Money is created out of thin air by private banks. The effects of this on the NZ economy are discussed here, including interest, debt, GDP to Debt ratios and other repercussions. Monetary reform is suggested as a solution to the problems created by our debt backed money supply. www.amandavickers.co.nz

1. Money
And the NZ Economy
Slideshow
By Amanda Vickers
1

2. NZ Needs
Economic Growth !
Our economy
NEEDS
EXPONENTIAL
growth just like we
need oxygen.
2

3. We must Grow grow grow!
 Our whole monetary system is predicated on
continual exponential growth
 If we stop increasing GDP for too long we get a
recession, then a depression and then…A CRASH !
3
Which means …

4. With the system at present
we cannot
have a thriving economy
AND
CHOOSE to stop growing if we wish
4

5. Which can lead to problems
It is estimated that we need 1.5 planet earths to sustain
our consumption (8 for America)
5

6. and
6

7. We can’t go on like this
“ Anyone who believes in INDEFINITE growth
in a FINITE world
Is either a MADMAN
Or an ECONOMIST ”
Kenneth E Baulding
7

8. Quotes:
“Sustainability cannot mean
sustainable growth”
Charles Eisenstein
“The world can supply man’s need but
not man’s greed”
Ghandi
8

9. Why why why why why
9
MUST THE ECONOMY GROW
THEN?

10. 1. To support
Population Growth
10

11. 2. Our Money Supply must
continually GROW or our
economy CRASHES
11

12. Why why why why why
12
DOES THE ECONOMY CRASH IF
WE DON’T GROW?

13. Because, our monetary system
works like this….
 3% of our money is notes and coins
97% of our money is digital, electronic funds …..
13

14. .
The electronic money is
created by banks
when we take out loans.
It is effectively a
Spendable IOU
14

15. Martin Wolf is Chief Economic Commentator for
the Financial Times
15

16. 16

17. Student text books are misleading and out
of date
 “The way monetary economics and banking is
taught in many, maybe most, universities is very
misleading”- Prof David Miles, Monetary Committee, Bank of England
 “ (the money multiplier model) should be discarded
immediately”- Professor Charles Goodhart CBE, FBA, LSE, ex
monetary policy committee, Bank of England
 “Macroeconomics text books are largely silent on the role
of banks and creators of money, and on the potential
importance of the aggregate balance sheet level of
resulting debt”-Lord Adair Turner, ex chairman of the financial services
authority
17

18. The way monetary
policy works now
 Money enters the economy when we take out loans
 Money disappears from the economy when it is
repaid.
 And the interest ……. ?
18

19. Interest payments must be found and paid
to the bank from the real economy
Interest must
be found from
new loans
which have
been spent in to
the economy
19

20. Therefore
Interest to pay new loans comes
from money in the real economy
The money in the real economy
comes from more new loans
The result is that the cycle must
keep going and tomorrow must
always be bigger than today.
20
Musical Chairs

21. So, all money is debt.
21

22. Said another way (UK example)
22

23. That is why the monetary
system has been called
A game of musical chairs,
or
A ponzi scheme
And that is why when debts
become too great, and
defaults start to ripple through
the system, banks fail.
23

24. Tomorrow must be bigger
than today
So, that is why our money supply must grow.
24

25. And because all money is
backed by debt
 Our debt must constantly grow: NZ Debt
25

26. 26

27. Or said another way:
 MORE MONEY IN THE ECONOMY -> MORE DEBT
 LESS MONEY IN THE ECONOMY -> LESS DEBT
But we need
 MORE MONEY IN THE ECONOMY AND LESS DEBT
 Within our PRESENT system we can’t have both!
27

28. 28

29. Government borrows…
 Government and Local Councils borrow too.
Wherever this money comes from (eg bonds)
it is ultimately traced back to debt. All money
is debt.
 Every dollar Gov’t spends on interest
payments is a dollar of tax or rate money not
spent on education, health and infrastructure
 Government and Councils spend millions of
our hard earned money servicing debt.
29

30. New Zealand Government Debt
(source Wikipedia)_
30

31. Interview with Bill English (Minsiter of Finance)
Question to Bill English: 60 billion debt is huge. Who will pay for
it and when? And how did we manage to go from 10 billion to 60
billion over the last 6 or so years?
Bill English reply:
“The increase in debt has been driven by $15 billion funding
required for the Christchurch rebuild and expenditure running
higher than revenue for the last five years because we decided
not to slash Government spending but to borrow the money to
continue to support families and the economy. But now we have
to start paying it back. That's one reason surpluses are
important”
31

32. And we borrow too ….
(Green line is Private Debt)
32

33.  Increasing Gov’t or private debt adds money in to the
economy, creating our holy grail “economic growth”
 Our money supply goes up, and our Gross Domestic
Product (GDP) goes up and our debt goes up
 However, note that since 2008 our debt has gone up
much faster than our GDP
33

34. Debt:GDP ratio
34

35. Warning Flags
In 2012, Our Total debt to GDP ratio was well over
100%
This is TOO HIGH to be easily manageable and
repayable. Once (total) debt exceeds GDP it is
almost a one way spiral.
“Anything over 100% GDP is a major warning flag”
Nicole Foss.
35

36. Our options are:
 Taking money out of the economy to repay debt,
causing deflation and/or a deflationary recession.
OR
 Keeping the GDP up, continuing growth and keeping
the economy going with more debt
36

37. Debt Trap:
Desperate for GDP
 We are more dependent on overseas income through
trade
 Gov’t finds itself considering trade deals which promise
a small increase in GDP – at a huge cost and burden
to New Zealanders and the environment. (For example,
the Transpacific Partnership Agreement, or TPPA. For more
info see www.itsourfuture.org.nz)
 In many ways, we start stealing the future, selling it
today and calling it GDP
37

38. Solution
 We need to take back the power to create and control
our own money supply.
 We could have all or our new money created by the
Government via the Reserve Bank and spent in to
circulation by the Government, debt free
 We did it to build state houses back in 1936 and we
can do it again to rebuild Canturbury and the New
Zealand economy.
38

39. 39

40. .
40

41. What you can do and for more
information:
1. Join and support Positive Money NZ
www.positivemoney.org.nz
2. Write to your MP and preferred political party and bring
this information to their attention.
3. Tell everyone you know about this. Use Facebook,
Twitter, talk, gossip and spread the word! It is the people
that need to call for this change. This is about our
children’s future.
41