GREY POWER WAITOMO – ABOUT SOCIAL CREDIT

26 March 2006 – Talk given by John Pemberton and Katherine Ransom.

Introduction:

INTRODUCING KATHERINE by John

I’d like to introduce my wife, Katherine Ransom. She is Vice President of the Democrats,  and a member of Grey Power and National Council of Women. She holds a Masters in Creative and Performing Arts – with First Class Honours, and is a theatre director and script writer. She is also a committed and enthusiastic grandmother

INTRODUCING JOHN by Katherine

Allow me to introduce my husband, John Pemberton. He is the Deputy Leader of the New Zealand Democrats for social credit, and the Finance Director of Credit Union Waikato, handling assets of $23m. He was formerly a trustee of Trust Waikato, which has over $200m in investments. He has been a bio-security officer and field technician with AgriQuality for 34 years. He is also a committed and enthusiastic grandfather.

WHAT WE WILL TALK ABOUT by John

John reassured the audience that the talk would be more than just dry economics. Katherine would talk about why we are here, and John about what the problems are – number crunching. Katherine would then explain what it means to people. John would outline how we got to this position – the history of banking and economics, and then both John and Katherine would present social credit solutions. John would wind up the talk and invite questions from the audience.

WHY WE ARE HERE by Katherine

Why are we here, talking to you about this seemingly dry subject of economics and financial reform?

Between us, John and I have five children and seven grandchildren. We want them to inherit a better world, to enjoy clean air and fresh water, to have enough to thrive and the means to achieve their dreams and goals.

We are concerned that our planet host will be too poisoned to allow that. We see that the interest-based global economic system is rapidly destroying the environment in the name of profit, and enriching the few at the expense of the rest of us.

With every passing year our sovereignty is eroded, along with our land, so that we are a democracy in name only.

We know we aren’t alone in our concern. There are hundreds of like-minded organizations all over the globe, all concerned with the social and economic injustice of the present financial system. We have regular contact with these people, through the sharing of publications and emails.

[John will be attending an International Credit Union conference in Dublin in July, and we have been invited to meet with members of both the Christian Council for Monetary Justice and Islamic banking organisations in London, each with similar concerns.]

All these groups recognise one basic thing: that those man-made things we abhor – poverty and famine, wars, disease, slavery, Third world debt, injustices of every kind – have as their root cause a rapacious global financial system.

We are here, finally, because we feel that New Zealand is in a unique position to lead the way to a better economic system. We have the means and the mechanisms. New Zealand has led the world many times in the past, and we can do it again.

WHAT ARE THE PROBLEMS? By John

Referring to statistics gleaned from the websites of the Reserve Bank, Statistics NZ and others, John outlined the magnitude of indebtedness in New Zealand.

• Govt Overseas debt:                                $17,966,000,000
• Govt Internal debt:                                     $24,800,000,000         
• Private Sector Debt of NZ residents:     $137,000,000,000
• Corporate Overseas debt:                      $147,012,000,000
• TOTAL DEBT:                                        $322,724,000,000

(See Appendix for more details.)

John referred to individual areas of debt, total debt and interest annually. He mentioned the current account deficit, which has been in the red for over thirty years. John broke down what these figures mean for individuals and households, and made a comparison with tax cuts or targeted assistance schemes that are policy with the major parties.

WHAT ALL THIS DEBT MEANS TO ORDINARY PEOPLE by Katherine

So what do all those numbers mean? It is hard for us to imagine a million dollars, let alone a billion. John gave some examples of how those debt figures break down to individual debt, but we’re all right, aren’t we?

Well, there are a few myths about New Zealand that need to be dispelled. One is that we are ‘clean and green’. In truth, 80% of our rivers and streams are polluted – by industry, farming and housing. Profit margins, unfortunately, come before clean water.

Of the land areas and waterways that remain pollution-free, more and more are privately owned and accessible to the privileged few. Farms are multi-property corporations. Beach-fronts sprout mansions like weeds. Overseas buyers price local people out of the house market.

Another myth is that there is abundance here. There is abundance, but not for everyone. A litre of clean water costs more than a litre of petrol. White bread and potatoes cost far less than fresh fruit and vegetables.

Too many seniors live without the means to heat their houses. Too many must wait for months or years for pain-relieving or life-saving surgery while DHBs spend millions to service debt. Although the price of imported DVD players has come down, most people can no longer afford to own their own homes.

In this land of plenty, the gap between rich and poor continues to grow. The band-aids of the present government are more to get people out working, and their children into day-care, than to share the wealth.

We have an entire generation entering the workforce lumbered with student debt, and we have a skills shortage as they take off overseas.

