Toolkit for a new economy
Democrats for Social Credit Party (DSC) monetary reform is based on the conviction that: whatever is socially and environmentally desirable, and physically attainable, is financially possible.
A range of tools has been identified and developed as Democrats for Social Credit Party policy that will be used to create and manage a monetary reform economy. These tools will create wealth for all New Zealanders, redistribute that wealth where necessary, direct investment funds toward the real economy of goods and services, discourage speculation and most importantly, significantly reduce the burden of compounding interest.
Core to DSC monetary policy is the sovereign Reserve Bank Monetary Authority (RBMA) that can provide and manage money as a public utility, for the economic, social and environmental benefit of New Zealand and its people. The RBMA will employ the tool of money creation, which may be lent into the economy interest-free or spent debt-free. It will be the responsibility of the RBMA to determine the proportion of each, according to the needs of the country each year. All monies provided by the RBMA may carry an administrative charge, to cover overheads.
Recognising that the current tax system is unwieldy and inherently unjust but that some form of revenue gathering may be desirable, a progressively introduced Financial Transactions Tax and a Foreign Transactions Surcharge are tools that will simplify revenue gathering and deter rampant speculation.
As mechanisation and technology do more and more of our work, in or out of recession there are fewer jobs. We regard income as a human right, not tied to paid work but derived from ownership, inheritance and residency. Growing naturally from the DSC monetary reform are Kiwi Income and Kiwi Dividend, forming a basic income for every citizen or resident of New Zealand, including children.
1. Interest free loans (overdraft/revolving credit facility) available from the sovereign Reserve Bank Monetary Authority (RBMA) at an administration cost only.
2. The issue of new money from the RBMA, to be spent into circulation by the New Zealand Government at an administration cost only.
3. A Financial Transactions Tax (FTT) – to be levied on all withdrawals from bank accounts.
4. A Foreign Transactions Surcharge (FTS).
5. The “Repayment Term” factor instead of the “Interest Rate” factor to be used in managing demand inflation.
Using the Toolkit
Monetary Tools – These tools are seen as a replacement source of lending or means of increasing the nation's money supply, not as an addition to the current system. Despite the use of interest free/low interest rate Reserve Bank loans by the 1935 Labour Government, and the Reserve Bank overdraft facility enjoyed by the New Zealand Dairy Board up until the early 1980s, the above monetary tools (1, 2 & 5) have not been utilised in a modern New Zealand economic environment. With that in mind, a staged or progressive approach will be used to complete the DSC monetary reform programme to allow adjustments for the effects of unforeseen events or behaviours.
Fiscal Tools - Despite being advocated since the 1970s in some form or another, the above fiscal tools (3 & 4) have never been implemented on a nationwide scale. The FTT tax has been used on occasions within a country i.e. on a state level. Just as the monetary tools above have not been utilised in a modern New Zealand economic environment, the same applies to the fiscal tools. Again, a staged or progressive approach will be used to complete the fiscal programme to allow adjustments for the effects of unforeseen events or behaviours.
1. Interest free loans (overdraft/revolving credit facility) will be available from the sovereign Reserve Bank Monetary Authority (RBMA) at an administration cost only, for:
• Investment in public and local authority infrastructure – public transport, sewage systems, public amenities, sustainable power alternatives, major environmental projects, etc;
• Providing a short term overdraft facility for the government to manage its cash flow requirements;
• Facilitating reciprocal trade arrangements made with other nations;
• Lending to trading banks to on-lend to their commercial, business, farming and corporate clients;
• Lending to first home buyers to increase home ownership; and
• Removing speculative demand from overseas investors chasing returns from high interest rates. A low interest rate policy will create a more realistic and stable trading value for the NZ dollar.
2. The issue of new money from the RBMA will be spent into circulation by the New Zealand Government – at an administration cost only:
• To fund all or some Government expenditure, i.e. the full provision of health and education;
• To help fund Kiwi Income (a stable regular basic income); and
• To help fund Kiwi Dividend (an amount that fluctuates with the performance of the economy).
3. A Financial Transactions Tax (FTT) – will be levied on all withdrawals from bank accounts:
• To control speculative demand;
• To ensure the government's budget is balanced;
• To remove tax compliance costs for business and individuals; and
• To widen the tax base.
4. A Foreign Transactions Surcharge (FTS) will be levied:
• To control speculative demand on our currency;
• To use as one tool to balance the current account in the short term;
• To progressively fund the repayment of our overseas debt over the long term; and
• To reduce domestic taxes.
5. The “Repayment Term” factor instead of the “Interest Rate” factor will be used to manage demand inflation.
• Loan demand will be managed by increasing or decreasing the loan term; and
• Home loan terms will be adjusted according to family incomes.
NZ Democrats for Social Credit Party
Published: January 2017