Summarising our whole system shift for a new economy

Designing a new economy has major challenges politically. We want two major changes that actually aren't politically realistic in the current world where eight individuals own as much wealth as the poorest 50%. There is too much concentrated power.

If we want monetary reform it is unavailable at national level because there are simply too many bank lobbyists in the world's capitals who are spending far too much for any public interest lobbyists to match. Then again, if we want to replace

Then again, if we want to replace income tax with land tax, forget it. Not a goer either from a practical political viewpoint. No self respecting politician will touch it if taxing land reduces its market value and threatens a politician's votes.

What about getting a Basic Income and replacing the intrusive welfare system? Well that depends on how you would fund it. The problem is most of the current solutions are a drag on the economy. You must not fund it from GST which is regressive or from income tax which is a drag on the economy.You must fund it by sharing the rent on land and other monopolies.

Well where do we go then? You have painted a dismal picture.

Most respond by saying "Oh well bring A or B in gradually". That takes ages and moreover when A is implemented it affects B and C. So the idea of just imposing a 1% land tax and bringing it up gradually is quite impractical. We have to think in terms of whole systems. It is a whole system shift we need. Redesign the political economy from scratch.

The fact of the matter is that we must be politically savvy to come up with a solution. Many economists might agree that land tax is the most logical tax, but unless they are standing for office, they don't have to face the public. It is one thing to be an economist and another to be a politician. Victoria University's 2010 Tax Working Group which was stacked with economists from many government departments as well as consultants and academics, proposed a land tax. Did the government listen? Not that I can recall. I don't remember their recommendations on land tax being discussed in the public arena for more than a day.

What about Positive Money and all its followers saying that money should be spent into existence not lent into existence? They make a very good case, you can't fault it. And yes, the British Parliament took it seriously enough to have a parliamentary debate. But do you believe it will go further? You only have to read Nomi Prins book 'All the Presidents Bankers' to get an idea how close presidents have been to the big bankers for over a century. Hilary Clinton's campaign was funded by investment bankers and Trump has six Goldman Sachs bankers in his cabinet. He has already moved to get rid of the weak regulations they now have.

When considering the political feasibility of putting in the idea of Michael Kumhof and Jaromir Benes' Chicago Plan Revisited, a plan making bank debt illegal, Lietaer, Arnsperger, Goerner and Brunnhuber listed five reasons for not recommending it.[1]
"1.Replacing a monoculture with a monoculture is not the way to generate diversity in exchange media.
2. While it is true that a Chicago Plan reform would eliminate risk of widespread banking crashes and of sovereign debt crises, there would still be monetary crises.
3. If governments were the only ones in charge of creating money there might be a risk of inflation. Such a risk is real and demonstrated in 2009 by the hyperinflation crippling the Zimbabwean dollar after President Mugabe instructed the central bank to print its currency by the trillions.
4. The fourth reason can be summarised as ‘political realism’. Any version of the Chicago Plan will be fought to the death by the banking systems because it threatens both its power base and its business model. Even after the excesses triggering the 2007-8 collapse, or in the middle of the Great Depression of the 1930s, the banking lobby managed to deflect the implementation of any significant changes. In 2010, for every elected official in Washington, there were three high-level lobbyists working full-time for the banking system. The financial services industry including real estate spent $2.3 billion on Federal campaign contributions from 1990 to 2010, which was more than health care, energy, defence, agriculture and transportation industries combined." (In USA, according to Gar Alperovitz, in 2010-11 the FIRE section (finance, insurance, real estate) section spent nearly $1 billion in lobbying against bank regulation.)

"5. The final argument is about risk. Nationalising the money creation process cannot be done on a small pilot scale. It must be implemented on a massive, national scale or, in the case of the euro, a multinational scale. Any change always involves the risk of unintended consequences. Logically, large scale change involves greater risk."

Yes, there is a way to go. The ideas came from the permaculture teachers in our new economics movement. Reform the very structure of governance to give quite substantial powers to  local government, turn governance upside down as well and then we might have a chance. The centralised governance structure must be replaced with distributed governance. Then we need to rethink the powers given to or claimed by local governance. In fact central government is not going to give very local government big powers like money creation, land ownership or revenue raising power, so they have to claim it themselves. This is where rebellion must be focussed. 

