gold on a desert island is not worth as much as the sack that holds it; and to allow the supply of money to regulate the production and consumption of goods, is as if we allowed strawberry-baskets to regulate the supply of strawberries, or an insufficient supply of bus tickets to bring about a strike of bus-drivers. And yet the present order of our lives is governed and controlled by the governors and controllers of money so that those who have developed the business of letting out strawberry baskets on hire, now control the production and consumption of strawberries. If an economist from Mars or a little child of ordinary intellect were told of the present position they would rock with laughter at the blind stupidity of mankind.
This national and mainly international dictatorship of money, which plays off one country against another and which, through the ownership of a large portion of the Press, converts the advertisement of its own private opinion into the semblance of General public opinion, cannot for much longer be permitted to render Democratic Government a mere nickname. To-day, we see through a glass darkly; for there is so much which ‘it would not be in the public interest to divulge’. As a consequence the public has not unnaturally become suspicious; not so much of the Government, democratically elected, as of those other far-reaching influences which are suspected of exerting undue pressure upon the freedom and discretion of Government at all times to legislate and act for the benefit of the State.
Lest they should spread and replace democracy, this country now concentrates upon attacking or distrusting dictatorships in any shape or form in other countries. A constructive monetary policy in our own country would strengthen the power of democracy, and would cast out those enemies in our midst who are trading upon our supposed ignorance whilst depriving us of adequate means to express our opinions. In short, it has begun to be generally realised that the free vote of the people no longer insures democratic government except in name, and that the widespread influence of money, of finance, and of ‘big business’, and, above all, of international finance with its impartial patriotism, not only dominates governmental policy, both national and international, and affects the lives and livelihood of the people, but has very nearly succeeded in converting our boasted democracy into what is virtually a financial dictatorship. Do the people of this country want such a procedure to continue? We are prepared to admit that, without honest and skilled leadership, democratic rule is akin to mob law; but are we prepared to entrust the future of democracy to sectional influences governed and controlled by those few who still govern and control our capital, our money, and capital’s international finance?
Strenuous efforts have been made over some twenty-five years to patch up the money system in an attempt to make it last a little longer; but it has stood, and now stands, in the way of progress and social betterment, thereby creating universal unrest and a tendency to obtain by force what cannot be obtained otherwise. For the sake of our children let us take warning in time. Let us discard the policy of inaction and pretence, and boldly face the fact that it is not the inevitable smoke of the galley-stove which assails our nostrils but that a fire is raging in the hold and that the ship of State is in imminent danger. Our democratic system and our existing financial system can no longer live together; one of them must give way to the other.
TO BANKERS AND OTHERS
This accusation against the monetary system is not intended to cast doubts or aspersions upon bankers and those few hundred individuals who, either directly or by their expert advice, control its management. Business is business, and it is only human nature and to be expected that a business man should consider his own business and his own shareholders first. There are some of us who believe that without armament companies there would be no war, just as there are others of us who believe that it is war which brings armament companies into existence; and so, when it is universally admitted that a community cannot nowadays lead a normal life without money, it is not unnatural that those who control and deal in money, who thereby possess the power of issuing or withdrawing credit, and who decide the ups and downs of the price level of commodities and the value of wages, should have come to regard their own business and their own property as transcending in importance all other considerations and all other businesses.
For them it is perhaps only natural that they should argue: ‘Let the people and their governments be careful to take no action and do nothing which might weaken the power and strength of the money business; for money rules the world. As long as we can keep the international business of banking and finance intact and unaffected by troubles, all will come right in the end.’ But it is precisely this argument, and the monetary policy adopted for the last fifteen years and contrived for the benefit and preservation of the money business and of the System that it advocated, which has led up to the present world chaos.
The monetary experts, the banking and finance interests, led astray at first by the City of London and obsessed with the urgent necessity of getting back to what was considered to be the re-establishment of ‘sound finance’, failed to pay sufficient attention to the new factor which had arisen in the world – a factor which they themselves, through their own highly prized system, had created a century ago, but which has since grown suddenly to such vast dimensions that it now overwhelms and renders diminutive the favourite theories and admitted practices of the past. They watched with pride the growth of their own child, but they did not realise that they were nurturing a robot which must sooner or later grow up and become a serious menace to its over-indulgent parents.
This new factor is the ogre of the world’s stupendous money-indebtedness to its own financial system. With every market short of purchasing power, the financial system set the whole world gambling on its future capacity to produce more and sell more and at the same time pay off its debts; and it is mainly the abnormal efforts of almost every nation to pay off, or even to pay the interest on, its impossible debts, which have resulted in the present international confusion where each nation seeks to exchange its own produce for the money of other nations, but not for the produce. For money debts cannot be repaid by produce unless and until that produce has been exchanged for money; production is of no value to finance except in so far as it may be converted into money; and the money industry, under the existing system, almost wholly depends for its prosperity upon the indebtedness of others. What finance has failed to perceive is that there is a limit to the profitable increase of this indebtedness. Similarly, Vickers, Limited, and, as the Bank of England knows only too well, Armstrong Whitworth and Co., and their respective shareholders, were half ruined by the war of 1914-18 and its natural repercussions. Those who regard Vickers Armstrong as war-profiteers either possess superficial intellects or have no knowledge of the proven facts; and I, who write, have suffered, and I know.
Having indulged in these symbolic diversions, without animus, without prejudice, and with no personal axe to grind I would appeal to all those who have the power to pull the strings of influence – which under the present regime are more powerful than a thousand so-called democratic votes at a general election – to consider the economic situation as it exists to-day. If they are honest, if they would deem it a gross insult to be included among those who place temporary personal aggrandisement before permanent national welfare, let them consider the economic situation and think deeply. It may be that many, in these precarious times, will be inclined to say: ‘This situation is not new. There is, of course, at such times as these, a natural division of opinion between those who are contented to continue the present order of things, and those others demanding what they believe to be a better and more Christian ideal which should replace it. This is no concern of mine; they must fight it out amongst themselves. I have quite enough to look after my own business.’ And to these I especially appeal; for every productive industry, great or small, every man and woman employed in that industry, and every office-boy, is dependent upon the profit and therefore upon the output of that industry.
Having had the opportunity of acquiring, over the last fifteen years, a greater knowledge of the feeling and the tendency of the people than most bankers could have achieved over two or three years, I would make the following appeal to the bankers of this country to those who manage the machinery of money and credit, and to those who are satisfied with things as they are and therefore see no reason for change: -
1.) I ask you to remember that you are dealing to-day with a general public of a far greater education and of a more thorough knowledge of affairs, of foreign policy and of financial policy, than they have had in previous times; and that the majority of these are conscious that, in some way or another, the key that locks them out from the enjoyment of the good things in the world’s shop windows is money.
2.) That, because the public come into contact with the monetary system mainly through the medium of banks, they naturally tend to blame the banks for the difficulty; not realising that they are, in large measure, tied houses – tied, that is, to the monetary system, and that, however great or small the faults of banks, it is in reality the system which is at fault.
3.) That banking is an industry working for profit, just as a gas company or any other utility company works for profit. And the people, realising this – erroneously perhaps – do not believe that any essential supply company should, at one and the same time, have control of the volume of its output and control of the price of its output, when the supply of its product is essential to the lives and welfare of those masses of the people who are dependent upon that product.
4.) That, whilst it may be possible, having regard to the immense power of money, artificially to maintain and uphold the present position for some months or for some years to come, against the rising revolt engendered by the present system, yet the time must eventually arrive (as it did in Russia, as it has in Spain, and as it may do in France) when the mass of the people will insist upon their right to possess a much larger share of the country’s available wealth, and when they will insist also upon a much nearer approach of to-day’s poverty to to-day’s wealth. With all earnestness and honesty I implore them to think of this possibility and to take warning in time; to recognise what is inevitable, and to decide: Whether it is best to continue the present regime and, with the power of the Press and with the power of money, to continue to fight for its supremacy; or, alternatively, whether it may be best to recognise that, for the good of the country, the maintenance of the Empire, the benefit of the British world community, and for their own benefit, they should immediately take steps to associate themselves with those who are demanding reform of the monetary system. This refers more especially to the controllers of the system, embracing the whole of that particular section of the community which deals in, manages, and controls money, credit, and finance, and whose business mainly depends upon the indebtedness of others.
5.) At times there has been in operation an expedient of cheap money, coupled with a policy of secret and progressive inflation, when it has been hoped (not without reason) that such a policy, by creating a steady improvement in trade and a gradual diminution of unemployment, would in time obliterate or conceal the necessity for reform and the exacting demand for a better monetary system. And yet I would ask our experts and our financial advisers to accept assurances that such a policy, welcome though it is, will not suffice; for past experience has taught a very large section of the public that, whilst temporary policies may give temporary relief, nothing but a thorough reorganisation and rationalisation of the money industry and the money and credit system will satisfy the permanent needs of the community and once more restore confidence in the financial system. Rightly or wrongly, a conviction exists in the minds of individuals and organisations influencing a predominant fraction of public opinion, that finance must in future become the servant of industry, and that the welfare of the country and of the Empire is of far greater importance than the welfare of the City of London and the profits of international financiers.
6.) That the true wealth of the nation does not consist in the hoarded gold of the Bank of England, nor in the book-entries standing to the credit of merchant bankers. The wealth of the nation lies in its capacity to produce goods, and its capacity to consume goods, and its capacity to exchange its surplus goods for necessary importations from other countries. If the City of London, with its banks, its gold, banknotes, and its money, were suddenly to sink into the bowels of the earth and be no more, the country would go on, and, with incredible rapidity, would recover from the shock and build a new and perhaps a better City. But if the country vanished, the City of London would be dead for ever. In the last resort, production and consumption could continue without money; but money would be useless dross without production and consumption.
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.

