Dr Brash Invited To Explain Money Creation System
New Zealand Banking Reform
The newly formed New Zealand Banking Reform group would like to invite the Governor of the Reserve Bank, Don Brash, to explain in plain English to the public the nature of the process of money creation.
It hardly takes much effort to see that whoever controls the creation and destruction of money has substantial influence over monetary conditions. Don Brash knows, as well as many others, economists, politicians and bankers, that effective control over money creation has passed from the Reserve Bank into the board rooms of registered commercial banks. Moreover, those banks are required to act in the interests of the (foreign) shareholders.
We believe that the general public should receive a clear explanation, from the Governor himself, of why and how the money supply has more than doubled over the last ten years.
In September 1989 Reserve Bank statistics tell us that the total money supply (M3) stood at 46.1 billion dollars. By September 1999 money supply had increased to 99.3 billion dollars. That is an increase of 53.2 billion dollars, 115 percent, or $14,000 dollars per person. Did the economy grow over that ten year period by 115 percent? I don't think so.
The Reserve Banks statistics also tell us that government created currency did not increase by any where near that amount. In fact, in Sept 1999 the TOTAL amount of currency stood at only 2.1 billion dollars.
If the Reserve Bank is concerned with holding back inflation, concern shared by the government and the public, why do we not hear about increases in the money supply? Surely increases in money supply have an effect on inflation.
The truth is that 98 percent of our money supply has been created by commercial banks, that they own that money, and that the interest rate increase announced yesterday has simply increased the rent we pay for using our money.
The New Zealand Banking Reform Group has been formed to act as forum for discussing monetary policy. We welcome involvement from the financial sector and all interested people.
We advocate a widening of the terms of reference for the up coming government inquiry into monetary policy.
And we invite from Don Brash a public, plain English, explanation for the doubling of our money supply since the Reserve Bank Act of 1989.
Thompson, Co-coordinator of NZ Banking Reform.
Ph 021 117 9149
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