We Need to End Money Creation by Private Banks – Urgently

After 18 years with the New Zealand Green Party, I will be voting for the Social Credit Party in our parliamentary elections in September. Founded in 1954, Social Credit was NZ’s official third party for many years, winning 20-30% of the vote in the 1970s. They have consistently campaigned around ending the ability of private banks to create money. Contrary to popular belief, 97% of the money circulating in the global economy is created (out of thin air) by private banks when they issue loans. (See 97% Owned)

Given the impending dual crisis we face (post-COVID19 economic collapse and catastrophic climate change), the need to regain public control over our money system is more urgent than ever. New Zealand, like the US has embarked on massive Quantitative Easing (QE).  Under QE, money created by central banks is handed over to private banks to buy back Treasury bonds.* This influx of new cash is supposed to inspire private banks to lend lots of money to businesses to create new jobs.

The US, UK, and EU tried QE following the 2008 global economic collapse. It didn’t work then and it won’t work now. Instead of using these funds to increase business lending, private banks used it to increase stock prices by buying back shares, to increase CEO salaries, and to speculate in the housing market (driving up house prices) and derivatives.

The result? A so-called jobless recovery in which stock prices soared with minimal new job creation.

What we needed then and what we need now is for the new money central banks (including the Federal Reserve) to be spent directly into the economy to fund the COVID19 recovery.

The movement to retake public control of money creating is a very old one, growing out of the US Greenback Party. Named after the Greenbacks Lincoln issued to fund the Civil War (rather than incurring massive debt to private banks). In 1892, the party was reborn as the Populist Party (aka the People’s Party). In 1892, the Populist candidate for president won 8.5% of the popular vote. (See The Populist Moment)

It was a Labour government that first used the Reserve Bank of New Zealand to fund state housing and the State Advances Corporation* in 1936. The US and Canada also used direct Reserve Bank funding to reduce joblessness during the Great Depression and to help pay for World War II. The US continued to use this so-called “overdraft facility” to cover deficits until 1981, Canada used theirs until the mid-seventies, and New Zealand theirs until 1987.


*Treasury bonds are the financial instruments governments issue when they borrow money from financial institutions to fund their deficits.

**The State Advances Corporation was a government agency providing extremely low interest mortgages for first time home owners.

Below is a recent local radio interview I gave with New Plymouth’s Social Credit candidate.

Hidden History: US Workers’ Bitter Struggle for Labor Rights

Plutocracy II: Solidarity Forever

Directed by Scott Noble (2016)

Film Review

Plutocracy II (the sequel to Plutocracy) covers the resistance movements that arose in response to the brutal sweatshop conditions of US mines and factories in the late 19th century. Prior to the rise of the labor movement, most US workers earned starvation wages, as well as experiencing the highest rate of work place accidents and deaths in the developed world.

This documentary traces the rise of the Molly Maguires, the United Mine Workers, the Western Federation of Miners, the American Railway Workers Union (started by Eugene Debbs), the American Federation of Labor (which only represented white male skilled workers), the Peoples Party (aka the Populist Party), the Socialist Party, the International Workers of the World (IWW) and the progressive and anarchist movement.

Solidarity Forever also highlights the extreme violence used by industrialists and federal and state governments to suppress these movements. During this period, the Pinkerton’s guards (a private army hired by corporate elites), national guardsmen and even US troops openly shot and killed nonviolent strikers without fear of legal repercussions.

The parts of the film I found most interesting concerned the IWW and the anarchist movement. I was previously unaware of IWW’s strict code of nonviolence, despite the stark brutality they experienced at the hands of government authorities. I was also unaware of their role in empowering Mexicans, African Americans and women to assume lead organizing roles – nor that the IWW organized the highly successful (women’s) textile workers strike in Lawrence Massachusetts in 1912.

I was also intrigued to learn about a faction of the early anarchist movement that engaged in “Propaganda of the Deed,” planning and carrying out assassinations of industrialist, generals and politicians in the hope of inspiring mass insurrection.

I was previously unaware of the involvement of the early progressive movement (which had its origins in middle class Christianity) in the eugenics movement and Native American residential schools.