Adair Turner was appointed UK Financal Stability Authority (FSA) Chairman in September 2008. He has combined careers in business, public policy and academia.
Speech 6 February 2013 - Debt, money and mephistopheles: how do we get out of this - at Cass Business School;
Money – in its pure fiat irredeemable base money form - is a powerful economic medicine if used within tight constraints and a potential poison if used to excess........
At the extreme end of this spectrum of possible tools lies the overt money finance (OMF) of fiscal deficits – “helicopter money”, permanent monetisation of government debt......
But before you decide from that that we should always exclude the use of money financed deficits, consider the following paradox from the history of economic thought. Milton Friedman is rightly seen as a central figure in the development of free market economics and in the definition of policies required to guard against the dangers of inflation. But Friedman argued in an article in 1948 not only that government deficits should sometimes be financed with fiat money but that they should always be financed in that fashion with, he argued, no useful role for debt finance. Under his proposal, “government expenditures would be financed entirely by tax revenues or the creation of money, that is, the use of non-interest bearing securities” (EXHIBIT 1) (Friedman, 1948). And he believed that such a system of money financed deficits could provide a surer foundation for a low inflation regime than the complex procedures of debt finance and central bank open market operations which had by that time developed...........
When economists of the calibre of Simons, Fisher, Friedman, Keynes and Bernanke have all explicitly argued for a potential role for overt money financed deficits, and done so while believing that the effective control of inflation is central to a well run market economy – we would be unwise to dismiss this policy option out of hand. Rather, we should consider whether there are specific circumstances in which it could play a role and/or needs to play a role, and even if not, whether exploration of the theory of money and of debt helps us better understand the problems we face, problems that may be addressed by other policy tools...........
The fundamental cause of the financial crisis of 2007 to 2008 was the build up of excessive leverage in both the financial system (banks and shadow banks) and in the real economy. Increased leverage creates rigidities and financial stability risks.........
Banks and Private Credit Creation
These risks are inherent in debt contracts and would exist even if there were no banks i.e. even if all debt contracts directly linked end investors with end borrowers. But fractional reserve banks, simultaneously creating private credit and private money, can greatly swell the scale of debt contracts in an economy and introduce maturity transformation. And there is no naturally arising mechanism to ensure that the scale of such majority transformation is optimal.

