The land dollar : a national land backed currency
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Poverty is caused because we don't believe the earth belongs to all so fail to collect the rent from land and its resources. It also exists because we allow the privatisation of money creation. Together these two parasites suck the life out of our habitat and our population. This proposal tackles them together and adds a basic income.
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The land dollar : a national land backed currency
- 1. The Land Dollar: Introducing a land backed national currency The Land Dollar: Introducing a land backed national currency 1
- 2. New Economics Party proposal Deirdre Kent, author of Healthy Money Healthy Planet – Developing Sustainability through New Money Systems Contact: deirdre.kent@gmail.com or on twitter @deirdrekent 2
- 3. The order of this slideshow International background Four international problems Paradigm shifts needed What to use What to do Expected results Has it been done before in history? 3
- 4. Only two layers of government Local taxes are called Rates 4
- 5. Auckland is the biggest city with a third of the population 5
- 7. One global system = connectedness 7
- 9. Ultimate needs Food, clothing, affordable housing Habitat restoration Jobs/basic income for all Create a thriving economy without growth imperative 9
- 10. Three major changes we want Publicly created currencies spent into existence – not lent into existence at interest Change the tax system Tax the use of the commons – not labour, sales or enterprise Welfare Reform to introduce Citizens Dividend. 10
- 11. All three changes would shock the economy! • Impossible both politically and practically to do public money creation suddenly. • Enormous change to tax system, as 80% of NZ central govt revenue comes from income tax, GST, company tax - can’t be done rapidly, nor on its own • Universal Basic Income is massively expensive and involves an inflation risk 11
- 12. 14
- 13. Banks now bigger than before Global Financial Crisis The gigantic and growing shadow economy is very weakly regulated, even after the Global Financial Crisis. Derivatives were at the heart of the GFC. Banks are now both too big to fail and too big to jail. The wealthiest top 0.1% can now easily influence Governments. We propose side-stepping the present (monetary, tax and welfare) system altogether and starting afresh, with one holistic solution, rather than fighting to change a very dysfunctional system 15
- 14. Poverty in New Zealand 16
- 15. The widening gap between rich and the rest hurts all. (Inequality A New Zealand Crisis ed Max Rashbrooke) 17
- 16. Global economy in crisis – bubbles everywhere Nomi Prims, ex Managing Director of Goldman Sachs says “The global economy has to crash. We are in a precarious place” (Interview with Thom Hartmann) 18
- 17. Banks create money Michael Kumhof, economist IMF January 2013 The key function of banks is money creation not intermediation. 19
- 18. Banks and land-ownership When banks create money as interest bearing debt, they get the best security – land With rising land prices they benefit from their rising loan portfolio We need to weaken the link between banks and land and strengthen the link between Government and land. 20
- 19. Each site is given value by... Site Government Local Businesses Local Government Social Organisations Nature 21
- 20. The tax system should incentivise what we want to encourage Labour - but when you work, you pay Sales - but when you buy, you pay Enterprise - but when you run a business, you pay 22
- 21. Hard to reform the tax system Since people are already paying twice on their land – their mortgage and their rates – it is politically suicidal to propose a third tax, a land tax. 23
- 22. The tax system benefits banks. Banks want Rising house (land) prices which means rising debt which means rising revenue for banks The last thing banks want is for government to benefit from rising land prices. Banks want that privilege. 24
- 23. What happen when banks create money? Banks create money as interest bearing debt Prices rise Growing debt Wealth concentration Instability Habitat destruction Growth imperative 25
- 24. A welfare mess Means tested benefits lead to a benefit trap Complicated, intrusive, expensive, leads to housing duplication, encourages dishonesty. Doesn’t value caring for dependents or developing useful skills or inventing 26
- 25. Why not a Universal Basic Income? Universal Basic Income is a full Citizens Dividend. If suddenly introduced, it would shock the economy. Our three reforms of tax, currency and welfare would all shock the economy – if done separately! But done together, introduced gradually as a small but growing Citizens Dividend, the transition will be smooth! 27
- 26. Time to think differently? “We can’t solve our problems with the same level of thinking we used when we created them.” Albert Einstein 28
