Published: April 2008
Heading for a Recession
Politicians are coy about using the term “recession”, but bank economists claim to be convinced that the housing slump and global credit crisis are leading us in that direction. The challenges of climate change, an ageing population and advancing debts exacerbate the situation. The language of bank economists is usually conservative but phrases such as “predator banks”, “recession” and “structural distress” are increasingly common. When economists talk like that, we should listen.
A recession is an inevitable consequence of global dependence on a system which is seriously flawed. Fundamentally, this is a systemic failure.Systems are man-made and must be regularly examined for effectiveness and relevance. If a system is examined and found wanting, it should be replaced by a viable alternative.
The present financial system does not serve us well, and nor do the politicians who lack the political will to challenge it. Some financial choices made by our elected parliamentary representatives border on the irresponsible. Others are morally repugnant. Dr Cullen’s pet project, the New Zealand Superannuation Fund, is both.
The folly of investing our tax dollars in overseas investments, instead of using New Zealand money to develop New Zealand, is demonstrated by the announcement of a $394million operating budget deficit for the seven months to 31st January, $4.2 billion short of the forecast $3.8 billion surplus. The $4.2 billion shortfall is largely due to losses sustained by the NZ “superfund” investments in overseas sharemarkets. In addition to the inevitable losses sustained by gambling with taxpayers money in this way, the fund invests in at least five of the companies manufacture cluster munitions. The New Zealand Superannuation Fund is investing our pension funds in weapons.
The present financial system is hopelessly outdated and serves a wealthy few, at the expense of everybody else. Almost every dollar injected into the financial system is created as interest-bearing debt resulting in the debt mechanism being the primary source of injecting purchasing power into the economy. The implications are alarming. The prospect of rising debt servicing bills faced by home-owners and businesses has serious ramifications but the impact on the wider community can be ameliorated if a monetary reform policy package is embraced and implemented. This will only happen if there is sufficient public support for a revolutionary transformation of New Zealand’s financial system.
Democrats for social credit proposes a radical shift in emphasis which would allow all New Zealanders to share in this country’s wealth as well as giving them the democratic right to say how it is managed.Underpinning our policies is the Reserve Bank of New Zealand. Instead of enriching the shareholders of commercial banks by borrowing money from them at compound interest, the DSC advocates funding capital works, infrastructure and some community projects by drawing down loans from our own bank, the Reserve Bank of New Zealand. This is simply the issue of credit from the Reserve Bank for the benefit of our communities.
New Zealanders do not need to suffer the pain of recession. There is a workable alternative. Social credit monetary reform is a sustainable way of funding New Zealand’s future.
Written By: Stephnie deRuyter
Party Leader
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