As a result banks can greatly increase the scale of financial and economic stability risks. They can also play an important autonomous role in the creation and destruction of spending power, i.e. of nominal demand, and as a result can generate booms and busts in overall economic activity..........
The danger of excessive and volatile bank credit creation is still further exacerbated when credit is extended to finance the purchase of assets – in particular real estate – whose value is itself dependent on the level of debt-financed demand. Unsustainable bank credit extension can therefore lead to credit and asset price cycles of the sort which Hyman Minsky described10: so too however, as we learnt before the crisis, can uncontrolled credit extension by chains of shadow-banking entities which in aggregate perform credit intermediation with leverage and maturity transformation (the defining characteristic of banks but outside the scope of bank regulation) Together these inherent characteristics of debt contracts, banks and credit/asset price cycles make the level of leverage in both the financial system and the real economy, and the rate of change of leverage key drivers of financial instability risks.
And over the last 50 years, as in the decade running up to the 1929 crisis, levels of leverage in both the real economy and in the financial system hugely increased (EXHIBIT 11). EXHIBITS 11-13 provide some indicators of that increase in private leverage for the UK and the US. Ahead of the crisis, the predominant assumption of much economic theory and of macroeconomic policy was that such increasing leverage – since arising from private sector contracts between rational agents – could be either ignored or positively welcomed. Ignored because financial system developments were considered as neutral (or simply absent) in models of money demand, inflation and real output: or welcomed because financial deepening was axiomatically beneficial since it reflected market completion.
In retrospect those assumptions were part of a widespread intellectual delusion which left us ill-equipped to spot emerging financial stability risks. They are now being roundly challenged......

Public Banking System Nations present and past;

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.

New BRICS Development Bank Announced;
http://www.postwesternworld.com/
Stephen Lendman Global Research, March 28, 2013
In September 2006, four original BRIC nations met in New York. On May 16, 2008, Yekaterinburg, Russia hosted a full-scale diplomatic meeting.
In June 2009, Brazil, Russia, India and China again met in Yekaterinburg.
Early steps were taken to end dollar supremacy. Eventual plans may replace it with a global currency or basket of major ones.
In 2010, South Africa joined the BRIC alliance. It was formally invited to do so. The group was renamed BRICS. Annual summits are held.
On March 26 and 27, Durban, South Africa hosted the group’s fifth one. More on that below.
Their “mechanism aims to achieve peace, security, development and cooperation. It also seeks to contribute significantly to the development of humanity and establish a more equitable and fair world.”
America’s economic supremacy is declining. BRICS countries are some of the world’s fastest growing.
They comprise a significant economic and political block. They account for over 20% of world GDP.
They’re on three continents. They cover more than one-fourth of the world’s land mass.
Their population exceeds 2.8 billion. It’s 40% of the world total. By 2020 or earlier, China may become the world’s largest economy.
By mid-century or sooner, India’s predicted to be number three, Brazil number five and Russia number six.
Between 2000 and 2008, BRICS contributed about half of global growth. In the late 1990s, Russia’s debt default and Brazil’s currency crisis rocked world economies. Today they have vast foreign exchange reserves.
BRICS have more global trade than America. China’s the world’s largest exporter. India’s an information technology powerhouse.
Brazil’s a dominant agricultural exporter. It’s highly competitive. It has vast amounts of fertile land. It’s known as “the world’s biggest farm.” Russia is oil and gas rich.
South Africa holds resources worth an estimated $2.5 trillion. It’s rich in gold, platinum, uranium, chrome and manganese ore, zirconium, vanadium, and titanium.
Two key institutions emerged from Durban’s summit. A BRICS Joint Business Council (JBC) and Development Bank were announced.
JBC formerly functioned as a forum. It encourages free trade and investment. Two meetings will be held annually. Rotating chairmen will head them.
Each BRICS country chose five top business executives to represent them. They’ll coordinate relations between member states and private sector players.
Separately, China and Brazil agreed to a bilateral currency swap line. It permits them to trade up to $30 billion annually in their own currencies.
Doing so moves almost half their trade out of US dollars. It suggests other BRICS partners will make similar moves.
They endorsed plans to create a joint foreign exchange reserves pool. Initially it’ll include $100 billion. It’s called a self-managed contingent reserve arrangement (CRA).
It’s a safety net precaution. It’s to strengthen financial stability. It’s an additional line of defense.
They agreed to establish a new Development Bank. The idea was proposed last year in New Delhi.
It’s done,” said South African Finance Minister Pravin Gordhan. BRICS leaders “will announce the details,” he added.
South African President Jacob Zuma said:
We have agreed to establish the new development bank. The initial capital contribution to the bank should be substantial and sufficient for the bank to be effective in financing infrastructure.”
Ahead of the summit, officials said each country may contribute $10 billion for starters. It’s aim is to fund infrastructure and other development projects.
It’ll operate separately from Western international lending agencies. It’ll challenge their global dominance. It’ll test how they do business. They prioritize neoliberal harshness.
It includes privatizing state enterprises, selling them at a fraction of their worth, mass layoffs, deregulation, deep social spending cuts, wage freezes or cuts, unrestricted market access for Western corporations, business-friendly tax cuts, trade unionism marginalized or crushed, and harsh recrimination against non-believers.
It strip mines nations for profit. It shifts wealth from public to private hands. It destroys middle class societies. It turns workers into serfs.
It substitutes debt peonage for freedom. A race to the bottom follows. An elite few benefit at the expense of most others. It sacrifices economic growth for private gain. It’s the worst of all possible worlds. Nations are transformed into dystopian backwaters.
BRICS have other ideas in mind. They seek a multipolar world. Much work remains to be done. Agreement on details must be finalized. It’ll take time to begin operations.
It’ll be a second alternative to Western debt bondage. In December 2006, Hugo Chavez proposed a Bank of the South (Banco del Sur).
A November 2007 summit launched it. In September 2009, it was established. Its members include Venezuela, Brazil, Argentina, Ecuador, Bolivia, Uruguay and Paraguay. Plans are to increase initial capitalization.
Member countries pledge to contribute. Full operations are expected to begin later this year. At issue is representing the needs of the South. It’ll contribute to its development. It’ll do so free from debt bondage.
BRICS Development Bank intends no one country to dominate. Voting rights will reflect equality. Economic growth matters most.
India’s Minister of Commerce, Industry and Textiles, Anand Sharma, said:
Our countries are making their own statement that we are proactively engaged in balancing the global economy.”
We are creating new axis of global development. The global economic order created several decades ago is now undergoing change and we believe for the better to make it more representative.”
BRICS trade today exceeds $360 billion. By 2015, it should reach $500 billion. Continued longterm growth is expected. Mutual cooperation helps sustain it. Each member country benefits.
It remains to be seen how plans unfold. Hopefully global changes for the better will follow. They’re long overdue. Dominant emerging economies will play leading roles. They’re laying the groundwork to do so.