So we have proposed spending money into existence at the very lowest level of government (in New Zealand that would be the Community Board). That money will gradually buy up land. The Community Board would then receive land rent from the property holder and pay the rates (local taxes) of that property holder. This process happens gradually, while closely monitoring inflation. If there is a sign of inflation, the rate of decay of money can be adjusted or the money spent at a higher level of governance.

So the Community Board claims the right to issue money, to buy land with that money, to receive public revenue. It could also impose certain resource rents to be determined.

With the growing revenue from land rent the Board would be able to distribute regular Citizens Dividends and build and maintain essential infrastructure.

There would have to be participatory budgeting so that the balance between infrastructure and dividends was maintained and the public was behind the Board.

Now if we are going to reclaim the right to issue money, we might as well design it properly while we have the chance. It is there we look to history and read Bernard Lietaer. He cites a period of 2000 years of a decaying Egyptian currency which had huge social, educational and economic benefits, 200 years of European currencies in the central middle ages that resulted in an age of prosperity, equality, high education and more leisure and finally a period in 1932-3 in a small Austrian town during the Great Depression. Each of these had a decaying currency, much as goods decay.

So the new money would be designed to decay. In practical terms, it would keep its face value but attract a regular payment to keep it valid. The local Board would develop a more equal relationship with its local Council who would inevitably end up accepting the new currency for rates. This would eventually pass on to central government who would have to accept it for taxes.

So what we propose is a new currency that soon is accepted by central government for taxes. This means it is a new national currency. They way this works out is that each local board keeps its currency from inflation so all are on a par. They flow into a stream that flows into a river towards central government.

Minsky a good economist but missed Henry George and Silvio Gesell

Why Minsky matters : An Introduction to the Work of a Maverick Economist by Randall Wray.

My thoughts after reading this nice clear book are that Hyman Minsky, with his yearning for full employment, more equality and a stable financial system, would have revelled in the books of two non-economists – Henry George 1879 and Silvio Gesell 1906. Henry George’s writings would have given him answers to the eternal social justice conundrum and satisfied his curiosity about why Keynesian solutions tend to be inflationary. The route to full employment and more equality would then be staring him in the face. He wouldn’t  have had to struggle round arguing against a payroll tax when George had argued for a logical tax system so well. Minsky doesn’t quite get there. Wray merely implies he approached it when he said Minsky ‘did not see public purpose in discouraging work.’  And while he knew that boom and bust were inevitable, with exposure to Fred Harrison’s writings or those of Bernard Lietaer he would have understood the underlying causes.

Nor did Minsky get currency design, though he did say, ‘Anyone can create a currency. The problem is to get it accepted.’ Silvio Gesell would have provided a fundamental understanding of the importance of currency design. The idea that people can design currencies for different purposes is new to most people and, given Minsky’s mainstream education, he was probably never exposed to that. I think he would have been excited to read Gesell as it would have turned his knowledge of capital formation, interest rates, risk and banking upside down. But Minsky had to earn a living and couldn’t afford to stray this far from orthodox economic thinking. It was enough to argue against mainstream beliefs of macroeconomics like that the economy is naturally stable because the market moves it back to equilibrium. That was a life’s work.

Minsky is a clever mainstream economist, educated in universities that didn’t expose their students to Henry George or Silvio Gesell or even Bernard Lietaer. But within those limitations Minsky in 1987 predicted the explosion of home mortgage securitisation that eventually led to the Global Financial Crisis. He leaves us with a legacy of sentences and phrases like ‘Stability is destabilising’, ‘that which can be securitised will be securitised’, ’money manager capitalism’ and prescribes clear methods of reintroducing bank regulation. He explained debt on debt on debt layering, leveraged buyouts and many other otherwise obscure terms.

Well done Randall Wray for explaining the work of Hyman Minsky to the general public in such readable form. I am conscious that I have not read the original Minsky so hope I will not have been mistaken.

Productivity Commission recommends change to land value rating system

You won't find this headline in the NZ Herald or the Dominion Post because it is all but ignored in their reports. Admittedly the Dominion Post gives the rating system a mention in paragraphs 16 and 17 of its report, but its headline was "User pays seem as vital for housing".

