Economic Tools for the 21st Century

The basic global problem is that the world’s money supply is created, owned and controlled by commercial financial institutions and lent into the system at

interest. The interest is not created, requiring more borrowing, resulting in exponentially increasing, compounding debt.

The whole world is heavily burdened with compounding debt. It causes deepening poverty, famine and in the last few decades, continuous war. Compounding debt is the underlying cause of regular and more frequent boom/bust cycles, increasingly severe recessions and the misery and loss suffered by business and small investors.

In Western countries, compounding debt causes ‘deindustrialisation’  the shifting of the manufacturing sector off shore to countries with few labour laws and no environmental compliances. It leaves behind unstable economies, and a growing, lowskilled work force.

Compounding debt takes the wealth created by people’s work and delivers it into the hands of nonproductive bank shareholders and speculators. It widens the gap between the rich and the rest of us.

Compounding debt causes stagnant wage levels, rising prices and failing business. It contributes to family breakdown, community dysfunction and national unease.

Compounding debt causes poverty, inflation and unemployment. It promotes poor nutrition, poor health and inadequate housing. Compounding debt fosters racism, sexism and other forms of exclusion. It breeds a savage, dogeatdog society.

Compounding debt drives people to gambling, drug abuse, crime and violence. It is a recipe for depression, despair and suicide.

Compounding debt deflects business income from sustainable production methods. It pollutes our water, air and earth through poorly regulated, profitdriven activities. It destroys rainforest and other fragile ecosystems, for the increasing production and unstable prices of cash crops such as coffee, chocolate, palm oil and soy beans.

Compounding debt forces cashstrapped governments, local bodies and individuals to treat urgent environmental problems as unaffordable ‘side issues’. It allows a small group of people to own and control the world’s wealth, leaving the rest of us to fight for a shrinking number of jobs.

Compounding debt causes commoditisation of resources that were once public utilities: power, water, and especially money. It causes commoditisation of social essentials that were once investments in the well being and future of the people: housing, health, public transport and education.

This is the state of New Zealand in the 21st Century. As fast as the ice caps melt, the debt mountain grows faster. So what are we going to do about it?

This party has a proud history of nurturing ideas well ahead of their time. Will we abandon that vision and the robust economic tools that support it? Will we cravenly adopt populist causes at the expense of our core policy of justice through economic reform? I say “No.”

The tools we have developed to reform the economy are more relevant in the 21st Century than ever before. The current Government is as ineffective as the last one, pussyfooting around the edges of the recession, tinkering with this bit and taking big slices off that.

Give us the opportunity to redesign New Zealand’s money supply as a public utility, and we will provide interestfree and debt free money to enhance the quality of life for all.

I won’t be like Roger Douglas, and timidly back down in the face of threats from the banking sector. When we can begin to progressively reform the hugely inefficient and openly biased tax structure with our revenue tools, I refuse to kowtow to financial industry bullying. They will NOT evade FTT as they evaded GST.

We are here today with the tools to reign in these powers and we are not going to lay those tools aside for political expediency. The Gap  some $50 billion and rising  is being filled with debt. What are we going to do about it?

Are we going to let the foreignowned banks continue lending at interest, to suck the wealth from the pockets of families to fill the pockets of the already rich? I say “NO”.

For too long the powers that be have proclaimed that only work can generate income. The powers that be are living proof that this is a lie. Many in the top income brackets live off unearned income. They are the real beneficiaries and bludgers on the nation.

It’s time to turn that around. It’s time to return to the people what rightfully belongs to them: their ownership stake in the country, and their inheritance of past wealth.

We have the tools to accomplish this. Using an economic tool box for New Zealand, we can provide a basic Kiwi income for every resident in the country. An income that is not tied to working hours, or to a dole for not working, or to a handout  and a slap  for being a solo parent. An income for every person that derives from ownership, inheritance and residency, as of right.

The banks won’t like it. Who will they lend to? Who will take on their credit cards and overdrafts? What will they tell their shareholders? They can tell their shareholders and their head office banks overseas:

“The game is over. In New Zealand, they finally figured it out.”

And we have figured it out, a long time ago. The country is in a mess, the tax system is in a mess, and the welfare system is in a monumental mess. People have to borrow to live, and we know how to fix it.

This is our point of difference.

This toolbox of reform mechanisms can transfer the wealth out of the pockets of the moneylenders and back to the families and businesses of New Zealand. Why would we want to hide the strengths and convictions that have helped us survive for so long?

In the face of political ridicule that masks fear, in the nervous silence of the media, in spite of the humble, exhausted ignorance of the very people we seek to help, still we work for a better life for this country and its inhabitants.

We work for environmental, social and economic justice. We work for quality of life and a standard of living that is shared by all, including those who come after us.

We are the guardians of a truth so profound it is not an option to back down under threat or ridicule. It is not an option to compromise with injustice. It is not an option to give up.

I mentioned a toolbox, and not by accident. In this toolbox there are five basic monetary reform tools that we can utilise to transform New Zealand into a showcase of sustainable prosperity that will be the envy of the world.

The first tool is interestfree lending, set up as a revolving credit facility or overdraft through a public utility. This tool has been employed successfully in the past, but never in a modern New Zealand economic environment. It is designed to replace the current inefficient sources of money with a cheaper, more efficient source.

The second tool is the creation of new money debtfree. This money will be spent into the system, increasing the money supply without increasing the debt. This tool is designed to help fund social investment such as a free health system, free education and a basic income programme.

The third tool is a Financial Transactions Tax, known as FTT. The primary function of this tax is to discourage speculation. FTT will also remove compliance costs for business, and help balance the government budget.

As a first step FTT will gradually replace GST. Any further replacements to the tax system will be done progressively and with due caution. There may be unforseen effects and changes of behaviour prompted by the implementation of FTT that will require adjustment.

The fourth tool is the Foreign Transfer Surcharge  FTS. Again, this tax is primarily to stop speculative currency trading. Any revenue gathered by FTS will go toward retiring overseas debt, restoring the balance of trade or reducing domestic taxes.

The fifth tool is the use of a repayment term instead of an interest rate to control demand inflation. The commercial banks will be required to manage the average repayment term of their loan portfolios, as the public utility directs for the good of the people of New Zealand.

Unlike the current debtbased financial system, these tools are not designed to ‘run the country’. They are designed to manage a money supply so that people can own and run the country. These tools are designed to empower people with income, with health, with skills and with opportunity.

They will free people from the tyranny of compounding debt and give them an economy that works for them instead of the system we have now that makes us tenants in our own country.

I am not going to dwell on the specifics of this tool box. There is no point getting bogged down with hypothetical percentages and estimated costs that can’t be tested in today’s economic climate. I am confident that when the time comes, this tool box will be ready to build a better future.

The toolbox is designed to be utilised in the 21st Century. New technologies exist that make these tools easy to implement and difficult to evade or defraud. And it is through these new technologies  internet, mobile phones and other global communications  that we will reach a younger audience.

These are the business people of the future, who need to know that there exists an alternative financial system that allows the economy to work for them. This younger generation surrounds itself with constantly emerging technology and electronics communication systems.

In order to reach them, we must adapt our language  and our thinking  to a modern context. We can’t go back to old times and old ways of doing things. We have always been a forward looking party.

With a toolbox well suited for the electronic age, it only remains for us to embrace modern communications in order to share our vision with coming generations.

There should be no exclusions due to poor communication. We’re all in this together.

The Future Beckons.

Deputy Leader John Pemberton; PO Box 402 Matamata
Email: pemberj@slingshot.co.nz Website: www.democrats.org.nz

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