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.

Herman Daly has received numerous significant awards (e.g., the Right Livelihood Award and the NCSE Lifetime Achievement Award) that recognize the value of his ideas for making this world a better place.  For decades, he has been an inspiration to students of economics and public policy — how often do you see students lining up at the end of the semester to have their professor sign their textbooks?
Over his career, Herman has taken a courageous stance, swimming upstream against the currents of conventional economic thought. Not content to bequeath his ideas on economic development solely to the academic realm, he did time at the World Bank to change policies in the real world.  He also has written books that are popular with citizens around the world.

Herman Daly – Money and the Steady State Economy
Why should money, a public utility (serving the public as medium of exchange, store of value, and unit of account), be largely the by-product of private lending and borrowing? Is that much of an improvement over being a by-product of private gold mining? Why should the public pay interest to the private banking sector to provide a medium of exchange that the government can provide at no cost? Why should not seigniorage, unavoidable in a fiat money system, go entirely to the government (the commonwealth) rather than in large part to the private sector?

Is there not a better away? Yes, there is. We need not go back to the gold standard. Keep fiat money, but move from fractional reserve banking to a system of 100% reserve requirements. The change need not be drastic–we could gradually raise the reserve requirement to 100%. This would put control of the money supply and all seigniorage in hands of the government rather than private banks, which would no longer be able to live the alchemist’s dream of creating money out of nothing and lending it at interest. 

All quasi-bank financial institutions should be brought under this rule, regulated as commercial banks subject to 100% reserve requirements. Credit cards would become debit cards. Banks would earn their profit by financial intermediation only — i.e. lending savers’ money for them (charging a loan rate higher than the rate paid to savings account depositors) and charging for checking, safekeeping, and other services. With 100% reserves every dollar loaned to a borrower would be a dollar previously saved by a depositor, re-establishing the classical balance between investment and abstinence. 

The government would pay some of its expenses by issuing more non interest-bearing fiat money in order to make up for the eliminated bank-created, interest-bearing money. However, it can only do this up to a strict limit imposed by inflation. If the government issues more money than the public voluntarily wants to hold, the public will trade it for goods, bidding the price level up. As soon as the price index begins to rise the government must print less, tax more, or withdraw some of the previously issued currency from circulation. 

Thus a policy of maintaining a constant price index would govern the internal value of the dollar (providing a trustworthy store of value and constant unit of account). In effect the fiat money would receive a real backing—not gold, but the basket of commodities in the price index. The external value of the dollar could be left to freely fluctuating exchange rates. These policies are not new—they go back to Frederick Soddy in1926, and to similar proposals by Frank Knight and Irving Fisher, the leading American economists of the 1920s. The fact that bankers and their friends in government and academia have willfully ignored these ideas for 90 years does not constitute a refutation of them, but rather is a tribute to the power of vested interests over the common good.

How would the 100% reserve system serve the steady state economy?

First, as just mentioned it would restrict borrowing for new investment to existing savings, greatly reducing speculative growth ventures—for example the leveraging of stock purchases with huge amounts of borrowed money would be severely limited.

Second, the fact that money no longer has to grow to pay back the principal plus the interest required by the loan responsible for the money’s very existence lowers the general pressure to grow. Money becomes neutral with respect to growth rather than biasing the system toward growth.

Third, the financial sector will no longer be able to capture such a large share of the nation’s wealth, leaving more available for meeting the needs of the poor. A steady state economy is not viable if it means a steady state of poverty for any significant proportion of the population.

Fourth, the money supply would no longer expand during a boom, when banks like to loan lots of money, and contract during a recession, when banks try to collect outstanding debts, thereby reinforcing the cyclical tendency of the economy. Reducing the risk of recession reduces the need to accumulate more to get us through the bad times.

Fifth, with 100% reserves there is no danger of a run on the bank leading to failure, and the FDIC could be abolished, along with its consequent moral hazard.

Sixth, the explicit policy of a constant price index would reduce fears of inflation and the resultant quest to accumulate more as a protection against inflation.

Seventh, a regime of fluctuating exchange rates automatically balances international trade accounts, eliminating big international surpluses and deficits. US consumption growth would be reduced without its deficit; Chinese production growth would be reduced without its surplus. By making balance-of-payments lending unnecessary, fluctuating exchange rates would greatly shrink the role of the IMF and its “conditionalities.” It also introduces more short-term risk and uncertainty into both international trade and investment. Many economists would see this as a disadvantage, but steady state economics favors a greater degree of national production for national consumption, and fluctuating rates would offer a bit of protection in the form of adding an extra element of cost (exchange rate risk) to international transactions. Like the Tobin tax it “throws a bit of sand into the gears” and reduces global commerce and interdependence to a more manageable level.