- 27. Central government Should set the policies that can provide the right conditions for strong, vibrant local economies and then get out of the way 29
- 28. Politicians decide tax, money and welfare systems 30
- 29. “To change something, build a new model that makes the existing model obsolete.” (Buckminster Fuller) 31
- 30. • The crash will happen at some point. • Issue a new currency that can survive it. • Spend it into existence to buy land. • Make it obey different tax and welfare laws. 32
- 31. A Living System Complex Whole Feedback loops 33
- 32. Different interventions, different leverage A system has patterns which mustn’t be broken Choose where to intervene to get the most leverage Treating one thing in isolation won’t work 34
- 33. Possible interventions in a living system 35
- 34. Interventions for most leverage Change major paradigms, common assumptions and beliefs, about the currency system and the basis of taxation Change the goals: aim of a vibrant economy is not growth, but maximum happiness for the most people 36
- 35. 1. Lending into existence vs. spending into existence New paradigm:Instead of money being created as interest bearing debt by private banks, money is spent into existence by government 37
- 36. 2. Parallel currencies Change of paradigm: instead of one national currency, two national currencies acceptable for taxes 38
- 37. 3. People have ability to issue money New paradigm: It is a country’s sovereign right to issue their own currency. Any group of human beings is free and able to design and start their own currency 39
- 38. 4. Tax from monopoly use of natural resources New paradigm: the monopoly use of the world’s natural resources should, and can, be taxed Result: instead of government revenue coming from income tax, GST and company tax, it will come from the use of land and other natural resources 40
- 39. Change the goal of an economy The present goal of the economy is simply to grow so that the interest could be paid The new goal of the economy is to bring the greatest happiness to the greatest number of people 41
- 40. The power of currency design A well designed currency system is a powerful agent for change. You can:- Can build in incentives for import substitution Designers can alter velocity of circulation Currencies can shape behaviour towards co-operation and generosity 42
- 41. A good currency flows like blood 43
- 42. The Plan Create a new parallel national currency Link it to a very different tax and welfare system Grow the amount of this currency slowly to avoid inflation 44
- 43. Treasury issues a new currency for buying land. This currency can be spent by citizens on taxes, land rent and student loan repayments. It is redeemable for taxes, so can be used for anything. 45
- 44. Not the Reserve Bank, which is too close to the private banks, even in New Zealand 46
- 45. Overview of the process 1. Local land committees establish Land Rental Index and recommend which land should be bought first in the area 2. A central land committee determines suitable order and intervals of land purchase, to avoid inflation 3. Treasury buys land, paying with land dollars and keeps the land as the crown’s security 4. The lessee pay rent to the Treasury but no longer pays any rates 5. The seller then spends the land dollars 47
- 46. Government Treasury Citizens Resource rental revenue shared three way Local government 48
- 47. Treasury Local monetary authorities Monetary authorities, acting together, make sure there is no inflation 49
- 48. Central Land Committee Local land committee Land committees, working together, decide on a programme to buy up land. Budget set by Monetary Authority 50
- 49. 1. Land Committees set up Committee in each local board area that has good Maori representation from local hapu. Establish a local Land Rental Index and come up with a list of land recommended for sale. Central Land Committee buys up land gradually. Power to the local boards 51
- 50. Land which is not under dispute from a Maori iwi (tribe) or hapu subtribe)! 52
- 51. The Waitangi Tribunal meets to hear Treaty claims 53
- 52. 2. The land committees might choose any combination of: Land owned by land trusts who want to take land out of the marketplace Land just outside built up areas, for food production Land owned by a business person Foreign owned land Valuable land: central city land, especially vacant sections 54
- 53. 3. Treasury buys land •Assess rentals on bare land by auction in order to find true value, and set up the Local Land Rental Index •Land becomes Crown Leasehold Land •Full land rental payable by lessee Land rental adjusted annually according to Land Rental Index Crown pays rates 55
- 54. What is a just lease? Never in perpetuity Possible to pass to a relative Security of tenure Rent adjusted yearly Protected from political interference 56
- 55. Crown Leasehold land exists Many high country stations, Reclaimed land e.g. Napier port, Auckland port Land Information NZ deals with leases 57
