GUEST BLOG: Tadhg Stopford – The evil legacy of 1989
Central Bank “Independence”, another Winebox crew Racket
In 1989, New Zealand became the first country in the world to enshrine central bank independence into law. It was hailed as a breakthrough, freeing the Reserve Bank from “political interference.” Nations quickly copied is. But in practice, all it did was hand monetary sovereignty to private financial interests. It was a takeover of our treasury powers by banksters/the finance sector.
Duh. We gave our money creation power to greedheads.
The results? A $200 billion deficit in infrastructure (roads, hospitals, rail, energy, housing) and the loss of sovereign control over credit creation. Bevayse indtead of continuing to invest, they suffocated our economy of spending “because there’s no money” (Lies!!! You’ve just binned our bank)
Talk about an own goal of catastrophic proportions. The policies of the last forty years have reduced our national wealth and filled foreign bankers boots. In the name of ‘efficiency’. In the name of ‘free markets’.
Luxons cutting back spending even more now, citing ‘immutable laws of economics”.
Bullshit. What total bullshit.
Irresponsibility and insanity, more like. Could be incompetence. In fairness. But I think it’s entitled evil myself. Because it’s been going on for a long time, and if you look into it. It looks a lot like an intergenerational racket. Judas generations I call them; from rogernomics and ruthenasia to Seymour Luxon Willis bishop et al. Junk tank creatures, corporate non entities, junk tank entities, tobacco lobbyists, more corporate junk tank entities. The pedigree of our politicians is desperate. Not leadership material for public service. These are the wrong dogs.
I’m reminded of a Turkish proverb. “The shrinking forest kept voting for the axe; because it said its wooden handle made him one of them”.
All that ‘debt’ our politicians said was so scary, most of that was from investing in ourselves. In ‘think big’ and more.
We have more debt now, after forty years of NOT investing in ourselves. Meanwhile, much of our wealth production has been sold cheap to monopolies who exploit us.
How is that progress? Who really benefits?
The Scam Explained
- Who do central bankers really serve?
- Not the public, but the financial class. Central bank Independence meant that instead of issuing low-cost sovereign money (“tap money”) to itself, our governments became dependent on private markets for our own currency. …talk about easy money, for the banksters.
- Sovereign debt ≠ household debt: Sovereign debt carries no compound interest burden. It can be rolled over, refinanced, sold, or even forgiven. It is, in effect, a record of what a nation has invested in mobilising its people and resources.
Therefore, if invested wisely, public debt is a record of running costs and our investments; from which we can expect returns that will lower the cost of living and of business. “The wealth of nations” is built on sovereignty and productivity.
- Private debt is the trap: borrowing from private banks means compounding interest payments — a permanent siphon of public wealth to the financial sector. Ever growing, as more and more essential spending is borrowed at interest, instead of created for free.
Private debt also discourages investment in high risk or low profit but otherwise important areas. Tending instead to blow asset bubbles in housing or the financial markets.
Why Sovereign Debt Was Demonised
One of the great neoliberal con jobs was to present sovereign debt (“public debt”) as a problem. It never was. As Adam Smith noted in The Wealth of Nations, wealth is built when a society mobilises its labour and resources productively. That’s exactly what sovereign spending does. Public credit creation becomes private profit when spent into an economy.
Debt only becomes a problem if created and directed unproductively. Muldoon’s “Think Big” projects, while politically controversial, were not the reckless failures they were painted as. They were long-term investments. But neoliberals pilloried him, not because of economic failure, but because public credit threatened the supremacy of private finance.
The Consequence of Central Bank Capture
By letting “independent” central bankers dictate monetary policy, New Zealand, the US, and the UK have all ended up in the same place:
- Starved infrastructure
- Chronic underinvestment in public goods
- Perpetual dependency on private bank credit
- Rising inequality as financial rents flow upward
What looks like prudence is in fact a racket: a deliberate constriction of sovereign credit creation to maximise profits for the financial class.
The Sovereign Alternative
If you want a truly sovereign nation, don’t let bankers control the money supply. Sovereign debt, used wisely, is a tool of independence. It funds productivity, public wealth, and resilience. Private debt, in contrast, is a tool of control
In real terms, this means unshackling the rbnz from the public finance act and rbnz act.
