La gente, los bancos y el dinero

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Ciencias econmicas
atlantismo mundial
4.7.2016
Kerry Bolton

En artculos anteriores para Katehon he tratado de la alternativa a la financiacin internacional - la

usura de forma que el Estado asuma la prerrogativa de crear y emitir su propio crdito. Aunque
esto se ha hecho con xito a lo largo de la historia, trayendo prosperidad a aquellos estados e
incluso comunidades locales que la tienen, la idea sigue siendo ridiculizada por polticos y
economistas como "inflacionaria" y, a menudo, menospreciada sin debate como "dinero falso". Sin
embargo el "dinero fiduciario" y la "flexibilizacin cuantitativa" irnicamente son usadas por los
estados como ltimo recurso cuando el caos financiero amenaza debido a la acumulacin de la
deuda. Entonces, el "dinero fiduciario" y la FC se vuelven aceptables repentinamente, y de hecho se
rescata a los bancos que crearon la deuda y que normalmente son firmes en su oposicin a la
interferencia del Estado en las finanzas. Lo que falta crucialmente en el uso reciente del "dinero
fiduciario" y la FC sin embargo, es que en vez de la impresin y la emisin de dinero directamente a
la comunidad por parte del Estado a travs de una "renta bsica" o un "dividendo nacional", o
ponindolo en circulacin a travs de proyectos estatales, este es adelantado al sistema bancario
privado. Por lo tanto, lejos de reducir la deuda, el crdito adelantado a los bancos se utiliza para
acumular ms deuda. Por ello, el dinero fiduciario no es un problema, sino la manera en que se hace
circular. De ah que el crdito estatal y el dinero sean anatema para los plutcratas, hasta que se
necesita para apuntalar su sistema de deuda y sacarlos de los problemas de su propia creacin.
El uso creativo de la moneda fiduciaria a una amplia escala, a nivel nacional, fue de 4.000 millones
de dlares de bonos del Tesoro de EE.UU. emitidos bajo la administracin Kennedy en 1963. Es
significativo que eran Letras del Tesoro y no divisas de la Reserva Federal. Se hicieron circular en
la economa, sin pasar por el sistema bancario y siendo as un medio de aumentar la oferta de dinero
libre de deuda. Lincoln emiti 150 millones de "Lincoln Greenbacks," pero esto fue socavado y
sustituido por la National Banking Act de 1863, que autorizaba a lo que se llam de forma
reveladora bonos del tesoro remunerados y con inters compuesto (Ver K. R. Bolton, The Banking
Swindle, London, 2013, p. 88). Los estados y las comunidades (a travs de monedas locales,
cupones o "pagars"), como el que he descrito anteriormente en "Katehon" en relacin con la
moneda "Kolionovo" de un pueblo ruso, muestran que el crdito y la moneda puede y debe ser
emitido precisamente no "con inters, con "inters compuesto" o, en pocas palabras, con lo que ha
sido condenado por milenios como "usura "por todas las grandes religiones hasta la Reforma.
Nueva Zelanda fue uno de los pioneros de la edicin moderna de crdito estatal durante la dcada
de 1930. El primer gobierno laborista nacionaliz el Reserve Bank en 1935, y comenz poco
despus la emisin de crdito estatal, inicialmente para la construccin de viviendas estatales. No
hubo inflacin; slo produccin y reactivacin de la economa durante la Gran Depresin. Ahora,
irnicamente, hay una crisis de la vivienda en Nueva Zelanda con mucha cantidad de reciente
atencin de los medios centrndose en las personas sin hogar. El gobierno no sabe cmo superar la
crisis mediante la simple construccin de viviendas estatales con el crdito del estado, debido a que
la interferencia del Estado en la economa, y especialmente en el sistema financiero, ha sido tratada
durante dcadas como un anatema por los partidos nacional y laborista. Por otra parte, incluso
acadmicos y polticos no recuerdan el uso del crdito estatal en aos pasados; es como si se tratara
de una poca mtica en torno a la cual hay una niebla de olvido. Los historiadores citan los
programas estatales de vivienda de la dcada de 1930 y ni siquiera aluden a la forma en que se
financiaron. He reproducido recientemente dos importantes panfletos del famoso poltico
neozelands John A. Lee sobre el sistema bancario del estado de Nueva Zelanda de la dcada de
1930. Estos folletos, "Money Power for the People", y "A Letter which every New Zealander
should read" pueden leerse por primera vez desde la dcada de 1930 en mi libro Opposing the
Money Lenders (Londres, 2016, pp. 39 -93).
Las potencialidades continuas del crdito estatal fueron reafirmadas, aunque no con aprobacin, por
el gobernador del Reserve Bank de Nueva Zelanda en 1996. Haba sido el mismo Banco de la
Reserva que exactamente sesenta aos antes emiti el crdito estatal que llev a Nueva Zelanda