- 56. 3. When the Crown owns my land We only have to pay for our house Crown pays our rates Because we only have to pay land rents, we have incentives to improve our house. We can pay our builder partly in Land Dollars 58
- 57. 4. Use of Land Dollars •A long term investment? •Pay taxes in advance? •Lend them to their children to pay off student loans? •Put them in NZ owned bank to be lent out to businesses? •Pay off mortgage 59
- 58. Can I sell Land Dollars for NZ dollars? The Land Dollar is issued at par and redeemed at par by Treasury In between let the currency float. It could even go out of the country for a while but it must be back in Treasury before it expires, just like a Flybuy point or a store voucher. 60
- 59. Resource tax on use of the commons 61
- 60. Of course there will be ‘sin’ taxes Tobacco, gambling and alcohol will continue to have taxes, once called Excise Taxes. 62
- 61. Treasury receives land dollars Refresh and re-date the Land Dollars they receive • From taxes or student loan repayments • Issue all men, women and children with a Citizens Dividend in Land Dollars. • Digital only, on a dual currency debit card like Kiwibank’s Loaded card. 63
- 62. Paid to all who have lived in NZ for a year, including children. Will be spent by most people on essentials like food. 64
- 63. • Choice of inputs directed towards local and non- fossil fuel • Labour has no income tax so farmer employs more labour • Encourages more manual and sustainable practices 65
- 64. Results –Affordability improves No tax burden so prices drop No interest built into the price of goods so prices drop 66
- 65. Thriving building industry No GST on materials No income taxes on wages 67
- 66. Thriving post fossil fuel economy! •As people spend their Land Dollars on labour intensive industries within the country, production will rise. The arts will flourish. •Organic farming, smaller farms, improvement of land will result from more labour input and less fossil fuel input. •Businesses with a low carbon footprint will thrive because of this new capital injection. •And the price of houses on Crown land will halve. 68
- 67. Has it been done before? Wōrgl 1932 1923 German hyperinflation Age of cathedrals 10th to 13th centuries BUT A CURRENCY HAS NEVER BEFORE BEEN DESIGNED TO LINK TO A NEW TAX AND WELFARE SYSTEM 69
- 68. Alternative: Create national currency at local level Why not give money creation power to community boards? And give them land purchasing powers. Community land trusts That would give them revenue raising powers (but make them share) Power to local people, with safeguards. 73
- 69. Why a locally created national currency? Wairoa, part of Hawkes Bay, part of NZ Power to local #relocalisation Care needed if rogue council. Commissioner 74
- 70. Three levels all coordinated All equally important and have their integrity 75
- 71. Summary Money should be created by the people for the people. More than one model. It should be backed by land. It should be gradually spent into existence to buy land, monitoring inflation all the time. 76
- 72. All new paradigms appear preposterous for a start 79
- 73. A glimpse of hope 80
- 74. ` 84
Notas do Editor
- A little background to this slideshow. We have been through several phases in our thinking and I will take you to where we are up to. There have been many people contributing to this development, mostly from the New Economics Party of New Zealand, founded in October 2011
- So let’s look at the order of this slideshow. I first of all give a little background of what is happening internationally and focus on just four major global problems. Then I go into the paradigm shifts and goal shift we need. Then I’ll talk about deciding what to use, and outline what to do. I then give an idea of what outcomes we could expect. Finally I look at whether this has been done before in history and with what results.
- I am from New Zealand – population 4.4 million. We have only two layers of government – national and local. After our country was colonised by the British in the early 19th century, there were land wars. To end these a major treaty – the Treaty of Waitangi – was signed between the Crown and Maori. But the Crown then went on to largely ignore it. Widespread confiscation of land occurred, and the private ownership model replaced customary tenure. Maori lost land. Nowadays after grievances are documented and examined by a Waitangi Tribunal we are getting financial settlements tribe by tribe
- Here is a photo of our largest city. Our capital is Wellington. Christchurch, our second to biggest city, is the one that was badly damaged by earthquakes in 2010 and 2011
- OK the caption is “Yes the planet got destroyed. But for a beautiful moment in tme we created a lot of value for shareholders.” Internationally we all face climate change, growing inequality, economic instability and an energy cliff. The energy we now get from fossil fuel exploration is declining as a fraction of the energy spent to get it. We need to design a post fossil fuel economy that is fair to all and also reverses climate change and the widening gap.
