We have launched a petition to parliament asking the House of Representatives to inquire into giving the Reserve Bank of New Zealand the sole ability to issue all New Zealand money, whether notes, coins, or electronic. Our Taranaki spokesperson Stuart Bramhall put her name to the petition as only individuals can initiate a parliamentary petition.
The petition will be a platform to educate people on the unsustainable nature of the current financial system and will inform them of our sovereign money alternative.
As we are using the parliamentary platform, the petition will ensure that a select committee be convened to consider the proposal. This will be a further opportunity to educate people, especially those on the select committee.
Followers of Positive Money New Zealand will be familiar with the problems of our current financial systems and the benefits of our Sovereign Money solution and the following is for those new to the conversation. After reading the content below we encourage you to sign the petition and browse the rest of this website.
Under our current debt-based system:
- Private banks create 97% of our money supply, from thin air and lend that created money to you and I at compounding interest.
- As the banks have a profit motive, they put most of that created money into housing which is low risk and provides them with a high return. This pushes up the cost of housing and starves the productive sector (where goods and services are bought and sold and people employed) of capital.
- When loans to the banks are repaid the money is not able to be lent out again and is destroyed. The money was created from nothing and when repaid it returns to nothing. More people must get into debt than repay their debt for our economy to grow and this is unsustainable.
- Because more people must get into debt than get out of debt, this fuels the growth imperative. The economy must grow to survive, and that requires more debt. The former governor of the Bank of England Sir Mervyn King said in 2010 “Of all the many ways of organising banking, the worst is the one we have today”.
- Private banks make huge profits from money creation, five billion dollars in 2017, with most of that money going overseas. That creates a huge hole in our economy.
- The Government borrows money from the banks to fund infrastructure projects such as roads, schools and hospitals paying five billion dollars a year in interest payments alone, when it does not need to.
Under the sovereign money solution:
- The Reserve Bank would create all of our money supply with an independent Monetary Policy Committee deciding how much money would be created.
- The newly created money would be spent into the economy for infrastructure projects and housing saving billions of tax dollars.
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. It proved to be highly successful and allowed for the creation of the welfare state.
- There would be a place for banks, but they would no longer be able to create money. They would need to get the money from those willing to invest. Their profits would be reduced to a sustainable level.
- Money from loans, once repaid, would be available to be loaned out again. This would reduce the growth imperative and our economy would grow organically.
- The cost of housing would stabilise over time as banks could only lend out what they had on deposit.
- The Reserve Bank would provide money to the banks to lend for the productive economy. This will allow the productive economy to grow and take on more staff. More tax would be paid.
- Taxation moneys that had previously been earmarked for infrastructure projects would be available to address child poverty, inequality, mental health issues and homelessness. Alternatively taxes could be reduced.
An IMF discussion paper titled The Chicago Plan Revisited, endorsed an approach similar to our petition. Issued in 2014, the paper said that bank’s ability to create money ex nihilo (out of nothing) created instability through boom and bust cycles. In addition, it said there was the possibility of runs on the bank as the banks liabilities exceeded the amount of available credit.
According to the IMF discussion paper, a system where the central bank (our Reserve Bank) issued the currency would smooth out the boom and bust cycles, eliminate runs on the bank and dramatically reduce both public and private debt. In addition, it would provide productivity gains of 10% and steady state inflation dropping to zero.
With a sovereign money solution, we will have a sustainable financial system that cares for society and provides a future for the people of New Zealand free from the crippling effects of too much debt. Please take the time to sign the petition.