“The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it. The process by which banks create money is so simple the mind is repelled. With something so important, a deeper mystery seems only decent.” Why should I worry about the New Zealand Banking System?
The impact of increasing debt levels may be lost on a lot of people. If you can locate yourself in one or more of the following categories, this may be your future:
I am a student leaving university:
- You find jobs scarce in a contracting economy.
- Your student loan takes longer to pay off in a low wage economy.
- You must contribute to “Kiwisaver” as National Superannuation may not be available in 2040.
- You have little money left over to save for a deposit on a house and pay for the basics let alone “luxury” items.
- You will be trapped in the debt cycle for most of your life.
I am a looking to buy my first home
- Even if you have the luxury of two incomes, you must borrow heavily.
- Raising the money for the deposit in a low wage economy will take you a long time while property prices keep rising.
I have bought a home in the last five years.
- House prices are so expensive that you may only be able to service the interest on the mortgage.
- A modest increase in the interest rates of 1% on a $250,000 mortgage will mean an extra $2,500 per year in interest payments, diverting money from other commitments.
- After paying interest on a large mortgage you will have little discretionary money for basics: food, heating, doctors’ visits, a reliable car, maintenance on the house, your children’s education and welfare.
- You have no money for “luxury” items.
- Your wages do no not rise at the same rate as outgoings (rates, heating, food etc.) and you become poorer.
- You are trapped in the debt cycle for most of your lives.
I am renting
- You find rental properties scarce and there is intense competition.
- You are locked into longer term leases to secure accommodation.
- Your landlords are servicing large mortgages and have less discretionary income for repairs and maintenance.
- Your wages do no not rise at the same rate as outgoings (rent, heating, food etc.) and you become poorer.
I am a retailer or a service provider
- An ever increasing chunk of your customer’s discretionary income goes into servicing debt and there is less money spent on goods and services.
- Luxury items only move during sales and there is a permanent reduction in margins.
Your income does not rise at the same rate as outgoings (rent, rates, insurance etc.) and you become poorer. - Retailers close up shop.
I am a homeowner, I have paid off my mortgage and I have children under 30
- You may need to use the equity in your house to assist your children to purchase their first home.
I am a tax payer
- The New Zealand government is currently paying $4,000,000,000 each year on interest payments alone. This money could be better spent on education, health and infrastructure projects such as rebuilding Canterbury.
- As more tax revenue is diverted to repaying debt and the accruing interest on the remaining debt, the government seeks to increase revenue through raising GST, selling off productive state assets, mining in our National forests, fracking and off shore drilling for oil.
I have paid off my mortgage, I do not have children under the age of 30, I am not in retail and the service sector and I am comfortable paying higher taxes.
- The New Zealand economy limps along and spending on infrastructure declines. The roads and services deteriorate and over time New Zealand sinks into “Third World” status.
- More people fall below the poverty line as wages do not keep up with outgoings.
- There is a loss of sovereignty as our money supply is held by private Australian banks who are in turn majority owned by American and British interests. Should any one of these three economies fail then New Zealand’s liquidity would be jeopardised. This almost happened during the 2008 Global Financial Crisis.
