May 2017 Positive Money New Zealand issued a press release seeking clarity from the Reserve Bank on how our money is created.  They still refer to intermediation by the banks, which is not how our banking system works.

5th November 2016 An article in The Guardian newspaper in England argued that abolishing debt-based currency holds the secret to getting our system off its addiction to growth.

5th September 2016 KPMG released a report, commissioned by the Prime Minister of Iceland, titled "Money Issuance" The report looked at money created by the Government.

28 March 2016 Bryan Gould has agreed to be the Patron for Positive Money New Zealand.

Bryan is a respected commentator on economic matters, an author, academic and Companion of the New Zealand Order of Merit.

31 October 2015 A monetary reform group in Switzerland has enough signatures for a referendum on who creates their money supply.

14 October 2015 The Finance Commission of the Dutch parliament discussed monetary reform.

31 March 2015. The Telegraph in London reports on the Icelandic governments plan to have their central bank issue their money supply and calls it a radical plan.

22 November. The British parliament debated money creation last week, for the first time in 170 years. There was cross-party support for a proposal to set up a monetary commission

23 September. A new generation of young people, dubbed ''property orphans'' may be destined to be renters for life.

17 September. The Bank of International Settlements (BIS), the bank used by central banks, confirmed New Zealand houses are among the most "unaffordable" in the world compared to people's incomes.

6 September. Bruce Bisset of Hawkes Bay today reveals the true story behind the so called Rock Star economy.

25th April 2014 "Strip private banks of their power to create money”: says the Financial Times’ chief economics commentator Martin Wolf, who endorses Positive Money’s proposals for reform

15th March 2014 - In a historic move The Bank of England quarterly bulletin explains how money is created. Whenever a bank makes a loan, it creates a deposit in the borrower’s bank account, thereby creating new money. The bank says that this differs from the story found in some economics textbooks.

16th August 2013. The retiring head of the Financial Markets Authority apologised for the mistakes made saying “You were let down”.


The Earl of Caithness“… our whole monetary system is dishonest, as it is debt-based… We did not vote for it. It grew upon us gradually but markedly since 1971 when the commodity-based system was abandoned.”

The Earl of Caithness, in a speech to the House of Lords, 1997.


A monopoly on the creation of money

“The essence of the contemporary monetary system is creation of money, out of nothing, by private banks’ often foolish lending.”

Martin Wolf, Financial Times, 9th Nov 2010

Debt is not a choice

With 98% of money issued as debt, in order for some individuals to be debt-free, others must be in debt.

As there's currently $168 billion in the economy, and all this money was created by banks as debt, then $168 billion of debt must be shared between us. This means that in order for some people to live debt-free, others must go into debt. This creates a situation where we are all fighting in effect to ‘keep our heads above the water’ - to avoid being the one who falls into debt.

However, it is mathematically impossible, when all money is created via banks making loans, for the public as a whole to stay out of debt. If you manage to stay out of debt, it means someone else has to sink further ‘under the water’ in order to maintain the money supply.

In other words, debt is not a choice in the current system.

Redistributing income and wealth to the banking system

By creating NZ’s entire money supply as loans, the banking sector is able to collect interest at an average rate in excess of 5% per annum on virtually every dollar in existence. This means in order for the non-banking sector, about 96% of the New Zealand economy, to have a money supply with which it can trade, it must pay around 5% of all the money in existence to the banking sector each year. This results in a regular and ongoing transfer of wealth from the non-banking sector to the banking sector.

This generates huge unearned income for the banking sector

This system creates three re-distribution effects:

1. From the Poor to the Rich:

All money is created as debt by the banking system. This shifts the ‘baseline’ of poverty down to zero or negative, rather than a low but positive bank balance. Because it is those on below average incomes that end up with much of the debt, they end up paying interest to the banking sector, in effect meaning that the poor subsidise the rich.

2. From the ‘Real’ Economy to the Financial

Businesses are also in a similar situation. The ‘real’ (non-financial), productive economy needs money to function, but because all money is created as debt, that sector will also end up paying interest to the banks. This means that the real-economy businesses - shops, offices, factories etc - end up subsidising the banking sector.

3. From the New Zealand economy to Australia and beyond.

Because this debt-based system redistributes money to the banking sector, a significant portion of New Zealand’s income leaves the country each year as repatriated bank profits.
All of these re-distribution effects are inherent to the system and will continue year after year as long as the money supply is issued by commercial banks as debt. It is very possible that the ‘upwards-and-inwards’ redistribution of income caused by this system of issuing money cancels out any downwards-and-outwards redistribution of income through the welfare state. Looked at another way, the welfare state may only be necessary thanks to the design of the banking system, and could be significantly scaled back if the method of creating money was modernised.

Control over the use of money

One of the basic ideas of capitalism is that money will be naturally channeled to the most productive use - in other words, the best business idea or most talented entrepreneurs. But by allowing banks to create the nation’s money supply and then distribute it as suits them best, this principle is very largely undermined.

We now have the situation where approximately 75% of lending goes directly into fuelling asset price bubbles such as housing, while only 25% is channeled to business and the productive sector.

The banking sector is failing to fulfill its supposed role in a capitalist economy.





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