so-called business cycle, the inevitable result of debt-based financial system, can then be used to the financier's advantage.
The power to decide on the size of the money supply is an awesome power. Of the Federal Reserve system, economist Milton Friedman once said: 'Any system which gives so much power, so much discretion to so few men such that mistakes, excusable or not, have such far-reaching effects, is a bad system. It is a bad system to believers in freedom just because it gives so few men such power without any effective check by the body politic.'
The case of Argentina provides a salutary warning for those who favour New Zealand adopting the greenback. Argentina pegged their peso to the US dollar and when the American dollar appreciated, Argentina’s exports were priced off the world market, forcing the state and the private sector to borrow more and more US currency from international financial institutions. Unemployment soared, pensions were cut, spending on health, education and welfare was slashed as Argentina struggled to service its US$132 billion debt. When President Fernando de la Rua forbade citizens to withdraw more than US$250 from the banks, Argentines poured on to the streets in open revolt and the government changed yet again.
The two options currently debated are the ANZAC currency or New Zealand dollar. But there is a third option, that we need both a NZ dollar and an ANZAC dollar. These could all co-exist.
What is known is that traders are more likely to trade in their currency zone than their geographical zone. Thus each currency has its role, and each economy should have its centre of control. Local currencies encourage local trade, national currencies encourage national trade and supranational currencies encourage trading within that supranational zone.
Retaining a NZ currency would enable New Zealanders to trade with each other without using valuable Anzac or US currency. It would help us keep our integrity as an economy and the Government wouldn't lose the $150 million a year gained from seignorage, the difference between the actual cost of printing the notes and the prices paid when they are sold to banks. An Australasian economy currency would enable trading within Australasia to be done with more convenience and lower costs .
Answering the inflation objection One major argument against multiple currencies is that two Reserve Banks won’t together be so easily able to control inflation. But we can’t control it now. One New Zealand dollar in 1950 was worth a mere 4 cents in 2000, scarcely evidence that the Reserve Bank has been competent in controlling inflation over the past fifty years. Even the last decade has seen a steady erosion of the value of the NZ dollar.
This is because the way we allow money to be issued now will always bring inflation. The bulk of the money we have now actually creates inflation.
Currently almost all the money we use is interest-bearing debt money. In New Zealand in 2001 98.3% of our money was issued by the banks and only 1.7% by Government as notes and coins. Since all businesses and governments have to pay interest on their debt and have to build repayment of this interest into their prices for goods and services or taxes, the money system itself is inflationary.
It is true that too much money brings inflation. For example in Germany after the First World War there was hyperinflation money was created at such a pace that by 1923 people had to take their money to the stores in wheelbarrows and a ham sandwich cost 24,000 marks. But while it is important to keep the money supply sufficient to buy the goods and services in the economy, it is equally important to issue the right sort of money.
It is not too much money which causes inflation, it is too much interest-bearing debt money.
If governments were serious about controlling inflation they would issue debt-free money themselves rather than allowing commercial banks to issue their inflation-causing money. If groups of citizens in green dollar and time dollar systems can do this and previous governments in vari