Infrastructure Plan Has Missed The Boat

Yet again the government has resorted to old, outdated, and unsustainable ideas with its infrastructure plan announced today, Chris Leitch, Democrats for Social Credit finance spokesman said today.

The debt funding and user pays basis of the plan will ensure its unsustainability, he says.

Instead the government should be looking to using the innovative forward looking ideas that John A Lee, backed by strong support from monetary reformers, used in the government of 1935.

Responsible for housing, Lee used the Reserve Bank to fund the building of thousands of state houses, a move based on his understanding of what was possible using social credit economic theory.

The 1949 report of the Ministry of Works says - “The sums advanced by the Reserve Bank were not subscribed or underwritten by other financial institutions. This action showed the Government’s intention to demonstrate that it was possible for the State to use the country’s credit in creating new assets for the country”.

The 2012 report of the International Monetary Fund states - “allowing the Government to issue money directly at zero interest, rather than borrowing that same money from banks at interest, would lead to a reduction in the interest burden on government finances and to a dramatic reduction of (net) government debt, given that irredeemable government-issued money represents equity in the common wealth rather than debt.”

The report says that under the Chicago Plan, “what would cease to exist is the proliferation of credit created, at the almost exclusive initiative of private institutions, for the sole purpose of creating an adequate money supply that can easily be created debt-free.”

What that means is that the government could fund the country’s infrastructure requirements from the publicly owned Reserve Bank at no interest rather than borrowing it from overseas owned financial institutions.

It could do so because all banks create new money out of thin air when they make loans.

The Bank of England confirmed this in its quarterly bulletin issued earlier this year “One common misconception is that banks act simply as intermediaries, lending out the deposits that savers place with them.”

“…..rather than banks lending out deposits that are placed with them, the act of lending creates deposits. Commercial banks create money.”

“Of the two types of broad money, bank deposits make up the vast majority - 97% of the amount currently in circulation. And in the modern economy, those bank deposits are mostly created by commercial banks themselves.”

The government already owes $80 billion and local government $130 Billion. That’s costing taxpayers and ratepayers $20 million per day in interest. New Zealanders cannot afford more.

Bill English should stop working for the bankers and big corporates, and start implementing policies that benefit Kiwis.

Ends

© Scoop Media