fuera de la Depresin. Sin embargo, el gobernador del Banco de la Reserva era en 1996 el Dr. Don
Brash, un celoso exponente de la economa de mercado y de la no inferencia del estado en la banca.
Brash tiene una distinguida carrera en la banca internacional. Despus de haber sido lder del
Partido Nacional y brevemente lder del marginal y libertario Partido ACT, Brash ha sido profesor
universitario en economa, sirvi como economista en Washington en el Banco Mundial en 1966;
volvi a Nueva Zelanda en 1971 para convertirse en director de la Broadbank Corporation, y en
1986 como gerente general del Trust Bank. Durante catorce aos, desde 1988, fue gobernador del
Banco de la Reserva de Nueva Zelanda. Fue bajo Brash que el Reserve Bank se hizo libre de
perseguir la poltica monetaria sin interferencia del Estado, conforme a la Reserve Bank Act de
1989, estableciendo una relacin contractual entre el Gobierno y el Banco. (Ver "Don Brash",
http://www.donbrash.com/about-don/). Desde entonces cualquier nocin de que el Estado debe
tener una direccin sobre la banca es considerado como hereja. Es una idea sostenida tanto por el
"ala izquierda" del Partido Laborista, como por el Partido Nacional. Al igual que muchos
entusiastas del libre mercado, Brash comenz en la "izquierda" de la poltica, y se movi hacia la
economa de libre mercado (muchos de los fundadores del Partido ACT haba sido incondicionales
del Partido Laborista, como Trevor De Cleene, Richard Prebble, Roger Douglas), mientras que el
otrora vido socialista Mike Moore se convirti en director del Banco Mundial y uno de los
asistentes a las conferencias Bilderberg. Esto sigue un patrn entre el mundo de la izquierda.
La Carta de 1996 del Dr. Brash
Con este teln de fondo, la detallada respuesta del Dr. Brash a un solicitante sobre la naturaleza de
la banca y las finanzas internacionales tiene muchas caractersticas muy significativas. En 1996 (28
de octubre) un investigador formul al Dr. Brash un gran nmero de preguntas sobre el carcter del
dinero y del crdito, y sobre el poder de los bancos internacionales sobre la poltica estatal. El Dr.
Brash respondi cada pregunta con sorprendente detalle. La primera serie de preguntas es:
(A) De dnde viene el dinero (en particular, de Nueva Zelanda)?
(B) En qu se basa su valor (cualquier cosa intrnseca)?
(C) Quin lo emite, y es esta fuente totalmente controlada por Nueva Zelanda?
(D) Quin dicta y controla la cantidad en circulacin?
Dr. Brash respondi con el membrete del Reserve Bank (25 de noviembre), a la pregunta De dnde
viene el dinero?:
"En Nueva Zelanda, como en casi todos los pases con un sistema monetario moderno, el "dinero
comprende los pasivos emitidos por el Reserve Bank (billetes y monedas) y por los bancos
comerciales e instituciones financieras similares (a cuenta de cheques y otros depsitos lquidos).
"Los depsitos bancarios comerciales son controlados por los prstamos de los bancos. Cuando un
banco concede un prstamo, en primer lugar, depositar el producto en la cuenta del prestatario. Por
supuesto, el prestatario, invariablemente, recauda fondos para gastarlos, por lo que los productos
(los depsitos), normalmente van a terminar en la cuenta bancaria de una persona distinta del
prestatario, a menudo en otro banco que el que hizo el prstamo. Sin embargo, lo cierto es que las
operaciones de prstamos bancarios en ltima instancia, estn detrs del depsito de los saldos que
mantienen los bancos. Al influir en las tasas de inters, el Reserve Bank es capaz de influir en la
tasa de crecimiento de los prstamos bancarios y por lo tanto la tasa del crecimiento del dinero
(depsito bancario)".
Por lo tanto, el "dinero" se crea como una deuda cuando se hace un prstamo por parte de un banco
(los "bancos comerciales e instituciones financieras similares"). A continuacin, se devuelve en
riqueza real (como el resultado del trabajo del prestatario), ms los intereses.
Sobre la cuestin de en qu se basa el valor del dinero, Brash respondi:
"El dlar de Nueva Zelanda (al igual que todas las dems monedas modernas que yo sepa) es dinero
fiduciario, es decir, no est respaldado por ningn activo fsico". Brash afirma que la circulacin del
dinero se basa en el contacto entre el Reserve Bank y el Gobierno para mantener la inflacin entre
el 0% y el 2%. El "dinero" no puede ser convertido en algo fsico por parte del Reserve Bank,
afirma Brash. La "fiabilidad" del poder adquisitivo del dinero se basa en que los objetivos del 0% a
2% de inflacin se mantengan.
Brash aqu afirma que "todas las monedas modernas" son dinero fiduciario. El dinero fiduciario no
tiene ningn respaldo aparte del reconocimiento de su legalidad por el Estado. Sin embargo, cuando
los oponentes de la usura sugieren que el "dinero" debe ser emitido sobre la base de los bienes y
