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25 April 2005
LETıS STOP BEING LOSERS
Most of us are losers in this hard-nosed world, it seems.
Sandra Patersonıs little daughter may have learned some valuable lessons about supply and demand, wages and profits in selling her feijoas at the gate, but the most chilling sentence in Ms. Patersonıs article is the quote from Rich Dad Poor Dad "Employees lose; owners and investors win." (Weekend Herald, 23 April 2005.)
Ms. Paterson laments that we donıt teach our children about finance, which is why, she implies, so many of our bright young things end up as employees, perish the thought. Of course she is ambitious for her daughter to rise into that employer/investor heaven; no one wants a kid who is a loser. The trouble is, she hasnıt really given the child a true 21st Century business grounding in feijoa sales. Do let me help.
Say the little girl has raw materials (feijoas) and labour (friends) available, but maybe she needs to build a stand. She has to go cap in hand to a commercial bank and apply for a loan. (Mumıs maxed-out credit card is no help.) To pay her workers, pay back her loan and still make a profit, this little capitalist has to charge more for the feijoas. She risks losing business if another kid down the road charges less. Or she could pay her workers less. Now there's an idea...
But down the road, that other kid has got an interest-free loan from her rich nana, has built a much bigger stand with signage, and is selling feijoas and apples, attracting more customers. Sales fall off at the Paterson gate, and the little owner is left with unsold stock, unpaid employees and a debt. Not just the money she borrowed, but an interest charge of 10%. Bankruptcy!
Meanwhile the laid off workers have put toys on their credit cards in anticipation of wages which they never receive. Some of them can get jobs with the kid down the road, but not all. Their toys get repossessed, but they still owe money, because of the interest they have been charged. The bank takes the feijoa stand, and the little capitalist is left with feijoas and debt. What is she going to do? She will have to Refinance. That is, borrow more money to pay her debt.
With the creation and control of the money supply in the hands of profit-driven commercial banks, there will never be enough money to go around. Debt continues to grow, loaned into the economy simply to maintain growth, in order to service debt. The cost of basic essentials such as housing, food and power continues to rise, carrying a loading of interest that every one of us pays.
Total debt in New Zealand two years ago was $270 billion. At the beginning of this year it was $309 billion; nearly $40 billion more debt, all carrying various rates of compounding interest. If the average interest rate is 10%, this year we will pay some $30 billion just in interest. The debt never goes down, no matter how well the economy does. Where is the money going to come from to pay it? Weıll have to borrow more from the bank, which creates credit not from deposits or investments, but out of thin air, at interest of course.
Is it just me, or does anyone else detect the, er, conflict of interest?
Last year we had a boom economy. About 10% of the population (the tax bracket Ms Paterson wants for her daughter) got richer on investments. The rest of us poor mugs fell further and further behind, in wages, in buying power and in the ability to save for retirement. A third of us have got so far behind that our children are living in poverty, with poor food, clothing and shelter, and a shorter life expectancy.
We have sold education to our youth, and created an entire generation of debt slaves before they even start their careers. Meanwhile, the drive for more profits, more spending and more debt is destroying our environment. Transpower isnıt the only company ready to go with the cheapest option at the expense of the planet host.
The worldıs religions have condemned usury since ancient times. Itıs not just something that Shylock did back in the olden days, it is the cancer of our present financial system. The major Christian hierarchies are pretty quiet about usury these days. Increasingly dependent on income from investments in order to maintain bricks and mortar and carry out charitable functions, they have become entangled and sadly complicit in the debt trap.
Is this the world we want?
Are we proud of this dog-eat-dog society that makes winners of a few and losers of the rest of us? Are we happy to teach our children to climb into that unearned income bracket by standing on the backs of their neighbours and friends? Can we afford to leave the clean, green image of New Zealand to the PR people, while we struggle to keep our heads above water a little longer, at least until we win lotto?
It doesnıt have to be this way.
We can change the story right here in New Zealand. There is no political, moral, religious or economic reason why the creation of money should be in the hands of commercial banks and profit driven money traders, and every one of those reasons why it should not. Picture this, if you will:
In an economy without interest-bearing debt, employees donıt lose, investment capital is cheap, local economies prosper, the dollar is stable and far fewer businesses fail. A democratically elected government controls the money creation and supply, investing in real production, in environmental conservation and repair and in education and health care for all.
(All right, thereıs a suspicion of politicians and their perceived lack of moral fibre, but at least we can throw them out every three years. In the present financial system, who throws out banks? They are unelected and unaccountable - monetary dictators.)
We, the people of New Zealand, can own our wealth again.
How can we do this, I hear you cry? Itıs election year. Vote for the party that advocates a workable plan for monetary justice. Thereıs only one: Democrats for social credit. Yes, itıs the dear old Social Credit Party in a new dress, but underneath beats the same good heart. Back in 1954 when the political party was formed, social credit was a good idea. Fifty years on, now more than ever, New Zealand desperately needs these monetary reforms to get us off the debt treadmill.
Letıs show the little capitalist how she can sell her feijoas and eat them too.
Katherine Ransom
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