If we look at the actual report, Using Land for Housing, it argues logically that a return to land value rating system is going to incentivise building. After several pages of evidence it concludes very moderately that "A good case appears to exist for setting general rates on the basis of land value rather than capital value, to encourage the development and efficient use of land. Arguments used to prefer capital value rating are not strong."

It says:
"A number of policy settings would influence a landowner’s incentive to develop land, at the margin. This
section considers four:
 the valuation basis of councils’ general rates;
 land taxes;
 tax breaks for development; and
 charging rates on Crown-owned land."

The media of course will focus on on the last of these.

Go to P258 of the report and read the subsequent pages. Submissions on the draft report are due on 4 August

Modernising the Georgist ‘doctrine’ without using the words “land value tax”

41bQo1jRHqL._BO2,204,203,200_PIsitb-sticker-v3-big,TopRight,0,-55_SX278_SY278_PIkin4,BottomRight,1,22_AA300_SH20_OU01_In Land a New Paradigm for a Thriving World, Martin Adams has spelled out his philosophy that no one should make a profit from owning land. He has carefully and thoughtfully reframed the Georgist ‘doctrine’ for a modern era and developed a clear new language. For example here is a classic sentence: ‘What most people don’t yet realise is that the value of land is best shared, and that whenever we profit from land we profit from society.”

Martin is no slave to doctrine and clearly thinks out the issues for himself. He sees the vision. “Once we being to share this value with one another, we have the opportunity to unleash a cultural, technological, ecological, and even spiritual renaissance that will liberate us in ways we can’t imagine.”

And – great news – Martin is no centralist. He understands that revenue must flow from the periphery to the centre, not the other way round. So he talks of land moving into a Community Land Trust and people then paying a Community Land Contribution. Some of the revenue stays local and the rest is passed upwards to other levels of government.

From his description of how to prevent urban sprawl to his chapter on using farmland efficiently, Martin challenges us to think in a fresh way.

Thoughout this valuable little book Martin has steadfastly refused to use the word ‘tax’ , arguing it implies that the people being taxed have to part with something that belongs to them. “Land value taxes”, he says, “are still rooted in the paradigm of private land ownership.”

The questions arising from this book regarding the practicalities of some of his suggested solution remain to be tackled. Martin, being so honest and so curious, will no doubt ask more questions, talk to more people and develop more politically realistic solutions. It's monumental task. I have no doubt he will make an even bigger contribution in the future. Watch this space!

Charles Eisenstein, Thom Hartman and Peter Barnes don’t just recommend any book or call a book a ‘brilliant contribution’ or a ‘modern breakthrough’. Their reputations would be at stake if they did.

Available here

The Land Dollar – how we came to offer this as an option

The combination of allowing banks to create money interest bearing debt, together with a land tenure system that allows people to profit from rising land values have led to growing debt, a built-in growth imperative, inequality and a never ending series of boom-busts. Both the issues of land and money need to be addressed, especially in the light of the climate emergency and the growing inequality we live with.

In our search to design an economy that isn't at war with the planet – one that doesn't write in forced economic growth or widen the gap between rich and poor – we have opted to combine basic income, monetary reform, governance reform and tax reform (the latter closely related to land tenure reform). We want a world where everyone has a fair share of our common wealth. We want to replace the extractive model that is killing our habitat with one that is life-friendly.

While addressing these reforms together is a huge challenge, we know for our climate's sake we must succeed. In reforming the system we know we can't afford to shock the economy. So we need incremental change of some sort and must look to nature for guidance about design.

We realised early on that imposing a land tax alone was politically well nigh impossible, even at half a percent. Raising it to the a full land rental level would be just as hard. That sort of incremental change would not be possible.

Objections for instance to charging a full rent for monopoly use of land include:-

a. The banks would block it. They hold the power because they issue mortgages backed by land.
b. The public wouldn’t like it because the market value of their property would decline. This is unacceptable especially to those with big mortgages.
c. Property owners would argue they already pay rates and a mortgage so why should they have to pay a third time?

We realised early on that reforming the money system by spending money into existence to build infrastructure would result in rising land values for those with properties served by that infrastructure – be it rail, schools or ports. It would be difficult to control land inflation and therefore to halt the march to further inequality. The rich would also buy up patents and any natural monopoly they could get their hands on.