- A Swiss study in 2011 found that of all the corporates, 138 of them were hyper connected with others. The global economy is so connected that we have financial contagion. It is just one system nowadays. We are now one global system with a high degree of connectedness.
- Even in New Zealand we are not immune from financial contagion especially after the big banks got even bigger.
- To remove the growth imperative yet have a thriving economy: liquidity for all the many businesses necessary in a post fossil fuel economy. We all need basic food and shelter, yet there is still poverty and children go without shoes or raincoats. We all need warm dry houses yet our housing stock is generally very poor in some areas. Above all globally we need to reverse the “economic growth imperative”, which is caused by our bank-favouring money system. So what we need is a thriving economy for a post fossil fuel age.
- We have a destructive and precarious money system, an illogical tax system which has grown like topsy, an out of date welfare system and we also need to change the way we fund all levels of government. Our party’s proposal says we need currency reform, tax reform, welfare reform and reform of the way we fund local government. Currency reform: we need publicly created currencies spent into existence – not lent into existence at interest. We have forgotten we can design our own currencies. In fact few people ever let this enter their consciousness. Tax reform: We propose to tax the use of the commons and monopolies, not labour or sales or enterprise. Welfare Reform: we want to introduce Citizens Dividend, and eventually this will be large enough to be called a Universal Basic Income We also want to reform the way we fund all levels of government
- If we look at those big reforms needed, the first three would shock the economy. Moreover you can’t just try a pilot scheme on any of them. We will try to avoid going head to head with the Too Big to Fail Banks. Remember it is extremely difficult politically. There are three full time bank lobbyists for every Congressman in US and the effect is felt everywhere in the western world. Tax reform: in NZ 80% of the tax comes from income tax, GST (which is our sales tax) and company tax. Moreover the Universal Basic Income is massively expensive and if implemented suddenly could cause inflation. (see Bernard Lietaer et al. Money and Sustainability for further explanation)
- Biggest six banks have 84% of deposits, 85% of financial assets and 96% of derivatives They are JP Morgan Chase Citigroup Bank of America Morgan Stanley Goldman Sachs Deutsche Bank
- Derivatives are financial weapons of mass destruction. And they were at the heart of the Global Financial Crisis
- I think this slide speaks for itself.
- Yes there is poverty in our country especially in rural areas. Substandard housing occurs everywhere. New Zealand ranks quite badly in any study of wealth disparity. There are pockets of deprivation both cities and the rural areas.
- When there is a big gap between the rich and the rest, the rich lose empathy and so do the poor, which means we lose our humanity.
- Only a few economists predicted the Global Financial Crisis. This time it is a former Managing Director of Goldman Sachs, Nomi Prims making the statement. She worked for two more investment banks in high office before this job.
- IMF economist Michael Kumhof says it like it is. "Virtually all money is bank deposits. The key function of banks is money creation not intermediation. The entire economics literature that you see out there today is that it is intermediation, taking the money from granny, storing it up and then when someone comes and needs it I can lend it out to them. That is complete nonsense. Intermediation of course exists, but it is incidental and secondary and it comes after the actual money creation. Banks do not have to attract deposits before they create money.”( From a January 2103 seminar posted on youtube) He wrote a paper with Jaromir Benes called The Chicago Plan Revisited There is now also a similar paper by three economists from the Bank of England.
- Few realise that banks have so much power, they even influence the tax system. They basically force income tax on Governments because they want the best security for themselves and this is land. We need to weaken the link between banks and land and strengthen the link between Government and land.
- When you buy a house the real estate agent will point out how near it is to schools, shops, bus stops, railway stations and parks. Or you might buy a house near a club you go to or your workplace. Every piece of land is serviced by central government (hospitals, roads, schools), by local government (street lighting, sewage, storm water reticulation, water, community halls) and by businesses, social organisations as well as by Nature. (nice to be near a river or lake or sea)
- We currently tax labour, sales (GST) and enterprise (company tax)* This is illogical if we want to encourage work, trade and initiative. In New Zealand the tax system has grown in a rather unconscious way and it is time to rethink it. *Karl Fitzgerald of Prosper Australia says there are 122 other unneeded taxes in Australia
- Through the rising prices of land, banks loan portfolios rise, bringing more income. Income taxes, sales taxes and company taxes take away purchasing power from the people.