To dismiss such sound policies as “extreme” in the face of the demonstrated fraudulence of our current financial system is quite absurd. The idea is not to nationalize banks, but to nationalize money, which is a natural public utility in the first place. This monetary system makes sense independently of one’s views on the steady state economy. But it fits better in a steady state economy than in a growth economy.

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?

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.

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?
Interest and inflation free money excerpt;
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.

Iain Parker closing comments;

If you take the time to visit my blog http://publiccreditorbust.blogspot.co.nz/ you will discover that every nation of Anglo-Saxon ancestry has at various times practiced Fully Functioning Public Central 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.

Canada - Canadian public credit history more needed today than ever!
An Ugently 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.)

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 Savage (First New Zealand Independent Labour Party Prime Minister 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.”

Read on to find out what these two esteemed leaders were refering at the same period of time yet oceans apart and what relevance it still has upon our society today?
Many monetary - banking and credit reformers throughout New Zealand’s history have been able to agree that the cause of inequality - disparities of wealth and poverty among plenty has been a mathematical systemic wealth transferring pyramid scam of a banking system. But thus far have sadly lacked any viable cohesion of sufficient consensual agreement upon a solution.

Firstly I will produce the irrefutable proof that the total repayment of debt is collectively impossible from the day it was born under the Anglo-Saxon heritage private profit central banking model. That there is always less currency of any form in circulation than what is owed to the financial sector as interest bearing loans. Thus a few insiders will win by design - a few more players will win by luck - but for most the the unaddressed compounding interest collectively marches them straight into debt peonage or debt enslavement. No different to a casino designed and owned by the house to favour the house by mathematical certainty. Only this is a casino that the populous have no choice but to play on a daily basis as it is decreed that its chips are the only thing accepted as payment of taxes.


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 discount interest supply 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 Pg 19;
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
As made clear in the following Jan 2010 Official Information Act reply from New Zealand Minister of Finance Bill English the cash injection referred to by the New Zealand Bankers Association above is the very same monetised debt we receive in electronic form from the privately owned primary bond exchanger's that is then introduced into our domestic system;

Office of Hon Bill English
Deputy Prime Minister Minister of Finance
Minister for Infrastructure
1 8 JAN 2010

Dear lain Parker
Thank you for your Official Information Act request, received on 27 November 2009. You asked a”number of questions about the nature of government bonds; as well as about the nature of money and the banking system.

1. Could you please tell me what a Government Bond is and what role it plays in our economy?

As you point out on page 7 of your submission, New Zealand government bonds are wholesale, New Zealand dollar denominated, fixed-term debt securities. They are secured by a charge upon and are payable out of the revenues of the Crown. Cash received by government bond issuance is used to fund goods and services provided by the government, e.g. roading, hospitals and welfare payments. Government bond yields provide an indication of the “risk free” rate of return in an economy and provide companies and households a benchmark with which to compare returns against those of alternative investments.

2. Could you please tell me who in the world of high finance, as Primary Bond Dealers, has the right to buy or monetise government debt bonds before they decide if they do or don’t on sell them on the secondary bond market?

New Zealand does not have “Primary Bond Dealers.” The term “Primary Bond Dealers” refers to institutions that, for example, trade directly with the United States Federal Reserve, where they are required to participate when the Federal Reserve holds securities auctions. In New Zealand, the nearest equivalent institutions are called registered tender counterparties. The main difference between the US and New Zealand is that registered counterparties are eligible but not required to participate in government securities tenders.
To qualify for registration as a tender counterparty, an institution must have a minimum credit rating of A-/A3, or have their obligations guaranteed by a parent entity with a minimum credit rating of A-/A3, or be a Crown financial institution.
Tender counterparties are primarily either New Zealand or Australian incorporated banks.

3. Are the Primary Bond Dealers private or publically owned institutions? That is not those that buy bonds on the secondary bond market, but the Primary Bond Dealers?

Tender counterparties are primarily private sector banks.

4. Could you please tell me what they use to buy our government bonds and if that medium of exchange existed before we pledged to pay it back with attached interest out of the future taxes of the nation or was it an electronic debt book entry, not anyone’s existing savings, but an electronic book entry that brings into circulation new money?

People purchasing government bonds must do so with New Zealand dollars. Settlement of the transaction between the purchaser and the Crown is by electronic cash transfer rather than physical cash. All else being equal, bond purchases result in a reduction in settlement cash balances of the banking system (either at commercial banks, the Reserve Bank or both) as cash is transferred to the Crown. An explanation for how this cash may originally be created is included in the answer to question 5 below.

5. Is it true that in excess of 90% of the money supply in circulation in New Zealand entered circulation as interest bearing debt owed to the banking network?

It is correct that most of the money supply in New Zealand has been created by the banking sector. This is done through the process of financial intermediation. Commercial banks, and other financial institutions, take deposits from members of the public and firms who wish to hold cash in the form of bank deposits. They then lend to individuals and firms who want to borrow — in the form of mortgages or business loans. This process serves to channel funds between savers and borrowers. It also shifts the risk of lending from individual savers to the banks, thereby reducing the risk of lending.
This process of
 intermediation involves the commercial banks lending a greater value of funds than the cash they reserve to meet expected deposit withdrawals. This is done because at any one time only a fraction of depositors will want to withdraw their funds. Banks therefore need to keep only a fraction of their deposits in reserve in order to meet those demands. Because the banks lend more than the total amount of cash held in reserve in the system, credit is created – thus increasing the money supply.
The exact proportion depends on the definition of the money supply. Using the most common definition of the money supply as M2 (i.e. currency held by the public + balances in cheque accounts + all other business or personal deposits that are available on demand), 
the October 2009 data show that the part not accounted for  by currency held by the public is 95%.
Data on money aggregates can be found on the RBNZ website at:
http://www.rbnz.govt. nzlstatistics/monfin/cl /data.html.  

