MoneyAnd the NZ Economy

SlideshowBy Amanda Vickers

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NZ Needs Economic Growth !

Our economy NEEDS

EXPONENTIAL growth just like

we need oxygen.

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We must Grow grow grow!Our whole monetary system is predicated on

continual exponential growthIf we stop increasing GDP for too long we get a

recession, then a depression and then…A CRASH !

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Which means …

With the system at present

we cannot

have a thriving economy

AND CHOOSE to stop growing if we wish

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Which can lead to problems

It is estimated that we need 1.5 planet earths to sustain our consumption (8 for America)

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and

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We can’t go on like this

“ Anyone who believes in INDEFINITE growth

in a FINITE world

Is either a MADMAN

Or an ECONOMIST ”Kenneth E Baulding

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Quotes:“Sustainability cannot mean

sustainable growth”Charles Eisenstein

“The world can supply man’s need but not man’s greed”

Ghandi

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Why why why why why

9MUST THE ECONOMY GROW

THEN?

1. To supportPopulation Growth

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2. Our Money Supply must continually GROW

or our economy CRASHES

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Why why why why why

12DOES THE ECONOMY CRASH IF

WE DON’T GROW?

Because, our monetary system works like this….

3% of our money is notes and coins

97% of our money is digital, electronic funds …..

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.

The electronic money is created by banks

when we take out loans. It is effectively aSpendable IOU

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Martin Wolf is Chief Economic Commentator for the Financial Times

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Student text books are misleading and out of date

“The way monetary economics and banking is taught in many, maybe most, universities is very misleading”- Prof David Miles, Monetary Committee, Bank of England

“ (the money multiplier model) should be discarded immediately”- Professor Charles Goodhart CBE, FBA, LSE, ex monetary policy committee, Bank of England

“Macroeconomics text books are largely silent on the role of banks and creators of money, and on the potential importance of the aggregate balance sheet level of resulting debt”-Lord Adair Turner, ex chairman of the financial services authority 17

The way monetary policy works now

Money enters the economy when we take out loans

Money disappears from the economy when it is repaid.

And the interest ……. ?

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Interest payments must be found and paid to the bank from the real

economy

Interest must be found from new loans which have been spent in to the economy

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ThereforeInterest to pay new loans comes from money in the real economy

The money in the real economy comes from more new loans

The result is that the cycle must keep going and tomorrow must always be bigger than today.

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Musical Chairs

So, all money is debt.

1. There is always more debt owing than there is money in the system

2. If everybody wanted to repay all their debts tomorrow, we would end up with no money in the economy and still owe interest to the bank.

3. So, ALL MONEY IS DEBT

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Said another way (UK example)

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That is why the monetary system has been called

A game of musical chairs, or

A ponzi schemeAnd that is why when

debts become too great, and defaults start to ripple through the system, banks fail.

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Tomorrow must be bigger than today

So, that is why our money supply must grow.

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And because all money is backed by debt

Our debt must constantly grow: NZ Debt

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Or said another way:MORE MONEY IN THE ECONOMY -> MORE DEBTLESS MONEY IN THE ECONOMY -> LESS DEBT

But we needMORE MONEY IN THE ECONOMY AND LESS

DEBTWithin our PRESENT system we can’t have both!

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Government borrows…Government and Local Councils borrow

too. Wherever this money comes from (eg bonds) it is ultimately traced back to debt. All money is debt.

Every dollar Gov’t spends on interest payments is a dollar of tax or rate money not spent on education, health and infrastructure

Government and Councils spend millions of our hard earned money servicing debt. 29

New Zealand Government Debt(source Wikipedia)_

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Interview with Bill English (Minsiter of Finance)Question to Bill English: 60 billion debt is huge. Who will pay for it and when? And how did we manage to go from 10 billion to 60 billion over the last 6 or so years?

Bill English reply: 

“The increase in debt has been driven by $15 billion funding required for the Christchurch rebuild and expenditure running higher than revenue for the last five years because we decided not to slash Government spending but to borrow the money to continue to support families and the economy. But now we have to start paying it back. That's one reason surpluses are important”

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And we borrow too ….(Green line is Private Debt)

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Increasing Gov’t or private debt adds money in

to the economy, creating our holy grail “economic growth”

Our money supply goes up, and our Gross Domestic Product (GDP) goes up and our debt goes up

However, note that since 2008 our debt has gone up much faster than our GDP

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Debt:GDP ratio

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Warning Flags

In 2012, Our Total debt to GDP ratio was well over 100%This is TOO HIGH to be easily manageable and repayable. Once (total) debt exceeds GDP it is almost a one way spiral.“Anything over 100% GDP is a major warning flag” Nicole Foss.

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Our options are:Taking money out of the economy to repay

debt, causing deflation and/or a deflationary recession.

ORKeeping the GDP up, continuing growth and

keeping the economy going with more debt

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Debt Trap:Desperate for GDP

We are more dependent on overseas income through trade

Gov’t finds itself considering trade deals which promise a small increase in GDP – at a huge cost and burden to New Zealanders and the environment. (For example, the Transpacific Partnership Agreement, or TPPA. For more info see www.itsourfuture.org.nz)

In many ways, we start stealing the future, selling it today and calling it GDP

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SolutionWe need to take back the power to create and

control our own money supply.We could have all or our new money created

by the Government via the Reserve Bank and spent in to circulation by the Government, debt free

We did it to build state houses back in 1936 and we can do it again to rebuild Canturbury and the New Zealand economy.

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What you can do and for more information:

1. Join and support Positive Money NZwww.positivemoney.org.nz2. Write to your MP and preferred political party and bring this information to their attention.3. Tell everyone you know about this. Use Facebook, Twitter, talk, gossip and spread the word! It is the people that need to call for this change. This is about our children’s future.

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