It’s just a shame we don’t have a pipeline of engineers and teachers and builders to empower with rbnz then.. neoliberalisms been bad for Nz x
Tadhg Stopford is a historian and teacher.
Support change by purchasing your CBD hemp CBG at www.tigerdrops.co.nz
I have said for a long time now government debt is not the problem .Private debt is around 500 billion which means around 15 billion is going over the border every year which is 15 billion of hard earned money never to be seen again and which is being spent and invested in AUS .No wonder that their economy is doing well .All those squeezed middle voters who went on a 2 year FOMO spending spree ,then voted for the coalition of idiots ,because they thought they would punish everyone else except them ,are now squashed and are selling houses for 150k less than they paid .
Your idea is good if we can trust whoever is in government to invest in the infrastructure that is needed. My fear is that they would waste money on vanity projects and senior public service/politicians salaries that continue to concentrate wealth at the top.
This: In 1989, New Zealand became the first country in the world to enshrine central bank independence into law. It was hailed as a breakthrough, freeing the Reserve Bank from “political interference.” Nations quickly copied is. But in practice, all it did was hand monetary sovereignty to private financial interests. It was a takeover of our treasury powers by banksters/the finance sector.
I have read, that NZAO was used as a bellwether for the spread of neoliberalism. We apparently were the eager puppies, tongues hanging out to be in with the bigger dogs, that had the best food and lodgings and outings. And sir Roger the Dodger got a knighthood for it.
But cheer yourself up with what we should have done, learn from Monty Python using some French insouciance – French taunting, (we being the French in the castle and the neolibs being supplicants to get in). This is how we should have been. Even throwing the cows at them which would never have been approved by SPCA. We didn’t and instead abandoned our neighbourly citizens, and the sale of our cows to the incomers, who treated the cows badly, and also us to conditions that the SPCA wouldn’t have approved for animals.
https://www.youtube.com/watch?v=QSo0duY7-9s
Monty Python
What is NZAO?
There was a piece a week or so ago on Newsroom by none other than Eric Crampton about how NZ revolutionised the world by innovating the independent RBNZ with the target of controlling innovation, and how the world looked down in astonishment and said wow we should do that too.
Almost as if Roger Douglas, Don Brash and the grey suits at Treasury were so smart as to come up with something so revolutionary.
Well no, they are all as dumb as rocks.
NZ was set up as a test case to put into practice Hayek’s principles and then it could be extended to the rest of the world as a best practice case study. Simply because kiwis are too naive to know any better.
Beware of these overseas experts selling us their magic beans and snakeoil, especially those from the rottnest of Canada.
NZ has no idea of what is about to hit us. But be assured we will be the world leaders in stupidity once again.
This is a good point about Muldoon.
Debt only becomes a problem if created and directed unproductively. Muldoon’s “Think Big” projects, while politically controversial, were not the reckless failures they were painted as. They were long-term investments. But neoliberals pilloried him, not because of economic failure, but because public credit threatened the supremacy of private finance.</i<
Muldoon lost much of his support being such a cocky, obnoxious little twerp. But the financiers couldn't have won their point if the public had been better advised, more involved, less top-down; we should be learning about our basics from when in intermediate. Then given a small project that different classes work on so that the various matters involved can be experienced and compared. Then have a look at a government project, where did the tensions, and mistakes that cropped up in the class one, show up in the government one? And work out if the return on capital is reasonable for usefulness or display.
Now the kids could be got off their devices that they have taken to so devotedly. Rotate them in a department in the Council, do some work, some planning. 'I am sorry but we need to get rid of some of you admins. The system under which we employed you is plainly not working for us'.
We have to bite the bullet before we get to putting it to our own heads.
Do not conflate Muldoon borrowing money to finance think big with actual public credit.
it was deliberate set-up to privatise our shared assets and resources through an intentionally manufactured debt crisis – Muldoon and Birch were nothing more than simple minded brainwashed stooges.
it’s a bout time we set fire to the FIRE industry