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Eco-Economy: What’s Wrong With Jim’s New Bank

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What’s Wrong With Jim’s New Bank


By Finlay Thompson

Jim’s new bank has the enthusiastic support of NZ Post and that’s about it. Even Finance Minister Michael Cullen looked quietly dismissive as the bank was announced yesterday in the Beehive.

Question: what is so wrong with the bank?

Answer: Jim’s new bank does not address the real issues. It does not resolve or offer a solution to the mountainous debt crisis that we face in New Zealand.

Our financial sector is a huge burden on all the productive sectors of the New Zealand economy. As a result of allowing the banking industry to write its own rule book, the financial deregulations of the 1980’s culminating in the 1989 Reserve Bank Act, we have given over control of our money supply to foreign, and often hostile, commercial banks.

Registered commercial banks have, with the explicit support of the Reserve Bank, obtained the power to create our money supply. They do this by appealing to an almost blatant lie. We are told that they use deposits when they lend money. In actual fact they create deposits by lending us money, our money is created as debt. This little act of trickery has had dire consequences in New Zealand.

The weight of more than $170 billion of debt squeezes the life out of our economy. That figure includes government, private, student and corporate debt. And yet there is absolutely no way to pay that debt down over all. In order to pay back our loans, and the interest, we need to get some money. And that money only comes into existence through someone else going into debt.

Jim’s Bank does not offer a solution to our debt crisis.

Having said all that, it is good that we will have the choice of going to a New Zealand owned bank. I am sure that NZ Post will have success in this venture. The SOE will return a capital gain to the government and small communities will have access to bank services. These are all good outcomes, but they should not stop the government from further confronting our banking mandarins.

Jim Anderton should follow up his present success by putting pressure on the Monetary Policy Review to explain the present debt crisis. He could get an interesting response from our bankers by asking the inquiry to:

“Explain to the public why we should allow private, commercial and largely foreign banks to create our money when the Reserve Bank of New Zealand can and should do it for us.”

Finlay Thompson
Spokesperson,
New Zealand Banking Reform.

Contact: 021 1179 149

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