Funding a full Basic Income is also a considerable challenge. An extremely large sum is needed, even when the net public expenditure is calculated.

During the summer of 2001-12 Deirdre had had a series of Skype calls with a Cambridge academic, the late Dr Adrian Wrigley. His solution was for the Treasury to pay off the mortgage and for a full land rental to be paid. The property would then have a covenant on it requiring owners to pay a full land rental to Treasury. No rates would then be payable. If the property was sold, the next owner would still have to pay that rental.

We only wanted the land to be bought/paid for, not the whole mortgage, so we changed it to that.

We soon learnt that using the preferred "covenant" idea was hard to explain to the public so we reluctantly dropped it in favour of publicly owned leasehold land. However we started with a centralised model of public ownership and remained with that for almost 2 years. All the time we were a uneasy about land being owned by any agency of central government.

Adrian never talked of a parallel currency. It was our idea to have one. We thought the current system is so badly messed up we had to start again, and believe that this was also the way not to shock the economy.

We knew a lot of land is overvalued and although we recommended buying land at market value, we know this isn't the total solution.

So we recommended designing a second parallel (and competing) national currency, and link it from the start to completely new tax laws. After all no public budget would ever stretch to paying for such a large quantity of land, no matter how slowly it was acquired. Treasury, not the Reserve Bank, would issue Treasury Notes to buy up land. We happily adopted Adrian’s excellent idea of having a Land Rental Index for each area and adjusting the rental each year accordingly. Only the land value needs assessing not the improvements, so that is easy. And you only need a sample of properties in each general area. Land rentals are valued each year and the index suitably adjusted.

Parity with the land dollar with NZ dollar became a hot topic of debate. After discussion we eventually said “issue it at par, redeem it at par and let it float in between.” The new currency would be valued by those who wanted to employ labour without tax or buy goods without sales tax.

The name of new currency changed many times – Tradeable Tax Credit, Treasury Note, Zeal and finally the Land Dollar. (We also went through a short stage of recommending Rates Vouchers for both Auckland and Christchurch.)

Then, in mid year 2014 we suddenly realised it didn’t have to be issued by Treasury at all. Eureka! It could be issued by Community Boards and the revenue could be shared by other levels of government and eventually flow to central Government. We said ‘turn the funding model upside down, replace centralisation with a model where decisions are made across the whole economy. Restore local democracy'. We gave a great deal of power to the local level of government – currency creation power, land buying power (compulsory where applicable), and revenue gathering power.

In this model the Community Board or its elected equivalent “owned” more and more land – a more politically acceptable solution. The local committee must have on it, by right, one or two representative from the local iwi or hapu grouping, who would have veto power over any decision to buy land, thus avoiding potentially sensitive land. Land would effectively go into a Community Land Trust. In this way land could be gradually taken out of the market place and the people who decide which land to choose would be answerable to the locals. (Adrian had hoped the land buying could all be done voluntarily to avoid legislation. Some will no doubt come in voluntarily)

A whole raft of tax laws applying to transactions using the new currency (the Land Dollar) would have to be passed right at the beginning. These would include all taxes on the rights to the use of natural monopolies. Natural monopolies are the rights to land, water, airwaves, minerals, fisheries, patents, domain names, hydro-electric power generation and supply, any public utility such as a port, airport or the monopolistic rights to reticulate wires, pipes, rails, roads and the like: the right to use water, air, land or the biosphere to absorb waste.

So what does the policy say now?

Our party wants to restore the concept of sharing the values of the commons, have a money system that doesn't build in increasing debt and the need for competitive behaviour. We want to distribute the rent from use of the commons to all NZ citizens over one year old as a regular Citizens Dividend.

A new national currency the Land Dollar is to be slowly spent into existence at Community Board level to buy up land. No rates would be payable for those whose land is community owned. A local land committee would give local hapu/iwi veto power over decisions as some land may be sensitive even after Treaty settlements. The rent from the land would be shared with other levels of Government and as a Citizens Dividend – using participatory budgeting as there would be many simultaneous claims. Inflation would be controlled by a network of committees at different levels working with Treasury and Reserve Bank.