servicios producidos y la posibilidad de comprar estos en su totalidad, los partidarios del statu quo
objetan que esto sera dinero "fat" o facilitacin cuantitativa, y dara lugar a la inflacin. Cuando
Russell Norman, en su momento miembro del Parlamento y lder del Partido Verde, sugiri que el
estado expidiera dinero fat, su sugerencia fue ridiculizada y borrada del mapa, y comparada con la
poltica monetaria de Zimbabwe, y Norman rpidamente retir la idea, para no ser nunca planteada
de nuevo por el Partido verde. Sin embargo, la moneda es "dinero fat."
Por lo tanto no es el "dinero fiduciario" per se lo que es objetable. La cuestin es en qu se basa el
dinero fiduciario: oro?, plata?, trabajo?, o como dice Brash de "todas las monedas modernas", en
"nada". Pero lo que significa "nada" en realidad es deuda basada en la usura. Los bancos dan
prstamos en base a nada y reciben el prstamo original basado en el trabajo real ms el inters
aadido. No obstante, as es como estados enteros toman prestado, y no slo los individuos y las
empresas. La moneda se obtiene comprndola de un banco como un dbito, y estas cuentas son a su
vez prestadas como un dbito del Reserve Bank. Estas cuentas del Reserve Bank son llamadas por
Brash "una forma de deuda pblica monetarizada".
El resto de la respuesta de Brash sobre que la moneda de Nueva Zelanda es controlada "totalmente
desde Nueva Zelanda" es falso, ya que evita el origen del endeudamiento del estado de los bancos
internacionales. Se refiere al "suministro de dinero dlar de Nueva Zelanda", que slo comprende
una pequea fraccin de lo que se llama en trminos generales "dinero", que el Dr. Brash coloca
correctamente en comillas. La mayor parte del comercio se lleva a cabo con el crdito, que no est
representado por billetes y monedas.
Brash responde despus a una pregunta de vital importancia, aunque responde con sencillez
convincente:
(A) "Antes de 1961, entiendo que el gobierno de Nueva Zelanda poda emitir su propio crdito y
controlar las condiciones del reembolso (tasa de inters, etc.) para grandes proyectos tales como
proyectos hidroelctricos. Es esto correcto?"
Brash responde: "Fue correcto, y sigue siendo correcto en la actualidad."
Qu pasa entonces con el hombre del saco de la "inflacin" que los economistas y los polticos nos
advierten causara un tipo de "inflacin" de Zimbawue o Weimar, con un montn de cubos de
billetes de banco sin valor? Es evidente que no hay nada intrnsecamente inflacionario sobre el
crdito del Estado. Esto lleva a la siguiente pregunta y su respuesta:
(B) Existe ahora un lmite (y cunto) a la cantidad de crdito que podemos emitir (crear) nosotros
mismos sin pedir prestado a fuentes en el extranjero?
El Dr. Brash respondi:
"Tcnicamente no hay lmite. Sin embargo, esta respuesta debe matizarse en algunos aspectos
importantes. Si creamos demasiado dinero en relacin a los bienes y servicios disponibles, vamos a
sufrir la inflacin y, dado nuestro tipo de cambio flotante, una disminucin en el valor de nuestra
moneda frente a otras monedas (es decir, una depreciacin del tipo de cambio). El problema
entonces sera la erosin de la confianza en Nueva Zelanda y una menor disposicin por parte del
extranjero a prestar a Nueva Zelanda, y / o un deseo de retirar prstamos y activos existentes de
Nueva Zelanda. En este sentido, durante el tiempo que Nueva Zelanda desee poder acceder a
capitales extranjeros - que durante la mayor parte de nuestra historia ha sido necesario para
financiar los niveles de inversin ms all de nuestros ahorros - entonces tenemos que ejecutar
polticas equilibradas y no inflacionistas".
Brash responde que un estado puede emitir su propio crdito en base a sus necesidades productivas.
Por qu este "dinero fiduciario" libre de deudas dara lugar a una inflacin monetaria, a diferencia
del actual "dinero fiduciario", basado en la deuda y la usura, no se indica. Como fue mencionado
por el investigador y reconocido por Brash, Nueva Zelanda expidi crdito estatal durante dcadas.
En cuanto a cmo comenz esto bajo el primer gobierno laborista, se remite al lector a los folletos
de John A. Lee anteriormente mencionados, reimpresos en el libro Opposing the Money Lenders.
En 1949, el Gobierno public un informe sobre el estado de la vivienda, refiriendo
"El rumbo un tanto inusual de utilizar el crdito del Reserve Bank, reconociendo as que el factor
ms importante en el costo de la vivienda es el precio del dinero, el inters es la parte ms pesada en
la composicin de la renta ordinaria. El recin creado Departamento [de la Vivienda] fue capaz de
obtener fondos al ms bajo tipo de inters posible, del 1% por las primeras 10.000.000 libras
adelantadas, y del 1% en otros anticipos. Las cantidades anticipadas por el Reserve Bank no
