This is the ppt from a talk I gave recently to an audience of elderly folk. I hope it's clear what my message is: to have a stable monetary system, we need appropriate boundaries and regulation, neither which are delivered by a market approach. It's also true that governments do not need to borrow money for investment in productive infrastructure. Feedback always welcomed.

1. Defusing the Debt Bomb:
Lessons from the GFC
By Raf Manji

2. About Me – Part 1
• Studied Economics and Finance
• Entered Investment Banking in 1989
• Started in Risk Analysis in Capital Markets
• Moved to Global Trading in 1991
• Spot Currency Trader to 1996
• Proprietary trader until 2000
• Epiphany

3. About Me – Part 2
• Trucost – Valuing the Ecosystem
• Angel investor in Clean Tech, IT and Ethical Investment
• Moved to NZ in 2002
• Studied Political Science 2003 – 2005
• Founded the Sustento Institute in 2006
• Social Entrepreneur
• Currently studying for a Masters in International Law and Politics

4. Global Financial Crisis - Overview
• Collapse in House Prices
• Credit Markets Freeze
• Banks collapse in US, UK and Europe
• Collapse in Global Stock Prices
• Global contagion
• Global Recession
• European Sovereign Debt Crisis

5. Mania Takes Hold - Iceland
• Population 320,000, GDP $13 billion, Bank losses $100 billion

6. Ground Zero – The US Housing Bubble

7. Irrational Exuberance? Prices vs. Rent

8. Driven by the Debtmobile

9. Financialisation of the Economy

10. Causes – The End of History?
• Excessive Credit
• Speculation
• Predatory Lending
• Deregulation
• Fraud
• Risk Modeling
• Complexity
• Hubris

11. European Drama and Greek Tragedy
• The Great Fudge
• The Big Payoff
• The Debt Binge
• The Euro Straightjacket
• The Hangover
• In Between a Rock and a Hard Place

12. Nu Ziland – Too Small to Fail?
• “Well managed and regulated financial system”
• External debt $147b (71% of GDP)
• Net Public debt $41b (20% of GDP)
• Gross Public debt $71b (34% of GDP)

13. Nu Ziland – Too Small to Fail?

14. Spending more than we earn - since 1973

18. Nu Ziland – Too Small to Fail?
• Living Beyond Means
• Cowboy Capitalism
• Sub Prime NZ style
• SCF Bailout
• Addicted to Debt

19. Lessons for NZ
• Excessive Credit
• Speculation in Housing
• Poor regulation
• No capital taxes
• Complacent Governance
• Debt Addiction

20. The Debt Based Money System
• Nearly all money is created as Interest bearing debt
• Created by the private banking system
• Exposed by the GFC
• Profits privatized, losses socialized
• New debt needed to keep the system going
• Boom, Bust built in
• New approach needed

21. Why should Government pay interest?
• Government can create its own money
• “In the colonies we issue our own money. It is called colonial
scrip...we control its purchasing power and we have no interest to
pay to no one”
Benjamin Franklin, 1764

22. Why should Government pay interest?
• Banks don’t like it
• “To repeal the act creating bank notes, or to restore to circulation
the government issue of money, will be to provide the people with
money and will therefore seriously affect our individual profits as
bankers and lenders”
James Buel, Secretary, American Bankers Association, 1877

23. Why should Government pay interest?
• Creating currency is a sovereign right
• “The issue of currency is a function of the government, a
sovereign right which ought not to be delegated to corporations”
Professor Davis Rich Dewey, 1902

24. NZ Money Supply – 98% Debt

25. Monetary Dialysis
• Replacing “bad money” (interest bearing debt) with “good money”
(notes and coin)
• Retiring government debt as it matures
• Financing new infrastructure with “good money”
• Managing overall growth in money supply
• Setting limits on new bank credit
• Eliminating public debt by 2020

26. NZ – Monetary Dialysis Begins

27. NZ – Reducing Debt as % of Money Supply

28. NZ – No Public Debt by 2020

29. Dealing with the Overseas Debt
• Foreign Transactions Surcharge (FTS)
• Surcharge on all imports
• Pay down overseas debt
• Lowers exchange rate
• Improves Current account
• Lowers Interest rates
• Lowers foreign ownership

30. Moving Forward
• Debt Withdrawal
• Reforming money system
• Monetary Dialysis
• Rebalancing the Current Account
• Living within our limits
• Reducing housing costs (supply)
• Better regulation (RBNZ)

31. Final Word
“Whoever controls the volume of money in
any country is absolute master of all
industry and commerce...and when you
realise that the entire system is very easily
controlled, one way or another, by a few
powerful men at the top, you will not have to
be told how periods of inflation and
depression originate”
US President James Garfield, 1881