Money doesn’t grow on trees or so they say

They also say that money makes the world go round…well metaphorically it does. It oils the wheels of commerce and enables us to transact with each other and exchange our goods and services.

But how does money actually grow? There always seems to be more of it around. Who creates it?

You probably assume your local central bank does because only they can print notes and coins. That much is true but that’s only a bit of the story. Currently only 2-3% of the total money supply is created in the form of notes and coins that we keep in our wallets and purses.

The rest? Well as JK Galbriath noted the way in which most money is created is “so simple that the mind is repelled”. The private banking system simply create the balance of new money by issuing new loans.

That’s it. For those of you who thought banks lent out money you have deposited with them i’m sorry to inform you that this is not the case.

If you deposit $1000 in the bank, they now have the ability to lend out (and in the process create new money) up to $10000. Of course they charge interest on that loan which is where they make their huge profits from.

I’ll give you an example:

In New Zealand the money supply has increased 101% in the last 8 years. So the total money stock has more than doubled in 8 years!! In that time house prices have risen 143%.

But the official measure of inflation has only risen 20%. Hello…..what is going on here? Yes it is a complete mess.

It is not the central bank or government printing money and causing huge (but unmeasured inflation). It’s the private banks who are doing it! The ones who scream and shout if governments ever think about reclaiming their right to issue money interest free on behalf of their citizens.

It is one of the greatest swindles of in history.

It requires that people sit up, take notice and look hard at what is happening around them. In the US especially the system is starting to creak…..look at the housing market and the lenders that operate in it.

Please see the following sites for more information. Once you learn about this life will never be the same

US: www.monetary.org

UK: www.monetaryreformparty.org.uk

Can: www.comer.org

Aus: www.peoplesbankparty.org

As my old history teacher said read, learn and inwardly digest.

The Last King of Africa - Robert Mugabe?

I finally got round to seeing the Last King of Scotland yesterday. I thought it was a great film not just because of its portrayal of Idi Amin but also the feckless young Scottish doctor who arrived in Uganda hoping to help out, make a difference and have a bit of adventure (preferably sexual).

As Amin prepares him to meet his maker he makes some interesting points to the young man. He tells him in no uncertain terms that Africa is not a game or a place to come a play the altruist…it’s real….and reality is often brutal and bloody. His death was the first real thing the young doctor would experience in his life. As it happens he got away and we are left feeling that the message got through.

Of course the film is fictional though based on the book of the same name which drew on various people and factual events to create the character of Dr Carrigan. Complete with stereotypical English diplomatic spooks, menacing local enforcers and locals with big hearts but no hope, the film almost falls over but for the fact that it’s a fair representation of life in Uganda at that time.

It’s interesting for me also becuase in recent weeks i have met 2 people from Uganda in different contexts both who struck me as being very hopeful about life, passionate about making a difference but also aware that potentially similar problems may be lurking around the corner.

So that brings me to the point of this blog…….is Robert Mugabe the last King of Africa? Watching Zimbabwe implode is not very pleasant even for the dispassionate observer. The similarities with Uganda are there though not as obvious as one might think. Certainly the paranoia is setting in, the violence is on the increase and the general population is now suffering from food and medical shortages, inflation, unemployment.

Mugabe has already used up his fall guy card - the British - with white landowners having been given short shrift over the past decade. So the only people left to get stuck into are his own…..surely he doesn’t have much time left?

The nature of the dictator as a sociopath is well documented. Intransigence and unwillingless to listen are other unwelcome attributes. But is this just an African problem? I don’t think so. Look at Iraq, Serbia even Northern Ireland. Ian Paisley finally agreed with Sinn Fein yesterday as they sat down next to each other…..apparently “never, never, never, never” doesn’t always mean never.

And who is running Russia right now? Surely Putin is only a few steps away from a fully paid up authoritarian….he’s just doing well economically so can afford to be beneficient at the moment.

That could change.

Many old timers weep tears for their beloved Rhodesia but how can a country be prosperous based on the subjugation of others and the expropriation of resources? All around the world we are seeing a slow unwinding of the colonial and imperialist adventures of the last 500 years. Freedom, self determination and removal of the yolk of centralised and external authority is the story of the day. For Africa, stuck in the whirlpool of historical tribal and ethnic conflict, post colonialisation changes, grinding debt and the arms/resource trade, times are difficult.

The best thing the international community could do is to eliminate historical debts and aid at the same time under a guarantee that funds would go towards schools, hospitals and basic infrastructure.

Other than that people have to sort out their own problems in their own backyard. Human nature will no doubt continue to interfere with any positive outcomes but everywhere there are people with hope and the will to make things work.

As they say in New Zealand, she’s a hard road ahead.

debt, zimbabwe, poverty, conflict, mugabe, political institutions, un declaration of human rights, sustainability, new zealand, education, violence, politics, money, africa, uganda, future, Uncategorized

Sustainability - Where do we start?

Sustainability - what is it?

Sustainability is a much maligned word “full of sound and fury, signifying nothing”. Well that’s a tad harsh but the word has been dragged through the mud from the early days of “sustainable development” to the “four pillars” namely enviornment, economy, social and cultural.

Reductionism rules!