The education system is increasingly under pressure, with schools having to compete for funding. Overburdened teachers are also expected to be caregivers, coaches, psychologists and counsellors.

Classroom sizes grow, and services shrink. Precious country schools, so often the hub and focus of community activity, are closed as ‘uneconomic’.

Most shameful of all, is the dismal record of child poverty, abuse and neglect. It makes a mockery of our claim to be a great place to bring up children. New Zealand was the third worst for child abuse of all the OECD countries in 2003, and there is little evidence that we have improved very much since.

Some chilling statistics:

• Between 10 and 15 children die every year from preventable injury.
• Four out of five cases of abuse are not known to police or CYFS. Most children do not disclose abuse – they don’t know anything else.
• 17,000 children are hospitalised every year from preventable injury, at a cost of $5.3 billion.
• 70% of all prisoners were abused as children.
• It is against the law for an adult to strike another adult, or even threaten violence. Penalties are higher if a weapon is used. It is not presently against the law to strike a child, with or without a weapon.

Children make up 20% of our population, and 100% of our future. An aging society that does not care for its young is a society with a death wish, says Dr. Anne Salmond.

Our failure to provide all of our children with the necessities – good food, clothing and shelter, plus the love and support of a caring community – is underpinned by poverty.

And poverty, ladies and gentlemen, is the result of an unjust financial system that increasingly makes debt slaves of us all. We are mortgaging our future, our children and grandchildren and our planet host, for present profit.

HOW DID WE GET TO THIS POINT? By John

The Banking System.

It is all about money – making it and destroying it, storing it, moving it from one place to another or from one person or business to another, and recording those activities.

What is money? What is its purpose?

 Money is one of mankind’s best inventions. It is something we use to buy wealth. Money is a claim on wealth. Wealth is what people make and do. It comes from work, nature, and energy. Wealth can be goods people use; it can be services for others. So money is a man-made tool to facilitate trading. Rather than having to barter or swap goods and services directly.

In New Zealand:

The first money was just something everyone wanted because it was pretty or unusual – shells or gold. So it was easily traded. Most early money was too big or too heavy to carry around easily.  And so people began to store it. The storekeeper would issue receipts for it. These receipts were then used as money.

It wasn’t too much longer before the storekeeper started charging people to store their money. As the receipts were simple and easy to trade, people rarely bothered to take their receipts back, and their money stayed in the store.

The storekeeper could now give out more receipts than he had money to look after. But how could he do that?

[Here John gave examples of a Banks Balance Sheet using flip chart paper]

The loans came from nothing. The people nowadays use these loan receipts just like money receipts. Both receipts look the same.

In the beginning the receipts were promises by the bank to repay the peoples money, now the majority of receipts people promise to repay the storekeepers loans.

This process is pretty close to being one of mankind’s worst inventions.

Loans are not goods or services so they are not wealth. They are debts to the bank. Money receipts are today’s notes and coins.

[Show figures on flip chart]

Today’s loan receipts are called deposits. They are just numbers in a bank account. Imaginary money! Money that is neither pretty nor unusual. But it is very useful and easy to trade.

The Problem of Interest

The people use the bank’s money to make wealth. But the banker hasn’t made any wealth at all. He’s just made numbers in bank accounts.

Interest on money is perhaps mankind’s worst invention. It is something for nothing – unearned income. It is money people pay so that they can use money. The more interest people pay, the less money they have left to repay their debt.

[Use Flip chart to show the effect of interest]

New Zealanders, and in fact everyone in the world, have to borrow more and more just to stay still. We must put up the price of whatever we make or do, and work even harder. The more debt we have, the more interest we pay and the more wealth goes to those who make little or none themselves.

The price of existing wealth like property and business rises.

The time comes when we can’t do much because we can’t afford to use the bank’s money – because we can’t repay our loans or pay the interest. So we can’t build roads, schools, or hospitals, even though there are plenty of materials and most of us are willing to work.

Whose fault is it? Who do we blame?

The bosses, the workers, the dole bludgers, the beneficiaries, and the immigrants – you name it, they get the blame.

The real problem is money, not the bosses or the workers. There is always a gap between what the people earn and what they can buy. We do not have enough money to buy everything there is to buy unless we get it from somewhere else:  we borrow it from the banks.

Sovereignty and ownership issues

Virtually all the banks that operate in New Zealand are owned by a small number of faceless overseas shareholders. Kiwibank, Taranaki Savings Bank, Credit Unions, and the PSIS are some of the few NZ owned and controlled banking organisations we have left.

People or businesses who borrow from banks give over part ownership of those businesses or assets, until the loan is paid back.

There is, of course, another way that our businesses come up with more money and that is to sell shares, i.e. sell part, if not all, of the business to a new owner. And that more often that not is to an overseas investor.

