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Salient: Victoria University Students' Newspaper. Vol. 24, No. 8. 1961.

Shall We Pawn The Flag?

Shall We Pawn The Flag?

When we consider what is now admitted as a fact by the highest banking authorities, namely, that banks have a monopoly of the power to create money, it should be obvious to anyone of average intelligence that that is a stupendous power, irrespective of whether the banks are private trading banks or a State bank, or a World Bank for that matter.

The vile kernel which embitters our whole economy is that banks, by honouring cheques drawn against money which they have themselves created, get securities representing real wealth for nothing, and they claim interest on those securities for as long as they hold them, which is a very long time in many instances. Indeed, a great portion of the securities held by the banks, such as those associated with the national debt, represents assets which have long ago depreciated and of which there is not now in many cases even a trace of their existence.

Surely, if there is any sanity left with us, all capital assets should be paid for at their depreciation rate; but it is a fact that we are still paying interest on loans issued, for instance, for constructing roads that have long ago been dug up and replaced, such replacements involving fresh loans—roads piled upon roads, debts piled upon debts. This is the sort of thing we have in our national internal economy, and also in the case of our local bodies. There is also our external debt; in all somewhere around the fantastic figure of £1,200,000,000. Is not that just crazy?

Now it seems that our Government's intention is to funnel all further external loans for capital investments through the World Bank. Where is the need for such loans at all? Surely the proceeds from our tremendous exports should be sufficient, and to spare, to maintain our import requirements, and if not, why not? One has only to look at the terms of the present loan of £20,000,000 we are negotiating in London to see why not. The principal will never be repaid—the interest on it will go on for ever, and inflation will go on inflating like the expanding universe, except that the universe pays for its expansion as it expands; it leaves no debt and has no hire-purchase system.

It is bad enough that the community's assets should be held in pawn by financial institutions in New Zealand. That can be rectified. But it would not be so easy to redeem them from the World Bank. Let us keep New Zealand's flag in New Zealand.