fueron suscritas o aseguradas por otras instituciones financieras. Esta accin molde la intencin del
Gobierno de demostrar que era posible que el estado use el crdito del pas en la creacin de nuevos
activos para el pas. "(C. Firth and G. Wilson, State Housing in New Zealand, Wellington,
Government Printing Office, 1949).
As es como Nueva Zelanda funcion con xito durante dcadas. Ahora, bajo nuestro moderno
sistema financiero el Gobierno lucha por mantenerse a flote sin saber qu hacer con la
recientemente publicitada "crisis de la vivienda". Los lmites puestos en los prstamos para evitar la
inflacin se basan en las necesidades productivas, no en los requisitos del sistema de comercio
internacional controlado por los intermediarios de las finanzas internacionales. Tambin en este
caso el Estado asumi el control de la comercializacin internacional de productos agrcolas.
Mientras que esto era un tipo de "socialismo", no era comunismo, ya que la empresa privada estaba
protegida y avanzaba bajo los auspicios del Estado. Ahora tal nocin es vista con horror, no menos
por los partidos de la "izquierda" que por los neo-liberales (a menudo identificados errneamente
como "de derecha").
A la pregunta 2 (c) "estamos en deuda con los financieros internacionales?" Brash afirma que lo
estamos "slo en la medida explicada en 2 (b)". Es un muy grande "slo", sin embargo. Brash ha
aludido a un estado que es bloqueado para crear su propio crdito por las exigencias del comercio
intencional, despus de haber dicho anteriormente: En este sentido, durante el tiempo que Nueva
Zelanda desee poder acceder a capitales extranjeros - que durante la mayor parte de nuestra historia
ha sido necesario para financiar los niveles de inversin ms all de nuestros ahorros. No hay
ninguna necesidad para un estado de acceder a capital extranjero para construir su infraestructura,
ms que para asegurar los materiales en el mercado mundial. Es absurdo afirmar que se necesitan
niveles financieros de inversin "ms all de nuestros ahorros". El "ahorro" tiene poco que ver con
el asunto. Es como la creencia popular de que los bancos slo utilizan "dinero" en las cuentas de los
depositantes. Ya hemos visto, de acuerdo con lo que el Dr. Brash ha dicho, que los prstamos
bancarios se basan en los dbitos, no en entregar el dinero de los ahorros de los depsitos a un
prestatario. El prstamo se devuelve con dinero real, incluidos los intereses. As es cmo funciona
todo el sistema bancario. Adems, uno no "necesita" cmaras de compensacin internacionales
como intermediarios parasitarios para realizar transacciones comerciales entre los estados. Los
estados pueden crear crdito para facilitar el trueque en el mercado internacional con la misma
facilidad, ya que pueden crear crdito para el mercado interior, y hay estados que lo hacen
actualmente. (Ver "A barter way of doing things", The Guardian, 4 de enero de 2013,
https://www.theguardian.com/commentisfree/2013/jan/04/barter-exchange-goods-recession).
A la pregunta (5 (b) "Cul es la ventaja de un sistema de crdito central mundial en lugar de emitir
cada pas el suyo propio?," Brash respondi:
"Creo que no hay una ventaja en tener un" sistema de crdito central mundial en lugar de emitir
cada pas el suyo propio", y de hecho no es menos cierto que prcticamente todos los pases
continan emitiendo su propia moneda nacional".
Mientras Brash ha aclarado muchos puntos significativos sobre la banca, aqu oculta uno de los ms
importantes y mal entendido. Ya se ha comentado cmo el crdito es creado por los bancos y
emitido como dbito. Muy poco de esto toma la forma de billetes y monedas o "moneda". Por lo
tanto debe haber una distincin entre "crdito" y "moneda". Los billetes de banco son comprados
"por un banco que pasa un dbito" a la cuenta de depsito del prestatario. Los billetes son
comprados por el banco para el Reserve Bank. Esto se hace a su vez por el banco para pasar un
dbito a la cuenta de depsito que el banco mantiene con el Reserve Bank, financiado mediante la
venta de billetes del Reserve Bank, ellos mantienen el Reserve Bank. Son estos billetes del Reserve
Bank los que son una forma de "deuda pblica monetarizada" (Brash, 1 (a)). Pero la mayor parte del
comercio no se lleva a cabo con "billetes de banco". Es, por tanto, carente de sentido aludir a los
billetes que estn en circulacin como un factor significativo en la economa, y adems, como se
suele dar a entender, creyendo que el crdito se basa en la cantidad de dinero que un banco tiene en
depsitos de ahorro. Brash alude a esto comentando que "se necesita capital financiero... ms all de
nuestros ahorros". El capital financiero es crdito prestado en usura, no una "moneda nacional".