- When money is created as interest bearing debt, the total debt must keep rising. That is one consequence. Also in the price of all goods is interest, because the manufacturer borrowed at interest from banks. Since some are net lenders and the rest are net borrowers, money is constantly flowing from the borrowers to the lenders. This widens the gap between rich and poor. This system also requires constant creation of more loans, leading to a growth imperative which is impossible on a finite planet. The fifth consequence is that banks row the economy between easy money and harder money, so this leads to housing bubbles and instability. Well that is five adverse consequences of having such a money system and very few are aware of it. There is never enough money in the system for everyone to pay back their debt so someone has to go further into debt to pay the interest. This means the total money supply (money plus credit) has to keep increasing. This means economic growth must continue – the growth imperative! Our money system results in widening of the gap between rich and poor, growing debt, habitat destruction from the growth imperative and instability. And because everyone is competing to pay their debt with interest, it also shapes our behaviour towards being competitive rather than cooperative.
- Means tested benefits are costly to administer and result in the benefit trap where you can only earn so much or your benefit is cut. A plethora of government income support programmes result in a complicated and expensive welfare system quite unsuited to the 21st century.
- An alternative to the current welfare system is the UBI. But a Universal Basic Income if suddenly introduced, would shock the economy. There would be inflation. In fact the first three reforms would all shock the economy if they were to be introduced separately! You can’t just add a land tax because it is an extra tax. Making it tax deductible is regressive. People already pay for their mortgage and they pay rates or local taxes. Why should they pay a third? So it is not politically feasible. The point of a land tax is that you must untax labour and sales at the same time and this is tricky to do. Despite many tax reviews recommending land tax in New Zealand, no government has implemented those recommendations. So we are proposing to put them all together and introduce the whole package gradually, with a small but growing Citizens Dividend. In this way the transition would be smooth.
- Albert Einstein said we can’t solve our problems with the same level of thinking we used when we created them. Time to think differently.
- Now a couple of slides about central government. Community champions have been advocating strong, vibrant local economies for decades. But central Government policy has never yet provided the right conditions. Governments should make the rules, then get out of the way.
- And when you come to think about it, central government decides what the tax system will be, what the money system will be and how their welfare system will work. Here are a couple of our Prime Ministers, Muldoon and Key.
- Our aim is to build a new model that makes the existing model obsolete. The 1908 Model T Ford, replaced horse and carriage, the digital watch industry left Swiss watch makers behind. The smartphone was another breakthrough. So was Wikipedia They are also called Disruptive technologies.
- So the thinking is to leave the present tax and money system alone. We are expecting a crash. So issue a new national currency. Spend it into existence to buy up land, and then make it obey different tax and welfare laws.
- A living system is complex, whole and has many feedback loops so it can constantly readjust.
- Now a few slides about living systems. A living system has patterns in the relationships and they mustn’t be broken. A family is a living system. To intervene to improve the system is to find where to get the most leverage. If you just treat one part of a system it won’t work.
- Donnella Meadows studied living systems and concluded that there are a number of things you can change, a number of places you can intervene. I have blocked out all the points of intervention except three of the more powerful ones. You can see the ones at the top of this seesaw on the right are the ones that have the most leverage. They are about changing the paradigm (there are two of these) and changing the goals.
- As we saw before we have to change paradigms - the underlying assumptions and beliefs behind a system. For instance about the currency and about taxation. Systems theory says change major paradigms (the common assumptions and beliefs) about the currency system and the basis of taxation. And we need to change the goals. The true aim of a vibrant economy is not growth but maximum happiness for the most people. And we need to change the goals of an economic system. The true aim of an economy is not growth but sufficiency for all.