Transactions using the land dollar would attract no income tax, GST or corporate tax. But a whole set of different taxes is needed. This is because it must not be spent to plunder the earth, deplete resources, subtract from the social or cultural capital or pollute the water, air or biosphere. That means a full carbon tax for example.

For any currency to be effective as a means of exchange there has to be a circulation incentive built in. Adrian Wrigley suggested that rather than having a financial penalty built in for hoarding as recommended by Silvio Gesell, to make it easier each note should be issued with an expiry date.

The electronic version when received by Treasury would be refreshed and redated before issuing it as a Citizens Dividend. All citizens would receive it. Where there were dependents, the designated carer would receive it, thus changing the economic status of carers. In time this dividend would rise to a basic income, allowing a huge range of inventions and options for people who have been in unsatisfying jobs but have a passion or a hobby they want to pursue. Entrpreneurism would flourish – much needed in a post carbon age.

There are many unresolved issues. The property owner that has land bought with the new currency will have $100,000 plus to spend. Trades with the land dollar will not attract GST, income tax or company tax. We need actual examples, but believe a lot of it will be spent on labour to upgrade their homes or on the development of their small business.

We invite alternative solutions
This policy has been derived by discussing with a range of people at and between meetings and it has been largely driven by Deirdre, who has received feedback from meetings in Christchurch, Otaki, Wellington, Motueka, and two at huis held by the Living Economies Educational Trust hui. We are also aware there are some big issues we have not yet tackled, like the issue of Maori land. Our solution, we emphasise, is one solution. If you have another, please let us know!!
April 2015

There is no shortage of bedrooms in Auckland but…

The Q and A programme on TVOne this week started with a debate on housing. Property investor Olly Newland and Hive News Publisher Bernard Hickey were asked by Susan Wood about how to control the housing bubble in Auckland, since the Reserve Banks had this week decided it was not budging and would leave the Loan To Value (LVR) restrictions in place.

Olly Newland seemed to want no restrictions at all so that rents will come down. Bernard Hickey pointed out that if you have first home buyers with 1% deposit you run the risk that the banks will fail and the Reserve Bank can’t take that risk. Olly replied that the banks can look after themselves, which fails to understand that we need a reliable banking system. He said that LVR restricts first home buyers and that is preventing them from getting on the housing ladder. He even used the term “moral aspect” and said he was the first to encourage home buying for first home buyers.

Bernard pointed out that if rents go up the government has a fiscal problem because it pays accommodation supplements. Bernard says if interest rates go up homeowners are in trouble. He reflected on the fact that RBNZ had been considering various ways of controlling lending to investors, including a different rule for those who have five or more properties.

They disagreed on whether interest rates will rise or go down, Olly opting for the latter and saying we are getting deflation starting round the world. He dismissed the RBNZ’s solution to control investment finance as “political claptrap” and said he wanted people to be able to rent property for a lifetime securely. He believes the market would steadily slow down and people were investing for the long term.

Oh well, interesting to have his views.

Then the panellists came on and included Matthew Horton and Laila Harre. Laila said the government doesn’t know whether
they want more people to live in their own houses
they want to control the rental market. They should get a policy on these.

Laila said there was an obsession with the supply issue and a lack of proper statistics. The housing shortage figures vary between 5000 and 30,000! Property investors owning 5-6 homes are often living in large houses themselves when all their children have gone. There isn’t a shortage of bedrooms in Auckland at all.

Matthew then pointed out the anomalies possible in the RBNZ’s other options e.g. does a property owner with five bedsits have a bigger portfolio than those with three huge student houses? Here we go again. If you don’t ask the right questions you don’t get the right answers and you end up with a complicated messy system full of anomalies.

So they managed to have a whole debate without once raising the issue of land prices and how to keep them down.

You know when I was writing my book Healthy Money Healthy Planet – Developing Sustainability through New Money Systems I was arguing that money be created without interest. Some said interest rates need to go up not down. But the strongest reaction I got from the drafts was from Robert Keall of Resource Rentals for Revenue. He basically said “zero interest loans over my dead body” because he knew land prices go up. He said we want higher interest rates not lower interest rates.