La pregunta final formulada al Dr. Brash fue:
6. (a) He odo decir que "el dinero debe estar ah para servir al pueblo y no a la inversa". Por la
gente no slo me refiero a la "lite". Es esto un mito, un sueo puramente utpico, o es una
posibilidad presente de ajustar el balance un poco ms a nuestro favor? (Sabemos que no hay
almuerzos gratis), pero parece que si nuestro dinero o crdito ahora es slo una entrada de
ordenador, esto indicara una fuente un poco ms abundante para compartir con todos?
Dr. Brash respondi:
"Me temo que la idea de crear ms dinero como un medio para mejorar nuestro bienestar
econmico real es un sueo utpico. Por desgracia, repartir simplemente ms dinero para que la
gente gaste, sin el correspondiente aumento en la produccin de bienes y servicios, no va a hacer
otra cosa que aumentar los precios. El verdadero truco es encontrar maneras de aumentar la
produccin de bienes y servicios y, en lo que concierne a la poltica monetaria, lo mejor que se
puede hacer es mantener la estabilidad del valor del dinero. La experiencia indica que cuando la
gente pierde la confianza en la estabilidad de la unidad monetaria que se utiliza tan extensamente en
las transacciones econmicas y en los contratos, la eficiencia global de la economa se ve afectada
negativamente, y los estndares de vida reales van hacia abajo, no hacia arriba".
Cuando el investigador se refiri al aumento de "dinero o crdito" mediante la opcin de una
entrada de ordenador, es bastante obvio que se refiere al crdito, no a los billetes y monedas, que se
imprimen, acuan y ponen en circulacin como el smbolo ms pequeo de los medios de cambio.
Por lo tanto, no es una cuestin de producir grandes cantidades de billetes de banco, como
Zimbabwe o la Alemania de Weimar. Una vez dicho esto, sin duda hay margen para un aumento en
la oferta de dinero, o facilitacin cuantitativa.
Como el Dr. Brash afirma, repartir dinero sin un aumento correspondiente en la produccin va a
tener efectos negativos, no positivos, si se hace de forma catica y no cientfica. Pero no hay
reformadores bancarios y oponentes de la usura sugiriendo tal cosa. Es una cortina de humo para
desacreditar la reforma bancaria. El Dr. Brash ya ha dicho que el dinero fiduciario, es decir, el
dinero que tiene el respaldo del Estado, no est en la mayora de las economas respaldado por nada
fsico. Por lo tanto, es el status quo que es aleatorio, y se traduce en ciclos de subidas y bajadas, sin
equilibrio, hasta el momento en que hay una crisis importante, como la crisis de la deuda an en
curso. Entonces, los bancos reclaman el estado "rescatarlos" con dinero fiduciario, que pueden
volver a emitir con usura. Lo que es una estafa.
Brash afirma que "el verdadero truco es encontrar maneras de aumentar la produccin de bienes y
servicios". Esto se traduce en el eterno problema de la sobreproduccin. El Dr. Brash y otros
economistas convencionales "ponen el carro delante del caballo". Uno no puede haber
incrementado la produccin hasta que uno tiene los medios para facilitar su creacin y consumo: la
moneda y el crdito suficiente en la circulacin para consumir la totalidad de la produccin. Como
C. H. Douglas y otros reformadores bancarios han mantenido, el sistema bancario actual, basado en
el inters compuesto, retira ms dinero y crdito de la disponibilidad en la comunidad que bienes y
servicios disponibles. De ah que no hay demasiada moneda en circulacin, sino insuficiente. Esto
causa el problema recurrente de "la pobreza en medio de la abundancia". El aumento de la
produccin no es el problema. Podemos estar inundados de productos. Si la moneda est ah para
comprar es otra cuestin.
El militante britnico del Crdito Social, John Hargrave, lder de los Green Shirts durante la poca
de la Depresin, proporcion treinta y dos ejemplos donde los estados haban ordenado a las granjas
destruir los cultivos y el ganado, ya que, a pesar de que las masas estaban pasando hambre, no haba
poder de compra (dinero) para consumir la produccin. El ejemplo que da para Nueva Zelanda en
1933, es decir, varios aos antes de la nacionalizacin del Reserve Bank y la emisin de crdito
estatal, es de 5.000 corderos "conducidos hasta el mar y ahogados" (Ver Hargave, "Social Credit
Clearly Explained", en Bolton, Opposing the Money Lenders, pp. 102-104). Los granjeros
ofrecieron comida gratis para los habitantes de las ciudades hambrientos, si se poda proporcionar el
transporte, pero esto fue rechazado por el Gobierno.
Cuando el Dr. Brash escribe sobre "perder la confianza en la estabilidad de la unidad monetaria", se
est refiriendo realmente a la prdida del control de las instituciones financieras privadas para crear
y emitir crdito, cuando el Estado asume la prerrogativa por s mismo.