- From money being created as interest bearing debt by private banks to money being spent into existence by government (Positive Money) (Paradigm a largely unconscious underlying belief)
- From the assumption there will be One national currency acceptable for taxes to Two national currencies acceptable for taxes
- There is a third paradigm shift or change in belief - about our ability. From the assumption that we cannot design a currency (largely unconscious assumption) to Assumption that we can design a currency to have a circulation incentive Here is an organiser of a LETS system in Wairarapa displaying the notes of their currency And the time bank has an hour for its unit, an hour of work
- And here is a fourth paradigm shift – about our beliefs about the source of tax revenue
- Then there is the change of the goal of an economy The goal of the economy is to grow to The goal of the economy is to bring the greatest happiness to the greatest number of people (Largely unconscious belief)
- Every country should have absolute sovereignty over its right to design its own currency system and not let privately owned banks take charge of this, as they do now. A well designed currency system is a powerful agent for change. It can build in incentives for import substitution. It can shape behaviour towards co-operation and generosity. Because you can alter velocity of circulation, you can alter the economy. In the event of a financial crisis it can be the deciding factor between resilience or collapse. Not many people know the power of currency creation.
- This currency will flow freely to all parts of the country unimpeded by taxes on work, sales or enterprise. It won’t pool in any city or in anyone’s bank account. It will incentivise its users to invest long term. It will nourish each local economy and reward enterprise and work.
- We plan to create a new parallel national currency and link it to a very different tax and welfare system. The amount of this currency will grow slowly. We must introduce it gradually and monitor its effects closely to avoid inflation.
- Leave the present tax and money system alone. The crash will come. Try not to go head to head with TBTF banks. Issue a new currency. Spend it into existence to buy up land and make it obey different tax and welfare laws. What we are doing here is unusual. Creating a new currency and making it obey different tax and welfare laws is quite new.
- It is best to use the Treasury. The Central Bank of any country (ours is called the Reserve Bank) is too close to the commercial banks of the world.
- Now this slide shows how rentals are shared between the citizens and all levels of Government. Central govt gets some, local government gets some and some is distributed as a Citizens Dividend. It will take considerable tolerance and understanding to do this in a way that sees everyone’s needs being met.
- And not only does Treasury have to have a section dealing only with monetary stability, a monetary authority has to be set up in each local area. Only together can they control inflation. You don’t want a local board going rogue, nor do you want too much central control
- It’s the same with the land committees, only for them they have to abide by the budget set by the monetary authority. So between them they decide on a programme to buy up land, knowing they have to stick to a budget.
- So at each local authority area there will be a committee set up. Maori, particularly the local hapu (or sub tribe) should have a dominant say, but they should be supplemented with experts like town planners, real estate agents, valuers etc. Each committee recommends to the Central Land Dollar Committee. The local land committee comes up with a list of bare sections recommended for sale so that a local Land Rental Index is established. Central Land Dollar Committee buys up land in careful order so as to avoid inflation.
- Many iwi (tribes) have had settlements from the Waitangi Tribunal, the authority that hears grievances on land issues. But the iwi never gets what they ask for as some land is in private hands. There are cases all over the country where land has been taken, say for an airport during the war, but is now in private hands. The grievance is still there. That is why the local Maori should have a major say on the committee.
- This is a hearing of the Waitangi Tribunal. Iwi who have grievances bring their documents to the Tribunal, which then recommends a settlement. Then the government legislates. During the 19th century land was confiscated and a great deal has been bought cheaply by the Crown. The land tenure system was fundamentally altered with British colonisation resulting in a great many injustices.
- So which land might these committees recommend. Here is a list of possibilities. Land under small businesses, to give businesses capital in Land Dollars to develop and grow. Land just outside built up areas to encourage using the land for food production. Foreign owned land. Valuable land like central city land especially vacant sections.
- A full land rental is payable, adjustable annually according to Land Rental Index for area. It is Crown Leasehold Land now. Best to start with bare land by auction for true value, so you can set up the index. Rates are no longer payable, as Crown pays them.
- Here are a couple of leasehold properties. A just lease Never in perpetuity, best for 50 years with right to pass to relative (to encourage family farms). Fair to both parties Security of tenure needed Rents adjusted yearly based on Land Rental Index. People are afraid of buying leasehold properties because the rents can rise dramatically when the lease is for, say 21 years. That’s why you need to adjust rents annually and they won’t vary much. The law must be used to prevent future political interference in rents e.g. in Canberra a government wanting to be returned in the next election reduced rents to a nominal rent thus handing millions of unearned wealth to their inner city friends and depriving the public of revenue. The big challenge is to get the structure or the law right so that it precludes political interference for gain. Even in New Zealand a conservative government reduced rentals high country stations for political gain.
