The
Banking Fraud in New
Zealand
A short
time ago I wrote to the Reserve Bank of New
Zealand
in an attempt to gain further understanding of the banking system. I asked a
number of questions: “Where does the money comes from?” “By how much does the
money supply grow each year?” “By how much annually do our local
banks borrow from foreign sources?”
A
knowledgeable person from the Reserve Bank responded with his answers to those
questions, informing me that “most of the nation’s money supply is created by
the banks.”
He also
relayed figures from the most recent period between Jan. 2005 and Nov. 2008,
showing that M3 (total money supply) has grown at a rate of around 10% per
year, from NZ$ 117.51 Billion in January 2005 to NZ$ 173.901
Billion in November 2008.
In the
same period local bank indebtedness to foreigners has increased from NZ$
78.791 Billion to NZ$ 127.738 Billion, while local claims on foreigners fell
from NZ$ 27.379 Billion to NZ$ 19.977 Billion. Astoundingly, the net
indebtedness of local banks and financial institutions to foreign entities has
grown by almost exactly the same amount during the same period. The money
supply (M3) grew by NZ$ 56.391 Billion, and net local bank indebtedness
to foreigners grew by NZ$ 56.349 Billion. These figures are just
too similar to be mere co-incidences.
Surely, all
of our money has been created by foreigners. Neither our government,
our banks, or we ourselves create our own money supply. Every single dollar
of New
Zealand
money has been borrowed from foreigners at interest- at least during the
last 4 year period. One can only assume that this has been occurring since the
beginning of settlement by Europeans; first by importing British Pounds as a
means of exchange with the original inhabitants, and then by converting
foreign currency loans into New
Zealand
currency in a vain pretense at being an independent country.
The
Fractional Reserve Banking System provides a modern platform for this debt
expansion to occur, but our local banks are merely tools through which some
persons, bankers, or institutions outside of New
Zealand
actually create all new New
Zealand
money. This has diabolical ramifications.
How
Local Banks Acquire Foreign Finance
Our
local banks are able to borrow that kind of money (approx. $18 B per year)
from offshore because we give them the necessary security with
which to do so. When Kiwis surrender the titles to our homes or properties to
“our” banks in return for mortgage finance, we no longer “own” them. For all
practical purposes, they are now owned by the banks. Our banks then combine
our mortgages with others to create a mortgage bond or a similar financial
instrument, which is then given to some foreign financier as security for the
reciprocal borrowed funds. Our banks pay interest to foreigners on the same
money that they loan on to us at higher interest. This means that we New
Zealanders are forced to give up roughly NZ$ 18 Billion dollars in ownership
rights annually in exchange for the money required to “float” the local
economy, and for us to maintain our present lifestyles.
No one
seems to know how this money originally comes into being, or who is
responsible. It magically materializes out of thin air at little or no cost,
benefitting some anonymous offshore person or group of persons with enormous
wealth and power. And once repaid (with interest) this money is effectively
“laundered” removing it from further discerning scrutiny. Now legitimate, some
of the proceeds trickle down through the international financial system until
it finally re-enters New
Zealand
as foreign investment, competing with local dollars for ownership and control
of our remaining assets. This contributes to a further understanding of why so much
of New
Zealand
is now owned by foreign interests. By letting others create our money
supply, we are giving away New
Zealand
to the tune of $18 Billion per year or more!
As of
Nov. 2008 New
Zealand
private banking institutions owed a net NZ$ 120.336 Billion to offshore
interests. This means that as of Nov. 2008 foreigners “owned” $120.336
Billion worth of our homes, businesses, and farms- simply for providing
our means of exchange- by virtue of mortgage document, debenture, personal
guarantee, or other security.
By
subtracting this amount from the total “borrowed-into-existence” money supply
of $173.901 Billion, we easily deduce that foreigners have purchased and
directly control an additional $56.565 Billion worth of our assets; thus
reducing net indebtednesss, but at the cost of total alienation of our
inheritances.
We
don’t need to know who is responsible for this fraud, or how exactly this
money is created out of thin air. All we need to know is that this is
happening outside of New
Zealand,
and that we are continuing to pay the price for it. Once we stop borrowing
from the banks at high interest, the fraud can no longer control and “own” us.
The
present world economic melt-down adds another worrying aspect to the problem.
Falling real estate values will most certainly restrain and limit any further
growth in the money supply. And unless the New
Zealand
government takes on some role in the creation of new interest-free money, our
economy will most certainly crash and burn, along with the many other
countries reliant on the bankers’ high interest debt.
Why
We Continue to Borrow from the Banks
Simple
common sense reveals that we borrow because we do not have enough money to
continue our lifestyle and/or further our dreams. We borrow because we are in
“want”. Either we failed to borrow enough in the first place, or some event
has occurred to create our shortage. Setting aside the prospect of borrowing
for a moment- which always leads to a form of debt slavery- there is one
recurring event in our collective lives that leads to a shortage of money. That
is the ongoing collection of taxes through various means that continually suck
liquidity out of the private sector. The whole New
Zealand
tax take is in the vicinity of around $50+ Billion. This meshes neatly
with the total mortgage “top-up” borrowing by the private sector, of which
roughly one third originates offshore.
