Eco-Economy: Current Account Deficit a Fraud

Recent misrepresentation of the $1.9 billion December 2000 current account deficit in media and political statements is arguably fraudulent, and is definitely reprehensible.

The balance of payment figures should be sending alarm bells ringing, but Michael Cullen seems to be happy!

In his statement on Friday he implies that we New Zealanders should be proud of the fact that, "the December balance of payments figures are consistent with a strong export performance and good corporate profits in New Zealand." What is he thinking?

Just as scandalous is the way that this key indicator is explained to the New Zealand public via the media.

In Friday’s 3pm news program on Radio New Zealand it was reported that the increase in the BOP deficit shows, “…the widening of the gap between what New Zealand spends and earns abroad.”

This is a totally misleading use of the word “spend”.

Usually we think of spending as being what we do when we buy some goods or services, like a boat full of cars or a plane full of business advisors.

But the very same BOP figures show that New Zealand is running a surplus in terms of spending and earning goods and services.

Do the Radio New Zealand reporters actually know what the figures really mean? It seems unlikely.

As the New Zealand economy has been picking up its game the New Zealand money supply increases. Remember, money is debt, and more growth equals more debt.

In reality what the figures published by Statistics New Zealand on Friday show is that as people increased their borrowing this resulted in an increase in interest and dividend payments to our foreign creditors, and an inflow of foreign capital funds to finance new borrowings.

And so it is in a rather perverse sense that Michael Cullen seems to be proud, proud that NZ is returning a healthy profit to its financial overlords.

In a sense he is like the slave driver turning to praise his slaves for working hard because the emperor is happy.

But whom does Michael Cullen work for, and why doesn’t he just tell it like it really is?

The fact is that the increase in the BOP deficit consists of an increase in the rent we pay our foreign financial overlords for the use of our own land, our own businesses, our own houses and our own money.

As our economy grows stronger, we owe more and we pay more. This is the increase in the BOP deficit. We work hard for our economy and increase our rent payments abroad. We are being punished for doing well.

Is the media responsible for this misrepresentation of the meaning of BOP figures? And if not then who is?

Professional economists and officials in the Reserve Bank, Treasury and Statistics New Zealand clearly have some explaining to do.

Why don’t they explain to the public, through the mainstream media, what the BOP really means? Explain how the “invisibles”, as they are called, consist primarily of rent money, not spending.

How foreign commercial banks create our money, lend it to us and then cream the profits from our hard work.

Instead these terribly clever people, the alleged guardians of our financial wellbeing, have the gall to redirect blame onto the public, telling us that we spend too much, that we are not saving sufficiently, that we are all living beyond our means. Really! Surely they must be joking.

This is, quite simply, a fraudulent misrepresentation of the facts.

Finlay Thompson,
Spokesperson,
New Zealand Banking Reform.

RELATED LINKS…

Cullen Says BoP Figures Show Recovering Economy While Others Slow

- "The December balance of payments figures are consistent with a strong export performance and good corporate profits in New Zealand," Finance Minister Michael Cullen said today. See... BOP Figures Paradoxical Sign Of Healthy Economy [1] and Increased Profits Drive Rise In BoP Deficit [2] REACTION: - Green - Foreign Ownership Makes BoP Deficit Worse [3] - Nats - Current Account Outlook Not So Rosy [4]

[1] - http://www.scoop.co.nz/mason/stories/PA0103/S00402.htm
[2] - http://www.scoop.co.nz/mason/stories/BU0103/S00163.htm
[3] - http://www.scoop.co.nz/mason/stories/PA0103/S00410.htm
[4] - http://www.scoop.co.nz/mason/stories/PA0103/S00409.htm

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