Letter or Email to send to MP's or those you wish to enrol in our campaign
Title of email: Cut the benefits to Bankers out, not the things we care about.
Our current banking system started out in Britain in 1694 and is totally unsuited to present day life. The Governor of the Bank of England Lord Mervyn King said in 2010 “of all the many ways of organising banking, the worst is the one we have today.”
My name is ____ and I would like to draw your attention to one simple act that could revitalise the New Zealand economy: stop overseas private banks from creating our money supply and place that privilege in the hands of the New Zealand Government.
- Common belief is that banks lend out people’s savings, acting as intermediaries – they do not.
- Banks operate under a risk based system where they need only hold 8% of the money they lend out.
- Banks create the loan out of thin air by simply entering numbers on a spread sheet. They then loan that money to you and me at compounding interest which we pay for from our hard earned income.
- There is no enabling legislation to allow the banks to do this.
- Similarly, banks do not have the money they lend to Local and Central Government for infrastructure projects
- New Zealanders, its Government and local bodies pay interest on money the banks do not have and the money paid in interest (real money) then disappears overseas as repatriated profits, creating a huge hole in our balance of payments.
- Our level of debt (personal, Government and Local Body) is rising and our discretionary spending is contracting. We have less money to spend on essentials as money is syphoned off to service debt.
- Because local and central government are paying interest on money the banks do not have, our taxes and local body rates are higher than they need to be.
- This privatised money system encourages banks to lend more money because the more money on loan, the more profit. Our money supply doubled in 10 years.
- No money is created to cover the interest due. This is the reason we experience scarcity. When every dollar carries compounding interest, more money is required so that people can earn and pay the interest. This is the reason the system is likened to a Ponzi scheme.
- The Government needs to cut out the banks and introduce money directly into the economy. This will save $4 billion a year in taxes and a further $1 billion a year in rates in interest payments alone.
- This is not a new proposition. Money was injected into the economy in 1936 by the first Labour government to finance the construction of state houses. As a consequence, tangible assets were created, people were employed in meaningful work and New Zealand emerged from the Great Depression sooner and in better shape than many other countries.
- Under this solution, there will still be a role for banks, but they will only be able to lend out the money they have on deposit. This will eliminate the potential of runs on the banks as well as the boom and bust cycles.
Following are links to supporting articles that expand on the problem and the solution:
- An extract of the August 2012 IMF Working Paper titled "The Chicago Plan Revisited". The paper endorses the approach I suggest and describes the current practice of money creation by private banks as “an extraordinary privilege that is not enjoyed by any other business” (Page 5). I suggest you read the first eight pages.
- The November 2011 edition of New Zealand Investor magazine devoted its front page and editorial to the practice.
- The July 2012 edition of New Zealand Investor has an article by economist Raf Manji devoted to direct stimulus, where the Government introduces debt free money directly into the economy, using the rebuild of Christchurch as one such opportunity.
- Seven Sharp also featured the issue and the seven minute clip went viral and was seen around the world
For more detail check out the Positive Money New Zealand website.