Ten years later I know what they all meant. Low interest rates mean a land bubble (people call them housing bubbles but it is really the land that rises in value not the building).

So while I am still of the opinion that money should be never be created as interest bearing debt, I am also acutely aware of the connection between land and money and know that in New Zealand new land tenure systems were introduced by British colonists at the same time as private banks and their money creation powers.

The whole point is that because land is naturally occurring, it belongs to everyone. Colonists brought with them a concept completely alien to Maori, and indeed to the thinking of indigenous people worldwide, – private land ownership. The setttlers, who had largely been tenant farmers in England and Scotland, wanted freehold land. Freehold means land ‘free of rent’. Thousands of years of enclosures of land in Britain had meant that freehold was the new ideal. They had forgotten that land belongs to everyone.

It is a sign of how little distance we have come in our understanding of land as a natural resource that a high profile debate like this QandA debate can go hard at it without mentioning land. One tweeter said ‘The elephant in the room is capital gains’, again without mentioning land.

Oh and they had a debate they had about ‘forcing people out of their homes’. When Laila pointed out that there was no shortage of bedrooms in Auckland, Matthew Hooten said you can’t force people out of their homes. Well a tax system can. That is what tax systems do – they alter behaviour. If a Remuera retired couple is living in a huge home and the only cost to hold their land is the rates, they stay there. If however they had to pay an extra 3% land tax they might reconsider buying a smaller property more suited to their needs.

The next day the Dominion Post carried a short piece making Laila look ridiculous for saying this but she was only pointing out a fact.

A recent Melbourne study has found that a great many property owners are not even renting, they are just sitting on their properties waiting for capital gain. In the commercial area it is a higher percentage and in each suburb it differs. 64,386 properties are likely vacancies during Melbourne’s record-long housing supply crisis - See more at:

It is time such a study was done for Auckland.

Economics professor Steve Keen in a recent interview said it is only thing stopping unemployment rising to the levels of Europe is the the housing bubble. The housing bubble keeps money supply up. Goodness, that is a critical point and leads us to understand the interconnections between the money supply, unemployment and how the tax system affect where money is invested. Of course Steve Keen must then argue we need more money in the system as well as a tax system that taxes the monopoly use of the commons and not work. And we have to find a money system that is sufficient. Thank goodness for the citizen effort going on at the moment to start a Christchurch currency. Yes getting this new political economy is a huge challenge for the entire world.

Why not create a national currency at local level?

upmapOver a period of two years or more we have proposed:

1. A second national currency. The currency to be issued by Treasury, spent into existence to buy land. The new currency will have no other taxes than land rents, natural resource rents and taxes on bads. We aim to move to a tax system that taxes the monopoly use of the commons rather than labour and sales. Some revenue will be distributed as a Citizens Dividend to all citizens who have lived there for a year or more, the rest will be shared by all levels of government. We advocate a Land Rental Index to be set up in each area, with land rents being adjusted annually according to the index. Land rentals are relatively very stable over time. It is only when there is a major event like and earthquake that they decline or when a railway is put in or a labour intensive business arrives that they rise more than just a tiny bit. The new money would be good for the payment of rates and taxes. No further rates would be payable.

2. We have occasionally advocated a Christchurch currency and an Auckland currency created by spending it into existence to buy land. This would require complete cooperation from the central government as legislation would be needed to make it free of income tax, GST and company tax as before. Rents would be shared as a small Citizens Dividend. The rest would be shared with central government. So a similar design but a city currency as well as a national one.

3. Then very recently we went a step further and suggested that Local Boards (the Auckland supercity calls them this and there are 21 Local Boards as shown on graphic) create the currency, spend it into existence to buy land. A monetary authority will have to be set up to ensure there is no inflation. Revenue from land rents and some natural resource rents can be gathered by Local Boards and first distributed to the local citizens then the rest used at local board level and then sent up the line to supercity and to central government. Supercities would have power to impose taxes on water pollution e.g. leaching of nitrates that uses the commons of the aquifers and rivers. (and to tax the use of water for commercial purposes.)

This option 3 would require several currencies to co-exist. The usual NZ dollar, the new NZ dollar, the supercity dollar and the Local Board dollar. We had considerable difficulties and confusion when discussing exchangeability of currencies.


