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”.


Henry Ford“It is well enough that people of the nation do not understand our banking and money system, for if they did, I believe there would be a revolution before tomorrow morning.”

Henry Ford, founder of the Ford Motor Company.

The role of the Reserve Bank

The modernised system would actually reduce the role and influence of the Reserve Bank. Currently its main purpose is effectively to prop up and enable the current scheme run by the banks, as well as manipulate interest rates. Post-reform, it would merely act as the provider of the payments system, and the secure holder of real money (through providing the Customer Funds Accounts, Investment Pools and Operational Accounts to banks). This reduced role minimises the possibility that human error or poor judgment at the Reserve Bank could lead to wider problems in the economy.

The Monetary Policy Committee would also have less power and influence over the economy. Although it would gain the power to create new money (within constraints), it would lose the power to set interest rates. The Reserve Bank currently tries to encourage banks to create money by lowering interest rates to get more people to borrow.

By lowering interest rates to encourage a small amount of extra borrowing, they also wipe out the interest income that many pensioners survive on. Then, when the economy is 'overheating' and they try to raise interest rates to stop new borrowers, previous borrowers (potentially the very borrowers who stimulated the economy out of a recession by going into debt) see their interest payments rocket and their disposable income massively reduced.

This is like using a sledgehammer to crack open a nut. Post-reform, the MPC would simply authorise the creation of the new money that they believe is needed to stimulate the economy, having a much more targeted effect without harming anyone else.

The money supply would be easily and precisely measurable. The current, real-time money supply could be publicly accessible on the Reserve Bank’s website.

The real economy vs the financial sector

The modernised system would make the financial sector less of a drain on the rest of the economy and more of a service to it. Contrary to what is commonly stated, the financial sector currently does not create much wealth - it merely extracts wealth from the rest of the economy. Our reform restores the financial sector to its proper role of facilitating the creation of wealth and value in the economy.

The creation of wealth and value in the economy is primarily achieved by entrepreneurs working with engineers, scientists and salt-of-the-earth working people – who were all educated and trained by teachers and lecturers – all of whom are kept in a state of productive good mental and physical health by nurses and doctors and the health system, helped along the way by the recreation and entertainment industries.

These are activities that add value to society, and a well-functioning banking system should enable (rather than hinder) these activities.

Lending and economic stability vs the housing bubbles

Lending and investment would be naturally channeled to entrepreneurs and productive businesses, rather than being used to create bubbles in the housing market and push housing costs out of reach.

The modernised system would remove the root cause of the recent house price bubble - endless creation of money and debt by the banking system. The 200%+ house price inflation between 1997 and 2007 has left households with a choice of either working for an extra 10 years, or accepting a significantly reduced standard of living throughout their lives.

By phasing out the national debt and withdrawing government bonds as an investment option, investors and pension funds would need to direct their money towards productive uses. As they start to lend to corporations at lower than the cost of borrowing from the bank, the banks will in turn be forced to find other borrowers, and will therefore start lending more to smaller businesses and entrepreneurs, stimulating the economy from the ground up.

The modernised system would ensure that we direct more money into socially useful activities, as decided through the decisions of thousands of consumers and savers (rather than the priorities of a few bankers).

Rather than pumping 60% of all new money (which is presently created by the banking system through the loan-making process) directly into the housing market (creating bubbles and pushing the cost of housing out of reach), the distribution of this new money could occur first through thousands of ordinary workers, who by the law of averages will make a better decision on which businesses should be supported (with their spending)




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