- We have many Crown Leasehold properties already in our country including high country sheep stations, and reclaimed land near ports. We even have a government department dealing with it.
- So here is a summary if my land is owned by Government Because we only have to pay rents on land and not on the houses, there is there is no financial penalty if we improve our houses.
- Now here is the big one. When a homeowner is paid in Land Dollars for their land, what will they do with it? The homeowner who has been paid in Land Dollars uses them to make a long term investment, to pay taxes in advance, to lend them to their kids to pay student loans, or to put them in NZ owned bank to be lent out to businesses. Encouragement of manufacturing e.g. wool insulation of homes, food products, clothing, furniture, fuels, natural paints and other NZ-sourced building materials.
- Now this has been a topic we have discussed a lot. The new currency is issued at par and redeemed at par. And what happens in between is up to the market. And yes it could go out of the country. But remember it expires on a certain date, so would have to be back in time. We have something similar already in our Flybuy points. They drop off if you don’t redeem them in time. A store voucher is only valid till a named date.
- Here is the town of Waihi. It has a gold mine in the middle of it. Resource taxes are imposed at source on the monopoly use of any part of the commons e.g. Coal, oil and other mining, fisheries, water, radio spectrum, airports, ports etc. There is a wide range of resource taxes possible for revenue.
- Guess what? It has long been recognised that industries that cause harm will have to pay taxes for that harm. The commons they are using is the health system.
- Yes Treasury can refresh and rerate the Land Dollars they receive (they can do this because it is a digital currency). Then they will issue a Citizens Dividend in Land Dollars. We figure the best way to do this is on a dual currency debit card. People already get these when they travel. Technology is the least of our challenges. When Treasury receives land dollars in tax or student loan repayment… Treasury will refresh and redate the Land Dollars they receive, and from time to time will issue all men, women and children with a Citizens Dividend in Land Dollars. Thus the land rentals are shared with the people. It will be digital only. It will be on a dual currency debit card like Kiwibank’s Loaded card.
- Like the Alaska Permanent Fund, the payment goes to all who have lived here for a year, including children. A caregiver receives the dividend for the dependent. And when people get it they will spend on essential items like food. Here is a Farmers Market in Dunedin.
- As a result of accepting land dollars the food grower has a lot of them to spend. They have inputs to their farms of labour, fertilisers, fences, machinery, fuels etc. They will now naturally choose inputs which carry the lowest resource taxes. They will naturally prefer labour and organic products rather than fossil fuel based fertilisers which will have a resource tax. The workers’ pay is income tax free too. So their farms are made more productive.
- So what is in it for ordinary? Basically the cost of living sustainably reduces. Prices relative to wages drop when the money is spent on low carbon footprint activities or items. Without tax burden, prices drop. [Karl Fitzgerald says 23% of prices are taxes.(Total Resource Rents of Australia)] Without interest built into the price of goods, prices drop. The percentage interest will depend on relative input from labour and capital (See Margrit Kennedy “Interest and Inflation Free Money”)
- Of course the building industry will also be looking for locally based materials. They will naturally desire NZ sourced materials. Once again their labour is income tax free and their materials are GST free. Since timber can probably be sourced in NZ and labour has no income tax on it, building will thrive.
- As people spend their Land Dollars on labour intensive industries, production will flow to the regions. Organic farming, smaller farms, improvement of land will result from more labour input and less fossil fuel input. Businesses with a low carbon footprint will thrive because of this new capital injection. And the price of houses on Crown land will halve. Nothing will now stop development going to the regions rather than to Auckland. Businesses with a low carbon footprint will thrive because of this new capital injection. And when you don’t have to pay for your land, the price of houses on Crown owned land will drop dramatically. In central Auckland for instance it is 70% the value of the land.