http://katehon.com/article/people-banks-and-money

People, Banks and Money

Economics
Global Atlanticism
04.07.2016
Kerry Bolton

In previous articles for Katehon I have dealt with the alternative to international finance usury
as being for the State to assume the prerogative to create and issue its own credit. Although this has
been successfully done throughout history, bringing prosperity to those states and even local
communities that have, the idea continues to be derided by politicians and economists as
inflationary and often disparaged without debate as funny money. Yet fiat money and
Quantitate Easing ironically are used as a last resort by states when financial chaos threatens
because of debt accumulation. Then fiat money and QE suddenly become acceptable, and indeed
bail-out the banks that created the debt and that are normally adamant in their opposition to state
interference in finance. What is crucially missing in the recent use of fiat money and QE however
is that instead of the state printing and issuing money directly to the community through a basic
income or national dividend, or spending it into circulation via state projects, it is advanced to
the private banking system. So far from reducing debt therefore, the credit advanced to the banks is
used to accumulate further debt. It is therefore not fiat money that is a problem, but the manner by
which it is circulated. Hence state credit and money are anathema to the plutocrats until needed to
prop up their debt system and get them out of problems of their own making.

The creative use of fiat money on a wide, nation-wide scale was that of the $4,000,000,000 U.S.
Treasury Notes issued under the Kennedy Administration in 1963. It is significant that these were
Treasury Notes and not Federal Reserve currency. They were circulated into the economy,
bypassing the banking system and thereby being a debt-free means of increasing the money supply.
Lincoln issued $150,000,000 Lincoln Greenbacks, but this was undermined and replaced by the
National Banking Act of 1863 which authorized what was tellingly called interest bearing and
compound interest treasury notes. (See: K R Bolton, The Banking Swindle, London, 2013, p.
88). States and communities (via local currencies, coupons or scrip) such as what I have
previously written in Katehon in regard to the Russian village Kolionovo currency, show that
credit and currency can and should be issued precisely NOT as interest bearing with compound
interest, or in short what has for millennia been condemned as usury by every major religion
until the Reformation.

New Zealand was among the pioneers of the modern issue of state credit during the 1930s. The First
Labour Government nationalized the Reserve Bank in 1935, and began shortly after issuing state
credit, initially for the construction of state houses. There was no inflation; just production and the
revival of the economy during the Great Depression. Now ironically there is a housing crisis in New
Zealand with a lot of recent media attention being focused on the homeless. The government does
not know how the overcome the crisis by simply building state houses with state credit, because
sate interference in the economy, and especially in the financial system, has for decades been
treated as anathema by both National and Labour parties. Moreover, even academics and politicians
do not recall the use of state credit in bygone years; it is as though this was a mythic era around
which there is a fog of forgetfulness. Historians mentioning the state housing programs of the 1930s
do not even allude to how they were funded. I have recently reprinted two significant pamphlets by
the famous New Zealand Labour politician John A Lee on the 1930s New Zealand state banking
system. These pamphlets, Money Power for the People, and A Letter which every New
Zealander should read, can for the first time since the 1930s be read in my book Opposing the
Money Lenders (London, 2016, pp. 39-93).

The continuing potentialities of state credit were reaffirmed, albeit not with approval, by the
Governor of the New Zealand Reserve Bank in 1996. It had been the same Reserve Bank that had
precisely sixty years previously issued the state credit that brought New Zealand out of the
Depression. However, the Governor of the Reserve Bank was in 1996 Dr Don Brash, a zealous
exponent of market economics and non-inference of the state in banking. Brash has a distinguished
career in international banking. Having been leader of the National Party and briefly leader of the
fringe libertarian ACT Party, Brash has been a university lecturer in economics, served as an
economist in Washington with the World Bank in 1966; returning to New Zealand in 1971 to
become director of Broadbank Corporation, and in 1986 as general manager of Trust Bank. For
fourteen years, from 1988, he was Governor of the New Zealand Reserve Bank. It was under Brash
that the Reserve Bank became free to pursue monetary policy without state interference, under the
Reserve Bank Act of 1989, establishing a contractual relationship between Government and Bank.
(See Don Brash, http://www.donbrash.com/about-don/). Since then any notion that the state
should have direction over banking is regarded as heresy. It is a notion held just as much by the
Left-wing Labour Party as it is by the National Party. Like many free market enthusiasts, Brash
started on the Left of politics, and shifted over to free market economics (many of the ACT Party
founders had been Labour Party stalwarts such as Trevor De Cleene, Richard Prebble, Roger
Douglas) while the onetime avid socialist Mike Moore became director of the World Bank and an
attendee of the Bilderberg conferences. It follows a pattern among the Left word-wide.

Dr Brashs 1996 Letter

With this background, Dr Brashs detailed answer to an enquirer on the nature of banking and
international finance has many highly significant features. In 1996 (28 October) an enquirer asked
Dr Brash a large number of questions on the character of money and credit, and on the power of
international banks over state policy. Dr Brash answered each question in surprising detail. The first
series of questions is:

(a) Where does money come from (in particular, New Zealands)?

(b) What is its value based on (anything intrinsic)?

(c) Who issues it, and is this source entirely New Zealand controlled?

(d) Who dictates and controls the amount in circulation?

Dr Brash replied on Reserve Bank letterhead (25 November), on the question of where does money
come from?:

In New Zealand, as in virtually all countries with a modern monetary system, money comprises
liabilities issued by the Reserve Bank (notes and coin) and by commercial banks and similar
financial institutions (cheque account and other liquid deposits).

Commercial bank deposits are controlled by banks lending. When a bank makes a loan, it will, in
the first instance, deposit the proceeds to the borrowers account. Of course, the borrower invariably
raises funds to spend them, so the proceeds (deposits) will typically end up in the bank account of
someone other than the borrower often at another bank than that which made the loan. However, it
remains that bank loan transactions ultimately lie behind the deposit of balances which banks hold.
By influencing interest rates, the Reserve Bank is able to influence the rate of growth in bank
lending and hence the rate of (bank deposit) money growth.

Hence, money is created as a debt when a loan is made by a bank (commercial banks and similar
financial institutions). It is then paid back in real wealth (as the result of the borrowers work) plus
interest.

On the question of what the value of money is based on, Brash replied:

The New Zealand dollar (like all other modern currencies that I am aware of) is fiat money, i.e., it
is not backed by any physical asset. Brash states that the circulation of money is based on the
contact between the Reserve Bank and the Government to keep inflation at 0 to 2%. Money
cannot be converted to anything physical by the Reserve Bank, Brash states. The confidence of
the purchasing power of money is based on the targets of 0 to 2% inflation being maintained.