6. Prime Minister Key, could you please describe your activities as a member of the Advisory Board of the Foreign Exchange Committee of the US Federal Reserve between 1999-2001?

I refer you to the reply from the Office of the Prime Minister.


7. Could all please advise me if the US Federal Reserve and the Bank of England are privately owned institutions that sit within their respective governments or publicly owned institutions within their governments?

I refer you to the following pages on the websites of the Board of Governors of the Federal Reserve and the Bank of England respectively for this information:
http://www.federalreserve.gov/Qf/pf.htm

http://www.bankofengland.co.uk/about/leciisIation/leciis.htm

8. Could you please explain to me the role and relationship of the American Financial institution — Northern Trust — in regard to it being appointed custodian of our own NZ Debt Management Office?

The New Zealand Debt Management Office (NZDMO) has appointed Northern Trust as global custodian for NZDMO fixed income assets. The appointment followed a competitive tender exercise which was completed in 2008. Custodian duties provided by Northern Trust for the NZDMO are standard for financial institutions and include: the provision of trade settlement services; safekeeping of assets; and other administrative functions.

9. Could you please tell me if in New Zealand, a “new” mortgage at issuance, before it becomes tradable, is loaned to a borrower by a registered bank, is that mortgage created as a debt book entry account, not anyone’s existing savings, but an electronic debt book entry creating “new money”?

The creation of a new residential mortgage will generally result in new money (bank deposits) being created. The bank grants a new loan to a purchaser, who uses the cash to buy property from a vendor. The vendor then may spend or save the proceeds boosting deposits in the financial system.
You also ask for a list of the names of the officials who contributed to this reply. I am withholding these names in full under s.9(2)(g)(i) of the Official Information Act — to maintain the effective conduct of public affairs through the free and frank expression of opinions.
You have the right to ask the Ombudsman to review my decision.This fully covers the information you requested. I hope you find this information useful
Yours sincerely
Bill English 

Minister of Finance
end

Government Securities (Bonds and Treasury Bills) are currently issued and exchanged for the created credit of the private primary bond exchangers then pledged to be repaid out of future taxes of the borrowing nation. Many countries now have debts in excess of their level of sustainable natural resources to support enough commerce to ever tax enough to repay the ever compounding debt. The bankers are now insisting, just like pawnbroker shops - that the borrowers transfer real assets into ‘custodian’ banks such as Northern Trust so they are easily at hand when the inevitable debt repayment crisis occurs.
You can forget about the tender process mentioned being of some sort of consumer protection in the decision of just which one of these ‘custodian’ banks you are going to pay to inevitably remove your necessities of life from you - as they are generally all cross-owned by the private primary bond exchangers.
That made clear we will now continue with the expose of the impact it has had upon the social and economic development of New Zealand. At a time in history at the end of WW1 leading into the Great Depression when perhaps more citizens than ever had become more widely aware than ever of the crimes committed against humanity by the privately designed and controlled Anglo-Saxon heritage banking network and what was to come if they went unimpeded - and not long after the Independent Labour Party had been formed in New Zealand(1909) - another group of banking system reformers became internationally prominent from the 1920′s onward. 
The C H Douglas Social Credit movement were just as fully financially literate in the area of Monetary - Banking and Credit Systems and thus the need for reforms. They however had some different ideas to those of the Labour Movement as to just what form those reforms should take.
C H Douglas defined ‘Credit’ as an ‘estimate of compacity to pay money’, I feel it is not wrong to define Public Credit and C H Douglas Social Credit as two denominations of monetary easing. Many founding Labourite’s believed in introducing the Primary Monetary Base by spending it into circulation without private bankers compounding interest attached to build public infrastructure that provided the necessities of life made available free by nature as a public service. That portion of the Primary Monetary Base backed by the productive assets it created could remain in circulation as a grant providing the means of exchange for the citizenship and a store of value without causing inflation or having to risk ‘investing’ it to prevent inflation eroding its future value. There would then be a secondary level of Public Credit for worthy projects that would would be taxed or have a ‘simple’ interest attached to cover only the cost of administration of the monetary system and retire sufficient money from circulation as to suppress inflation should it occur and prevent the system from debasing itself.
Any simple interest would be significantly less than the usurious compounding interest charged under the present regime and any taxes significantly less having not to seek the means of repayment of ever increasing cost of debt servicing caused by compounding interest - and the price of goods and services significantly reduced by reducing the cost of compounding interest factored into pricing. National internal economies would be able to balance themselves to the benefit of as many citizens as possible with exports being the secondary consideration - not the primary consideration as under the current foreign debt stimulus - export led rapayment model that is an impossibility by mathematical formula.
C H Douglas put forward the evidence that there was a lack of purchasing power for the wider citizenship compared to what was able to be produced because of the current monetary system - especially after the increase of machinery in the production process. The ‘Gap’ as he referred to it was laid out in what he called the A + B Theorem. This was disputed by the financial spin doctors at the time - but after many decades of ‘Globalisation’ when the world - due to modern technology - is the smallest it has ever been I say it takes little proving today given the fact that under the current compounding interest based debt regime growth has never over the longterm - apart from anomalies such as war and after bankruptcy imposed asset sales - exceeded the debt you are forced to take on to attempt the growth. An estimated 24,000 people a day still die of starvation when the corporate inventory lines are full of food.
C H Douglas main ideology plank was working out just what the ‘gap’ was in dollar terms - then dividing that sum by the population - then spending Social Credit into circulation without the private bankers compounding interest as what he called a National Dividend - just like a ‘shareholder’ in a corporation all citizens were to get a share of the nations unlocked wealth as the event of the machinery age made their labours less required to help unlock that wealth. The National Dividend was to be issued without any work test.
Before Social Credit became a political party in its own right in 1953 Social Creditors used to inhabit the ranks of most political party’s in New Zealand. Although the Independent Labour Party were very close in the need banking reform ideology - most of its members questioned the stability of issuing large amounts of Social Credit into the populous and counting on the populous not to go on a consumer binge that would still lead to internal disparities of wealth that would be as destabilising and as inflationary as the status quo. They also had their concerns about the lack of a work test out of concern that if everyone could get money without working many might choose not to participate in the upkeep of society.
 New Zealand Independent Labour Party’s Public Credit And C H Douglas Social Credit Are So Very Similar with few differences. Sadly those few differences have stagnated the effectiveness of the monetary - banking and credit system reform movement of New Zealand at a time when they need to be more effective than ever.