4. Option 4 arrived a couple of days after I spoke to a meeting at a Motueka ecovillage in response to the questions and problems. This one is simpler and is like the formation of a river from the small streams to the river to the sea. Create the new national currency at Local Board level and pass it up the line. Local Boards would set up a Land Committee to decide which land should be bought first. Each local board might decide differently in consultation with its community. Every decision has the right to be vetoed by the local hapu or iwi and where applicable the Maori Land Court should be involved. You would also need a local committee (perhaps the same one) to administer a Land Rental Index or where appropriate because of different desirabilities of sites e.g. Wellington hill suburbs for sun. You would also need a local Monetary Authority to monitor inflation. It would work closely with the Supercity Monetary Authority and the Treasury Monetary Authority to ensure there is no inflation and that no local board would issue too much or too little new money. These are such important entities that they would have to be voted in.

There are so many issues to comment on here, it would be really good to have a general discussion. Then we can perhaps divide up the discussions. Option 4 finally gives real powers to the local economy, which is in line with our policy. The land board may, after consultation with the local community, choose a local business which needs capital, or choose undeveloped land owned by absentee speculators or the local iwi may have very strong preferences.

For instance, if the local committee chose five sections each valued at $200,000 it would create $1m of national currency. If the committee chose to purchase the land of a speculator, that speculator, seeing no future, might sell the lease and thus release the land for genuine use. Many with mortgages will want their mortgage reduced and, because the new currency is legal tender, the bank would have to accept it for paying off a mortgage. Or the committee may be persuaded that a local business needed capital to employ local labour and grow. A community land trust might ask for their land to be bought so they can take land out of the market. This would enable them to sell houses to younger people to join their village, as otherwise the cost would be unaffordable. They could then use the considerable injection of capital to develop their labour intensive businesses and the ones that use local materials.

Then the monetary authority, in conjunction with the monetary authorities of the supercities and the government would make sure the local board did not issue more money than it was allowed, as inflation must be kept strictly under control.images-1There could be problems with certain rogue local boards. Either they issued too much money and wouldn’t cooperate with the monetary authorities elsewhere, or their leadership was questionable. In that case there should be provision in law to instal a Commissioner until the Board's administration improved.

In models 1-3 we have designed in a circulation incentive in the form of a dated currency. However perhaps in model 4, since all money flows downstream from local to central, there may be no need of this.

My questions are (and you will raise plenty too):
  1. Exchangeability with the national currency NZ dollar? We had it as they are issued at par and redeemed at par and in between the value changes according to the market. Some have argued there should be no exchangeability with the old national currency.

  2. Will the creation of a second national currency at local board level stimulate the local economy?

  3. How does this all line up with the Maori Land Trust boards and Incorporations situation?

  4. How would the public be protected from local board that go rogue and how would the wider public ensure that local boards representatives can deal with this level of responsibility?

Now there is one more thing that comes before any of this. Councils and Government should never sell land. The idea of the government buying up the land in the Green Frame and then selling it off into private hands is unacceptable. They should keep it and auction the leases to the highest bidder, then share that revenue with the public (via a Citizens Dividend) and the central government. This should be entrenched in law somehow. Meanwhile a private bidder Auckland City Council has been offered $75,000,000 for a council car park. What a dreadful thing that would be if the council sold off this prime city land for cars to park and for a private enterprise to gain, both in car parking, and in capital gain. As they said in a The Nation programme on TV3, they are developing around traffic hubs. Of course. That means the public pays for the transport infrastructure and private land "owners" benefit from rising land values. Not fair, all wrong. Let logic prevail!

Reservations about Crown Leasehold Land. There are many who will have reservations about the government or the local board buying up their land. The alternative we used to have was that the Government pays you for your land, and the title of your property then bears a covenant, an obligation to pay a ground rent from then on, whoever owns the land. While it is more difficult to explain to the public, a covenant of this nature would give much more peace of mind when it comes to secure tenure of the land. "Leasehold title" has such a bad reputation that it is difficult to explain there are no sudden rent rises if the rent is linked to an index and that the tenure is for a lifetime, with rights that your descendants can get the next lease. No matter how much this is explained it may be better to have a covenant.