Not only are bank’s profits sent off overseas but now business profits are too.

OUR SOLUTIONS

Banking

Our policies to remedy these problems will be staged and there will be neither great fuss nor bother:

Our government and local bodies will be able to source their infrastructure borrowings from a publicly owned New Zealand Bank.

They will access the same sort of loan funds from a more competitive and efficient bank, The Reserve Bank of New Zealand. The overdraft money lent to them will be at a cost of administration only (less than 1%).

The overdraft will be repaid over the expected lifetime of the asset, by way of rates or taxes. If $1million is borrowed, not much more than $1 million will be paid back.

The Reserve Bank will become the sole source of the nation’s money supply.

The banks will simply lose the monopoly to create our money. We will ensure that they have adequate funds to carry out their functions for industry, and we will do nothing to alter the valuable relations they have with their customers and the services they provide.

They will obtain new money from the Reserve Bank at 1% and they can then on lend it at a competitive margin to their customers in the normal manner.

The Reserve Bank may issue a further limited amount of new money into the economy without a debt attached to make up the shortfall created by the problem of interest. This will be done by the Government spending it in areas such as health and education and also supporting the introduction of a Universal Basic income.

Imports and Exports

As a percentage of exports, we have the largest trade deficit for a January year since 1976. We are currently importing $1.42 worth of goods for every $1.00 we export.

For 30 years and more we have been told by successive Finance Ministers and Economists that a large part of our imports are made up of investment spending which will lead to an increase in exports, smaller deficits and eventually surpluses, so our debts will decrease.

It hasn’t occurred in my time and is not likely to happen in the next 50 years either, if all we do is carry on with the status quo.

We have two key policies to change this:

We must cut out the middlemen, remove the money-changers from the temple, and negotiate reciprocal trade agreements between ourselves and other nations. New Zealand would not be dependent on the world’s reserve currency - we would utilise our own trading credits managed through the Reserve Bank.

A bilateral form of trading, on equal terms between nations, will enable us to trade on a fairer basis with all and that includes those countries that desperately need our goods but under the current system cannot afford to buy them.

A Foreign Transfer Surcharge (FTS) applied to all NZ money transferred off shore or exchanged for other currencies, would halt speculative movements of money. The surcharge will erode away any margins made. Money collected from this mechanism will be used to reduce internal taxation and a proportion used to progressively pay back our debt.

OTHER MECHANISMS TO SUPPORT ECONOMIC REFORM: by Katherine

With the publicly owned Reserve Bank as the sole creator of new money, it will be possible to provide a Universal Basic Income to every citizen in New Zealand.

The welfare system as it operates today creates many ongoing and insidious problems. Critics say it causes dependency, and indeed there are families that have known nothing else but welfare even into a third generation. On the other hand, few of us would want the families of unemployed workers to go hungry.

The regulations in place to minimise benefit fraud have the side effect of putting barriers in the way of employment. There is a real cost of working – clothes, equipment, transport, childcare. The often low wages of employment available, together with the abatement rate, create a situation where people find their meagre incomes actually dropping when they re-enter the workforce.

Recent government measures to address this do not remove the shame and grief, and the long-term lack of confidence and loss of skills, of being on the dole.

A Universal Basic Income does not have these problems. It is not tied to employment, so has no abatement rate. It carries no stigma of bludging – everyone will receive it. Families will benefit, because even children count in the UBI scheme.

People will be free to work fewer hours, to work in the arts or volunteer sectors, or to spend more time with their families. The UBI might be capitalised to provide a deposit for a first home, as was often done on the old Family Benefit scheme.

People who once felt alienated or disenfranchised will, with UBI, feel an ownership stake in the country.

If we think of New Zealand as one large corporation, and its citizens as shareholders, then the UBI is a dividend paid to each shareholder as of right. It’s capitalism as it should be.

Another mechanism that will enhance a social credit economy is a Binding Citizen’s Initiated Referendum (BCIR). This will give citizens of voting age much more direct, democratic control of government, not just once every three years, but issue by issue.

It is a system that has been in use successfully in Switzerland for a hundred years. Checks and balances will be included to ensure that human rights are protected.

In recent years, voting has declined in New Zealand, as it has in many Western countries. With BCIR, instead of feeling that their votes make little difference, people will become more involved and interested in the process of governance. They will have more control over their own lives, and more responsibility for their own communities.

Together with public ownership of the money supply, BCIR will make New Zealand a true democracy, and a shining example to the rest of the world struggling under the yoke of debt slavery.

SUMMARY:

John reviewed for listeners the figures that show our mounting debt problem, how that debt affected people, how we got into this position of indebtedness, and some social credit solutions. He then opens the floor for questions

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