Brash here states that all modern currencies are fiat money. Fiat money has no backing other than
that its legality is recognised by the State. Yet when opponents of usury suggest that money
should be issued on the basis of goods and services produced and the ability to purchase these in
their entirety, supporters of the status quo object that this would be fiat money or Quantitative
Easing, and would result in inflation. When Russell Norman, at the time Member of Parliament and
leader of the Green Party, suggested that the state issue fiat money his suggestion was immediately
ridiculed out of existence and compared to Zimbabwes monetary policy, and Norman quickly
dropped the idea, never to be raised again by the Green Party. Yet the currency is fiat money.

Therefore it is not fiat money per se that is objctionable. The question is as to what fiat money is
based on: gold?, silver?, work?, or as Brash says of all modern currencies, nothing. But what
nothing actually means is debt based on usury. The banks give loans out based on nothing and
receive back the original loan based on real work plus the addition of interest. However, this is how
entire states borrow, and not just individuals and businesses. Currency is obtained by buying it from
ones bank as a debit, and these bills are in turn borrowed as a debit from the Reserve Bank. These
Reserve Bank bills are called by Brash a form of monetarised government debt.

Brashs further replies that New Zealand currency is controlled entirely from New Zealand is
disingenuous, as it avoids the origin of state borrowing from international banks. He is referring to
the New Zealand dollar money supply, which only comprises a tiny fraction of what is broadly
called money, which Dr Brash correctly places in speech marks. Most commerce is undertaken
with credit, which is not represented by notes and coins.

Brash next responds to a vitally important question, although one which he answers with cogent
simplicity:

(a) Pre 1961, I understand the New Zealand government could issue its own credit and control
the terms of repayment (interest rate, etc.) for major projects such as hydro-electric schemes. Is this
correct?

Brash replies: It was correct, and remains correct today.

What then of the bogeyman of inflation that economists and politicians warn us would cause
Zimbabwe or Weimar type inflation with bucket loads of valueless bank notes? Clearly there is
nothing intrinsically inflationary about state credit. This leads to the next question and answer:

(b) Is there now a limit (and how much) to the amount of credit we can issue (create) ourselves
without borrowing from overseas sources?

Dr Brash replied:

Technically there is no limit. But this answer needs to be qualified in some important respects. If
we create too much money in relation to available goods and services, we will suffer inflation, and,
given our floating exchange rate, a decline in the value of our currency relative to other currencies
(i.e., a deprecation in the exchange rate). The problem then would be erosion of overseas confidence
in New Zealand and a reduced willingness by foreigners to lend to New Zealand, and/or a desire to
withdraw existing loans and assets from New Zealand. In this sense, for so long as New Zealand
wishes to be able to access foreign capital which for most of our history has been needed to
finance levels of investment beyond our savings then we need to run balanced, non-inflationary
policies.

Brash replies that a state can issue its own credit based on its productive needs. Why this debt-free
fiat money would result in monetary inflation, as distinct from the present fiat money based on
debt and usury, is not stated. As alluded to by the enquirer and acknowledged by Brash, New
Zealand did for decades issue state credit. As to how this begun under the First Labour Government,
the reader is referred to John A Lees pamphlets, referred to above, reprinted in the book Opposing
the Money Lenders. In 1949 the Government issued a report on state housing referring to
the somewhat unusual course of using Reserve Bank credit, thus recognising that the most
important factor in housing costs is the price of money interest is the heaviest portion in the
composition of ordinary rent. The newly created [Housing] Department was therefore able to obtain
funds at the lowest possible rate of interest, the rate being 1% for the first 10,000,000 advanced,
and 1% on further advances. The sums advanced by the Reserve Bank were not subscribed or
underwritten by other financial institutions. This action shaped the Governments intention to
demonstrate that it was possible for the state to use the countrys credit in creating new assets for
the country. (C Firth and G Wilson, State Housing in New Zealand, Wellington, Government
Printing Office, 1949).

This is how New Zealand functioned successfully for decades. Now under our modern financial
system the Government flounders about wondering what to do about the recently much publicised
housing crisis. The limits put on borrowing to avoid inflation were based on productive
requirements, not on the requirements of the international trading system controlled by the
middlemen of international finance. Here too the state assumed control of the international
marketing of agricultural products. While this was a type of socialism, it was not communism as
private enterprise was protected and advanced under state auspices. Now any such notion is
regarded with horror, no less by parties of the left than those of the neo-whigs (often misidentified
as Right-wing.)

To the question 2 (c) are we beholden to international financiers? Brash states that we are only to
the extent explained in 2(b). It is a very big only, however. Brash has alluded to a state being
stymied by creating its own credit by the demands of intentional trade, having stated above: In this
sense, for so long as New Zealand wishes to be able to access foreign capital which for most of
our history has been needed to finance levels of investment beyond our savings There is no
necessity for a state to access foreign capital to build its infrastructure, other than to secure
materials on the world market. It is nonsense to claim that financial levels of investment are needed
beyond our savings. Savings have little to do with the matter. It is like the popular notion that
banks only use money in the accounts of depositors. We have already seen, according to what Dr
Brash has stated, that bank loans are based on debits, not handing over money from the savings of
deposits to a borrower. The loan is paid back with actual money including interest. That is how the
whole banking system works. Further, one does not need international clearing houses as parasitic
middle men to transact trade between states. States can create credit for facilitating barter on the
international market, just as readily as they can create credit for the internal market, and there are
states currently do so. (See A barter way of doing things, The Guardian, January 4, 2013,
https://www.theguardian.com/commentisfree/2013/jan/04/barter-exchange-goods-recession).