If all
taxes were eliminated and $50 Billion worth of new interest-free money were
created by government, our ever-growing foreign indebtedness could be brought
to an end, and a huge new low-interest source of private local money could be
brought to bear on investment and wealth creation rather than on serving tax
debt. This assumes that a whole population might change its
consumption-based belief systems and spending culture overnight. That is
at least a little over-optimistic. Perhaps we should learn to walk
before we try to run.
The two
major taxes are taxes on personal and business incomes- amounting to somewhere
around NZ $20+ Billion, and Goods and Services Taxes (GST) which amount to
somewhere near NZ $18 Billion. The exact figures are unimportant, as there is
no direct relationship between taxation and sustainable funding of government
services.
Simple
mathematics suggest that if either one of these sources were abolished, and
government took on the responsibility and opportunity of creating a similar
amount of new interest-free money with which to meet its commitments, the
private sector would be roughly NZ $20 Billion better off, and may not need to
borrow from overseas banking interests at all.
Before
we can achieve any significant degree of national independence and ongoing
prosperity, our government must begin to issue its own interest-free money
rather than borrowing from offshore or forcing private New Zealanders to
borrow from offshore through our local banks in order to pay our taxes.
Thus,
some form of tax minimization must accompany the issue of new interest-free
money, preferably one that encourages savings and investments rather than
consumption.
The Best
Way
Forward
It
seems clear when observing present spending habits that if GST were removed
and income taxes retained, the present trend towards consumption would be
accelerated, and much of the “saved” private funding would find its way into
consumer spending. Arguably, some amount might be used to pay off mortgage
debt, reduce further borrowing, and/or could be put into investment or
savings; but because this would simply reduce the costs of individual consumer
goods, the most likely effect would be an across the board increase in
consumption spending. There is no reason to expect that this would result in
lower interest rates, lower debt, lower inflation, and an increase in local
ownership. To the contrary, the most likely expectation would be the need for
government to raise income taxes substantially in order meet cash shortfalls,
print yet more money, or increase borrowing; leading to higher inflation,
higher interest rates, and increased private or government debt. Indeed, a
great deal of study has been undertaken under just such a scenario; study
encapsulated in what is known as the “Oliviera-Tanzi effect”, whereby
“monetizing” debt (printing money to service debt) in an inflationary economy
based upon income taxation simply leads to higher inflation, higher costs, and
greater debt (or the need for grossly increased income taxes). This ultimately
leads to hyper-inflation and total bankruptcy for a national economy. This
route should be avoided at all costs.
On the
other hand, removing all income taxes, and maintaining the present GST at its
current rate would without doubt have an opposite effect. As investment and
savings would no longer attract punitive tax rates, a great deal of the
“saved” tax money would be apportioned towards those enterprises. The present
GST would continue to put a brake on rampant consumer spending, and any
increase in spending would increase GST revenue as well as stimulate the
economy. But the greatest benefit would be in the increased savings and
investment that would occur. Besides creating new jobs, better products, and
lower costs, increased investments significantly change the important
relationship between money supply and wealth.
If
unchecked by the issue of new money, the resulting deflation would stifle
business by continually devaluing stocks. And thus government would have the
opportunity and responsibility not only to replace the former income tax
revenue with the interest-free issue of new money, but to issue, distribute,
and/or spend sums far in excess of the amount previously taken in income
taxes, as a way of balancing the new wealth created by increased investment
and savings.
Another
beneficial side effect would be the new positive sentiment that would be
harboured in the new system whereby most folks would tend to invest and spend
more aggressively, effectively increasing the velocity (and availability) of
money, and allowing more persons to profit from its presence.
Importantly,
such a revised system would insulate all New Zealanders from the negative
ripples of the coming world-wide depression, allowing our producers to reduce
costs substantially and compete favourably on world markets regardless of the
offshore business climate.
In such
circumstances, the political questions of the future would focus not on how to
find the resources to adequately fund government in the midst of scarcity, but
on how to distribute surplus resources in the midst of plenty.
Fantastic
new opportunities would naturally arise, allowing government to provide more
and better services and/or fund a universal individual benefit to every New
Zealand
resident. The sheer necessity to work, or welfare degradation, would no
longer be the prices of survival. Creative work would become an individual
matter of choice, willful service, and/or the means to fulfill the wildest
dreams.
My 2005
book, “The Zen of No Tax” (by Carl Peterson) includes an in
depth examination of how income taxes create a destructive and
counter-productive effect on government funding and society as a whole. Taxes
do not and cannot work to provide sustainable government funding. “The Zen of
No Tax” also offers a snapshot of what the future may look like without income
taxes. Those early insights revealed in “The Zen of No Tax” dovetail nicely
with those recently gained in conversation with the Reserve Bank of New
Zealand,
and underline the only sustainable path ahead: That is, eliminating income
taxes, and empowering our government with the issue of interest-free money.