C H Douglas wrote this of the situation in – Break Down Of The Employment System – 1934

“It will usually be found that when the quasi-practical objections have thus been disposed of, the objector discloses his real position, which is what he calls a moral objection, that he hates the very idea that anyone should be comfortable in this world without being made very uncomfortable in the process. Some years ago I had the experience of discussing these proposals with Mr and Mrs Sidney Webb(New Zealand Labour), and after disposing, one after the other, of the objections raised to the feasibility of the scheme, 
I was met with an objection with which, I confess, I found myself wholly unable to deal, and I recognize that objection in the Labour Party Report on the Douglas proposals.”

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. It must be said it would appear a rather confused and contradictory Michael Joseph Savage at times. 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 acquiring the compulsory 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. 

So as the current New Zealand Independent Labour Party head down the path to become the impostors they are at present - who would not currently seem to have a clue of their long lost founding ideals that are even more needed today than ever for the very same reasons. To the point that Private Public Partnerships as a means of finding money to build public infrastructure sits officially in the economic policy section of its 2008 election manifesto.
At the point it had become clear that Labour had abandoned its Public Credit credentials it appears that both Public Creditor's and C H Douglas Social Creditor's gravitated to the only remaining option - the Social Credit Party. They had some great success before the advent of Mixed Member Proportional(MMP) voting system. Polling 21% of the vote in the 1981 election but only winning two seats in Parliament - a major reason MMP came about by national referendum vote.
In my studies of the monetary - banking and credit systems - before I knew of the New Zealand Labour Party’s history of Public Credit I stumbled across the modern spin off of the original Social Credit Party - now the Democrats for Social Credit(DSC). Before knowing what I now know I stood for DSC as a candidate for Taranaki King-Country in the 2008 election. An experience I don’t regret as I thought they were the only credit reform option in the nation at the time with any history and infrastructure - and I met some of the most decent civic minded tireless people you would ever wish to have in your trench.
The sad thing is knowing what I now do of the wider history of credit reform in New Zealand I am amazed that Social Credit did as well as they did over the years given the factional rift in the party over just what form that credit reform should take - that of Labourite Public Credit basis or that of C H Douglas Social Credit including a National Dividend Payment without a work test. Also disagreement over the practicality of a Financial Transaction Tax(FTT) The Party in my personal opinion is stalemated to the point of probably never again gaining traction.
In my personal opinion I now deem Public Credit as far more viable an option over that of fundamental C H Douglas Social Credit. At the risk of offending those I never wish to - but know it must I feel that the clinging to the fundamentalist ideas of C H Douglas have made the Social Credit Movement easily ridiculed by co-operatives of predatory foreign lenders. I also believe that Productive Public Credit if implemented alleviates the need for FTT - thus could put the debate to rest. I feel this allowed the likes of Bob Jones to easily dent DSCs popularity so much so that it contributed to the Party voting to change its name to the Democrats in 1985.
All credit reformers know the importance of having your own national bank with its own clearing house software for transfer - payment and settlement to deliver your own public credit money through. The Democrats must be congratulated for their part in the formation of KiwiBank in 2001 when they were part of the Alliance Party in coalition Government with Labour in 1999. The Alliance Party broke up toward the end of the term. The Democrats renamed themselves the the New Zealand Democratic Party for Social Credit or Democrats for Social Credit in short.
New Zealand - 2014 - is facing its darkest hours at the hands of the Anglo-Saxon heritage private central banking network and their subsidiary multinational corporations and knowing what I do now of the history of credit reform in New Zealand I feel the best hope of success of ever having any success in the urgent time frame needed is for every credit reformer with a knowledge of monetary - banking and credit systems - in the interest of credibility - drop the pursuit fundamental C H Douglas Social Credit in its entirety and hammer home to the grassroots of Labour in a concerted campaign the founding ideals of the Labour Party that are even more needed today than ever for the very same reasons.

Below details Michael Joseph Savage explaining John A Lee’s State Housing Scheme funded by Productive Public Credit - the National Opposition Leaders remarks after it was done and Labour's financial spokesman Walter Nash’s comment twenty seven years to late - should assist anyone wondering just how to articulate such an incomprehensible proposition for someone with no financial system knowledge whatsoever in order they might be able to understand it;


Man to Man by Tom Skinner 1981 – Michael Savage explained the State housing scheme to Tom Skinner of the (New Zealand) Federation of Labour as such;
Pg 45 – “I was with Joe on one occasion when he began chatting about the ramifications of the Governments State Housing Scheme. He told me … how the construction of those houses created assets in a productive way. The Government created the money through the Reserve Bank at a moderate rate of interest to cover the contract price, which paid for materials, tradesmen’s wages, the purchase and development of the land and all the other essentials required to finish the house. On completion the house was transferred from the Housing Division of the public works department to the State Advances Corporation – in effect from one department to another. The corporation was the renting agency responsible for selecting the tenants, collecting rents and maintaining the house and the property. The philosophy was that as the money was created for productive purposes no loss could occur if it were not repaid from one department to another. Meanwhile, during construction, tradesmen had been paid wages which had been spent and absorbed into the economy. But it was solid money backed by the creation of assets. People had been kept fully employed while the government built homes for the people.