To a question (5(b) what is the advantage of a central world credit system as opposed to each
country issuing their own?, Brash replied:

I dont think there is an advantage in having a central world credit system as opposed to each
country issuing their own, and indeed it remains the case that virtually all countries continue to
issue their own national currency.

While Brash has elucidated many significant points on banking, here he obscures one of the most
important and misunderstood. He has already commented on how credit is created by banks and
issued as a debit. Very little of this takes the form of notes and coins or currency. Therefore there
should be a distinction between credit and currency. Bank notes are bought by a bank passing
a debit to the borrowers deposit account. The notes are bought by the bank for the Reserve Bank.
This is done in turn by the bank to pass a debit to the deposit account the bank holds with the
Reserve Bank, funded by selling Reserve Bank bills they hold to the Reserve Bank. It is these
Reserve Bank bills that are a form of monetarised government debt. (Brash, 1(a)). But most
commerce is not carried out with bank notes. It is therefore meaningless to allude to the bills that
are in circulation as forming a significant factor in the economy, and further, as is often implied,
believing that credit is based on the amount of money a bank has in savings deposits. Brash alludes
to this by commenting that financial capital is needed beyond our savings. Financial capital is
credit loaned at usury, not a national currency.

The final question put to Dr Brash was:

6. (a) Ive heard it said that money should be there to serve the people no vice versa. By the
people I dont just mean the elite. Is this a myth, a purely utopian dream, or is it a present
possibility to tweak the balance a little more in our favour? (We know there are no free lunches), but
it seems that if our money or credit is now just a computer entry, this would indicate a somewhat
more abundant source for all to share?

Dr Brash replied:

I am afraid the notion of creating more money as a means to enhance our real economic welfare IS
a utopian dream. Unfortunately, simply dishing out more money for people to spend, without any
corresponding increase in production of goods and services, is going to do nothing other than
increase prices. The real trick is to find ways to increase production of goods and services and, so
far as monetary policy is concerned, the best thing that can be done is to maintain stability of the
value of money. Experience indicates that when people lose confidence in the stability of the
monetary unit which we use so extensively in economic transactions and contracts, the overall
efficiency of the economy is adversely affected, and real standards of living go down, not up.

When the enquirer referred to increasing money or credit by the option of a computer entry, it is
fairly obvious he is referring to credit, not banknotes and coins, which are printed and minted and
put into circulation as the tiniest token of the means of exchange. Therefore it is not a matter of
churning out massive amounts of banknotes, like Zimbabwe or Weimar Germany. Having said that,
there is certainly room for an increase in the money supply, or Quantitative Easing.

As Dr Brash states, dishing out money without a corresponding increase in production is going to
have negative, not positive effects, if it is done chaotically and not scientifically. But no banking
reformers and opponents of usury suggest any such thing. It is a red herring to discredit banking
reform. Dr Brash has already said that fiat money, i.e. money that has the backing of the state, is not
in most economies back by anything physical. Therefore it is the status quo that is random, and
results in cycles of booms and busts, without equilibrium, until such time as there is a major crisis,
such as the still ongoing debt crisis. Then the banks clamour for the state to bail them out with fiat
money, which they can reissue at usury. What a con.

Brash states that the real trick is to find ways to increase production of goods and services. This
results in the perennial problem of overproduction. Dr Brash and other conventional economists
put the cart before the horse. One cannot have increased production until one has the means of
facilitating its creating and consumption: sufficient currency and credit in circulation to consume
the whole of production. As C H Douglas and other bank reformers have maintained, the current
banking system based on compound interest withdraws more money and credit from availability in
the community than goods and services available. Hence there is not too much currency in
circulation but insufficient. This causes the recurring problem of poverty amidst plenty. Increase
in production is not the problem. We can be awash with produce. Whether the currency is there to
purchase it is another matter.
The militant British Social Crediter, John Hargrave, leader of the Green Shirts during the
Depression era, provided thirty-two examples where states had ordered farms to mass destroy crops
and livestock because, although masses were going hungry, there was not the purchasing power (the
money) to consume the production. The example he gives for New Zealand in 1933, that is, several
years prior to the nationalisation of the Reserve Bank and the issue of state credit, is of 5,000 lambs
driven into the sea and drowned. (See Hargave, Social Credit Clearly Explained, in Bolton,
Opposing the Money Lenders, pp. 102-104). Famers were offering free food for hungry city
dwellers, if the transport could be provided, but this was refused by the Government.

When Dr Brash writes of losing confidence in the stability of the monetary unit, he is referring
really to the loss of the control of private financial institutions to create and issue credit when a state
assumes the prerogative for itself.