- There is a lot in this slide. The town of Wørgl in Austria in 1932 put some Austrian shillings aside and issued work certificates with a circulation incentive. Taxes were paid early, unemployment dropped and infrastructure was built. But after 15 months banks persuaded government to make it illegal. In 1923 when German hyperinflation pushed the country into crisis a new bank was formed which issued a new currency the Rentenmark. It was backed by land. More study of this is indicated. In the Central Middle Ages in Europe each lord or baron minted their own silver coins, and reminted it at intervals causing it to circulate fast. This was an astonishing period of cathedral building. Land rents were payable to the lord or baron. But a currency has never before been designed to be linked to a new tax and welfare system. This proposal is a new proposal which has similarities with all of the above.
- We have at least three major points we aren’t sure about and we would love to cooperate with other groups on these issues. Here’s the first one: With legal tender people are forced by law to accept it for payment. In the case of repaying a mortgage with an Australian bank, do we want to go head to head? It might immediately start a World Trade Organisation case! The important advantage is that mortgage holders can pay down debt.
- Because revenue is shared three way, we have no idea if there will be enough. Full modelling needs to be done. This may be expensive. It is possible we could use participatory budgetting as in South America so that everyone decides who gets the next round of rentals – citizens, local government or central government. Note here we suggest that participatory budgetting might be part of the process as there are many decisions to be made at each stage. The revenue is shared three way.
- Once again we would appreciate your input. Does the land rent for the retired just get taken out of the estate when the person dies? Would this be an incentive for the adult children of a retired person in a valuable big home to persuade them to move?
- I can hear you already saying this is a very radical idea! It is. Three levels of monetary authorities are needed to control inflation and the local boards and supercities need to elect theirs. The third level is Treasury. Each local board to have a land committee to decide which land to buy. It also sets up and administers the Land Rental Index. Advantages: 1. Local boards know the local property best. 2. Avoids the need for participatory budgeting 3. Turns the power structure upside down. Local appears to have more power than central yet all levels are important.
- Here is the lovely little town of Wairoa on the east coast of the North Island. It has a District Council of its own but if it were subsumed into a larger unitary authority, say centred in Napier, it would have no revenue raising power. Its assets would be owned by the larger authority. However when it has wider powers it must also act in the interests of the whole region and the whole country so if it went rogue a Commissioner could be appointed.
- The principle is that every level of government is equally important. Each has its integrity. As in Nature each must respect the integrity of the others and be prepared to help it thrive. It is not a competition!
- Read it
- *** this slide seem to talk about a potential “pilot project”. I’d like to reduce the number of words on the slide, but will hold it until I know what exactly you want to convey with this slide*** Both of these cities have rapidly rising house prices. In fact the OECD puts NZ 2nd highest in price to income ratio and it is all in Auckland and Christchurch. An Auckland currency would save Auckland City Council precious national dollars. A Christchurch currency would save Christchurch City Council, under pressure with the rebuild after the 2011 earthquake, millions of national dollars. Legislation would include setting up a local Currency Committee to monitor inflation, imposing natural resource taxes and exempting from national taxes.
- Yes this is a 3D printer on the right. And by changing these assumptions, we create the best leverage for change to make sure we all get our basic needs of food, shelter and clothing met. With tax reform and monetary reform we can create a thriving economy without growth imperative
- So if all this seems preposterous, remember that all new paradigms are preposterous for a start!
- If these ideas have stimulated you, that’s good. Maybe somewhere in this discussion there is hope. Maybe within the bounds of political pragmatism some ideas from this presentation could be developed, some rejected. Or maybe when a financial crash happens and a long depression sets in, there will be an opportunity for radical new ideas like this.
- All of this is indeed about a change in paradigm, moving the greater public and the decision makers on all levels towards these new assumptions, and aim for a different goal. We looked at this earlier and saw that No-one should earn money by creating money. It’s ok to have several currencies in a country. Any group of human beings is free and able to design and start their own currency, not just banks The use of the worlds natural resources should, and can, be taxed The goal of the economy is to bring the greatest happiness to the greatest number of people.
- ***And by changing these assumprions, we create the best leverage for change to make sure we as humans all get our needs met, as we: Feed the hungry Reverse climate change Build and upgrade houses Return jobs to the provinces Create a thriving economy without growth imperative***
- Thank you for the opportunity to present these ideas.