This opinion piece is in response to this article.
Of U-turns and asset sales
19 Nov 2020
As a former minister in Labour’s 1984 cabinet, Richard Prebble might know
about promising to save rail and then doing a u-turn and selling it off – along
with a host of other former state owned assets.
And he’s starting to understand more about social credit, having claimed a
couple of weeks ago that our economy was being run as a social credit one,
and then doing a u-turn and this week acknowledging that it’s sort of not.
Sort of not, due to the use of expensive middlemen in the name of the four big
Aussie banks who will make an additional $11 billion profit over the next two
years by lending money that they create out of thin air to the government in
exchange for government bonds which they then flick off to the Reserve Bank.
$11 billion in pure profit because it doesn’t cost them a cent to create the
money they lend to the government.
$11 billion that should have been spent into the economy to build
infrastructure, or put into health care so that people in Christchurch don’t need
a charity hospital to get operations they deserve, or people in Invercargill don’t
need a charity hospital to get cancer treatment, or kids in Wellington don’t
need a private property developer to build them a children’s hospital to rival
Being an associate finance minister and meeting with the Reserve Bank and
Treasury doesn’t qualify Mr Prebble to be an economics expert and he’ll need
to school up more about social credit, or maybe continue to read my articles if
the wants to understand what social credit really is about.
To help with that I’m going to send him a copy of Social Credit’s
comprehensive ‘Reclaim Our Future’ background paper, which he might find
A Social Credit government would access funding direct from the Reserve
Bank, instead of allowing that money to pour into the financial markets to feed
a fire under house prices, and that $11 billion would fund hospitals and
infrastructure, not enrich the already wealthy shareholders of those largely
American owned Aussie banks.
No longer would the government borrow off the private sector, wracking up
mountains of debt and interest to be repaid by generations of future
taxpayers, robbing them of tax dollars that should be spent by government
doing things to benefit Kiwis.
If that ‘freaked out the markets’ that’s only a problem for those wealthy bank
shareholders and their wealthy mates, who speculate on tiny movements in
share prices, the likely future price of coffee or oil, or a small increase or
decrease in the value of the dollar – none of which is of any benefit to New
Zealand’s productive economy.
Keeping those speculators happy is a significantly lower priority than Kiwis
needing proper health care, proper water and waste water systems, or a
decent road and rail network.
Of course those same commercial banks create out of thin air, every dollar
they lend, be it for houses, businesses, or personal loans. No, despite what
you’ve been told they don’t lend out the money customers deposit with them.
If you want to check that, you can confirm it on the websites of the Bank of
England, the German Central Bank and our own Reserve Bank.
While Richard Prebble and others bemoan the printing of money by the
Reserve Bank, not a whisper passes their lips about the money printing the
commercial banks do – on average about $20 billion in additional money
every year ($32 billion last year), limited pretty much only by the number of
borrowers the banks decide are credit worthy.
Social Credit has never advocated the creation of money in an unrestricted
fashion, and a portion of it might replace some of the money the commercial
banks currently create.
A key policy is setting up a New Zealand Credit Authority with independence
similar to the Judiciary, accountable to Parliament as a whole. Its task would
be to assess the economy, measure its unused capacity and labour capability,
and determine how much new money the Reserve Bank could safely create
without generating inflation.
Surprisingly there’s one thing we do agree on – the housing market is being
fuelled by the current actions of the Reserve Bank and where its money
creation is being directed.
Unlike Mr Prebble though I’ve got a solution – one that former Finance
Minister Michael Cullen, former Prime Minister Jim Bolger, and former Aussie
Prime Minister and Treasurer Paul Keating recommend.
Rather than sort of not, it is proper social credit, and now that Mr Prebble
understands it a little better, perhaps he might like to be added to the list.