Tom Skinner;
While Joe spoke I began suddenly to grasp the Labour philosophy related to the creation of credit. It set me off thinking about money and what it meant to the economy. The Government, figuratively speaking, could rub a state house debt out of the books because a building stood in its place. But money created by the banks in order to gain profits in the form of interest was the other side of the coin. It was unproductive, inflationary creation of money if unmatched by equivalent goods and services…..”
I have read and believe that monetary mismanagement is the greatest evil of our time. It breeds injustice, increased costs and, as the root cause of inflation, it diminishes the value of our money. Governments should carry out their pre-election promises and take the necessary steps to reform the monetary system. It can be done only by making the State the sole authority for the issue of currency and credit….. unfortunately, in this area politicians seem to be abysmally ignorant of elementary financial and economic truths.”

From The Cradle To The Grave – A biography of Michael Joseph Savage (First New Zealand Labour Party Prime Minister 1935-1940) by Barry Gustafson 1986;
Pg 198-9
The National Opposition (1936) was astonished by the use of Reserve Bank credit for housing, which disregarded traditional principles of budget finance. Forbes (George Forbes ex Prime Minister 1930-5 Great Depression era) admitted confidentially to Stewart (William Downie Stewart Jnr – Finance Advisor);
This places them in a unique position, the houses after erection carry no interest on capital cost, and for instance a thousand pound house can be let for 5s per week and be a financial success. The millennium seems to have arrived and it makes one wonder why we had to struggle in the bog, when there was such an easy way out of our troubles, houses, after being built with the highest paid workers in the world, at the lowest cost heard of, makes our policy of orthodox finance seem almost prehistoric.”

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.
end

Surely now the onion is beginning to peel to such an extent that even the slightly financially literate can now see - as opposed to sense - that something is just not adding up!

The exchange between New Zealand Prime Minister John Key and Leader of the Opposition Phil Goff earlier this week (November 9 2010) regarding the NZ dollar was very enlightening:
Labour leader Phil Goff earlier reiterated his party’s proposals on monetary policy, saying it should not just be reliant on the current objectives and the current tools.
“Clearly the [NZ] dollar is at such a high level that it’s helping to destroy the manufacturing industry in this country at the moment,” Goff said.
“We have to take that seriously and I would expect the government, with its army of bureaucrats, to have some answers, so far we've seen none,” he said.
Key later retorted that Goff was talking about the same 'army of bureaucrats' that worked for Labour when it was in power.

The above is very insightful in openly disclosing that the monetary and economic advisory bureaucrats overlap governments. Infact many have been behind the scenes for several decades. Research back even further you will discover that unto 1951 New Zealand had an upper house referred to as the Legislative Council. For most of its existence it was the conduit of the London Colonial Office made up in the main of members of the financial sector including the private owners of the patriotically named Bank of New Zealand – Thomas Russell and Frederick Whitaker who were involved in many well documented legislative abuses and Maori land grabs to line their own pockets that all of society are struggling to fix unto this day.


After New Zealand had suffered the indignity of two receivership's at the hands of our foreign bankers in 1961 and 1984 Rob Muldoon who was very aware of the historical predatory actions of the banking elite included the below excerpt on page 34 of – The New Zealand Economy, A Personal view, by Rob Muldoon 1985 – which was very much an account of his attempts to prevent what occurred then and is again occurring now. If anything Rob Muldoon was guilty of the most I would suggest it was underestimating the depth and breadth of their global influence:

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

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 busineses of legitimate enterprise provide for you to protect them from financial free raiders!

On the record official documented impact of global private banking pyramid fraud upon New Zealand.

Presently New Zealand's domestic banking network solicits loans and then refinances with foreign private central bankers at a lower rate of interest to cut a profit margin. How those foreign private central bankers fund themselves - who those foreign private central bankers are - and just how much they have gained from what is clearly a systemic pyramid scam is not that hard to find if you bother to look – but quite some effort has been made in New Zealand legislation to keep quiet the internal dynamics of it – as evidenced below;
First of all - 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.

Pg 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

New Zealand has had a chronic ongoing historical foreign borrowing balance of payment crisis since 1833;

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

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 discount interest supply 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 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
In New Zealand the Minister of Finance has the power to borrow on behalf of the government. The day-to-day operations arising from this authority have been delegated to the New Zealand Debt Management Office (NZDMO), a unit of the Treasury since 1988.
Insight into New Zealand Debt Management Office (NZDMO)

Many politicians in New Zealand are one or two social issue lobbyists that are completely financial system illiterate and very dependent upon second hand advice - so the concerns for the nation are obvious when that advice is coming from people educated from textbooks that have now been admitted at the very highest level of financial academia too have been in many cases been completely misleading in regards to the internal dynamics of the role of credit and currency within a money system.


The identity of the foreign Wholesale Credit 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


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.
end

Please just type - KPMG fines - into a Google search – then read of the many cases of financial fraud that KPMG - and the often referred to 'big four' global accountancy houses - have been involved in when assisting financial institutions to commit pyramid frauds - then please consider how prudent it is to continue taking second hand auditing advice from them - upon financial system issues so crucial to the equal economic opportunity of our society?

Anybody having taken the time to read this irrefutable on the record official document proof of - the crime of Fraudulent Conveyance of Predatory Lending of Counterfeit Credit - by the Anglo-Saxon Heritage Private Central Banking Network that we are suffering and - then chooses to remain silent on the most contributing factor of the ever growing external and internal inequities within our society - is undeniably committing an act of tyranny against wider society - plain and simple!
Any political party that can not articulate an evidence supported case for or against the foreign private authority over the nations accountancy of credit and issuance of currency - that includes the undeniable - admitted at the very highest levels from on the record official documents of how the current monetary system truly works - should remain unelectable!


Thank you for your time.