You could argue that we have a sustainable society already because we are still here…6 billion of us. That’s not a bad effort considering we started off with just two .

But when we look back at our history we see clearly the duality of our existence: misery, bloodshed, violence and despicable acts; and amazing creation, beauty, love and art. It;s hard to argue that much has changed in the last 10,000 years at least.

So where to? Can we ever become whole or will we always be engaged in a battle between the dark and light forces in our amazing universe.

I believe sustainability as a metaframework not an end in itself. It allows us to ask ourselves “what kind of society do we wish to live in?’…..if we can define that then all the other stuff will follow. The problem we have know is we start with the reduced view whether it is the environment or social issues or economic growth.

Then when it all ends in conflict we wonder why.

So where do start? Well there’s the ten commandments magna carta, uk bill of rights moving along to more modern frameworks such as the US constitution and one i quite like is the UN Declaration of Human Rights which came into being on 10 December 1948.

This was ratified by all then 58 member states which was no mean feat. The committee which prepared the initial text was chaired by Eleanor Roosevelt herself. You can view it here

Article 25 and 26 are of particular interest being on the issue of education and well being.

It’s well worth a read.

Article 1, Section 8 of the US consitution notes:

Congress has the power “to coin money, regulate the value thereof”……….it doesnt say banks have that power mind you.

Coming back the the topic at hand: how do we craft a society that sustains itself without the externalisation of environmental, social, cultural and economic costs.

- Eliminating poverty (Article 25 of the UNDHR).
- Compulsory free education to 16 for all (Article 26 of the UNDHR).
- Life, Liberty and Security of Person (Article 3 of the UNDHR)
- Life, Liberty and the Pursuit of Happiness (US Declaration of Independence)

I could go on.

What is it that we want? We dont want our prisons overflowing with societal detritus. We therefore must ensure at all costs all children we bring into this world are well looked after with resources to ensure that is the case. Decent fresh food not the fossil fuel sugar laden processed rubbish churned out my the corporatised supermarkets. No wonder so many children are going round the bend…we’re poisoning them.

Safe, secure and healthy homes are vital for our children. Well resourced educational facilities are next on the list alongside decent parks and safe public spaces. Ripping poverty and its bedfellows out of our society has to start now with major expenditure….the kind normally reserved for invading other nations and killing machines.

If anyone argues “show me the money”…well it’s right there in front of you. There always has been and continues to be a huge transfer of wealth from the state to the private financial sector. It’s fact: in the UK the sum has been estimated at GBP20-40bln a year. In the US i imagine it will be a more significant sum.

Underlying all this is the question of who owns the money supply, where does the power lie.

If we dont have an idea of what we’re aiming for we will most certainly miss the target. We know we already have as levels of happiness and well being have been static for decades (sorry GDP is not going to help).

If we focus on building strong roots then sustainability will come. Right now no amount of fiddling will help. As the Declaration of Independence noted,

“whenever any form of government becomes destructive of these ends, it is the right of the people to alter it or abolish it, and to institute new government, laying its foundation on such principles and organising its powers in such form, as to them shall seem most likely to effect their safety and happiness”.

Investing in our children

There have been some interesting stories out in the last week which have made me realise we need to change our focus a little. The Unicef report showed children in New Zealand getting a raw deal, suffering violent and deprived lives. This is a ridiculous state of affairs especially in a country with strong growth over the last 10 years and 9 years of a Labour government. The report is available here

At the same time there has been a great deal of fuss over the ethical dimensions of the NZ Cullen Fund, which pours $2bln a year of taxpayers money into the investment market to help pay for some of the increasing pension liabilities. The fund is already some $12bln in size. See below for more details

http://www.nzsuperfund.co.nz/

This is great long term investment but wait a second…..why don’t we start investing some of that money in our children. The payoff will be way bigger than the global stock markets which are prone to wild swings in an era of abundant credit. Here is a letter i wrote to the local paper

Dear Sir,

Events of the last week have shown New Zealand to be a society under severe pressure. The complete failure of the supposedly free state education system to lead young people out into the world as individuals able to make a contribution to society reflects poorly on the current Labour administration. Many parents already under financial pressure are required to increase contributions to school costs which have serious impact on the home budget. As a society we should be proud that we strive to offer education free to all our children knowing full well that investing in the future of our children is the best investment we can make. If we continue to fail in this we will pay a heavy price in the future and one which will dwarf the cost now of reducing class sizes, boosting teacher numbers, training and pay, and providing quality pre-school care to all our under fives. And yes investing in post-natal parenting classes would certainly help. No wonder many of your columnists are simply in a state of sad resignation. To see the government invest $2bln a year in the Cullen Fund to meet some future demand from an ageing population when that money should be spent now on our children is enough to drive anyone to despair. If the government does not deal with this situation right now it may as well start preparing for a vastly increased prison population and a country in social and economic disarray.

$2bln a year into better schools and better housing for children? free schooling as it should be….we are going to need all the skilled workers we can get in the future so we better start focusing in that now.

The Cullen Fund has always been a project based on ego and trying to keep up with the Aussies and their $1trln fund. All that does is drive asset prices to unrealistic levels and we know what eventually happens there.

Like charity, investment should start at home..