Press release 12 September 2018
How to protect our economy from the next GFC (Global Financial Crisis)
The New Zealand financial system is approaching crisis point due to its crippling level of private debt, which is now more than 90% of our GDP. Ten years on from the collapse of Lehmans Brothers in September 2008 and the start of the Global Financial Crisis and not much has changed.
Positive Money New Zealand is an advocacy group seeking to secure our financial future. It is launching a petition to give the Reserve Bank of New Zealand the exclusive ability to issue all New Zealand money, whether notes, coins, or electronic. Money issued by the Reserve Bank would be called sovereign money.
Don Richards, National Spokesperson for Positive Money says "Our current debt-based financial system has 97% of our money supply created by private banks at the click of a button to finance loans and mortgages. Our Reserve Bank has been relegated to issuing just 3% of our money in the form of notes and coins.
"Privately owned banks create money "ex nihilo" (from nothing) lending this created money to you and me with interest added. This new money is pumped into housing ensuring the cost rises out of proportion to the rest of the economy. It is how banks make huge profits with most of that money going overseas keeping the New Zealand economy on its knees " Mr Richards said
"More people must get into debt than repay their debt for our economy to grow in a debt-based money system. Making things worse, when bank loans are repaid, the money is destroyed and can't be lent out again. The money was created from nothing and when repaid it returns to nothing.
This system of debt-based money is unsustainable. As the former governor of the Bank of England pronounced in 2010 "Of all the many ways of organising banking, the worst is the one we have today".
"With the Reserve Bank creating all of our money, new money could be used to fund infrastructure projects. The money would stay in circulation, rather than being destroyed upon repayment. This is not a new idea. In 1936, after the first great depression, our Reserve Bank injected millions of pounds into our economy for infrastructure projects enabling the building of thousands of state houses. "
"By moving our banking system to having the Reserve Bank issue all of our currency and not debt-based we will have a financial system that has been proven to work rather than one that fails every 10 to 15 years" concludes Mr Richards
For more information, contact Don Richards National Spokesperson for Positive Money New Zealand.
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