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The Land Dollar: Introducing
a land backed national
currency
The Land Dollar: Introducing
a land backed national
currency
1
New Economics Party
proposal
Deirdre Kent, author of Healthy Money
Healthy Planet – Developing
Sustainability through New ...
The order of this slideshow
International background
Four international problems
Paradigm shifts needed
What to use
What t...
Only two layers of
government
Local taxes are called
Rates
4
Auckland is the biggest city with a third of the population
5
Climate change
Inequality
Economic instability
Energy cliff
6
One global system =
connectedness
7
Financial contagion
8
Ultimate needs
Food, clothing, affordable housing
Habitat restoration
Jobs/basic income for all
Create a thriving economy ...
Three major changes we
want
Publicly created currencies spent into
existence – not lent into existence at interest
Change ...
All three changes
would shock the economy!
• Impossible both politically and practically to do
public money creation sudde...
14
Banks now bigger than
before Global Financial Crisis
The gigantic and growing shadow economy is very
weakly regulated, eve...
Poverty in New Zealand
16
The widening gap between rich
and the rest hurts all.
(Inequality A New Zealand Crisis ed Max Rashbrooke)
17
Global economy in crisis –
bubbles everywhere
Nomi Prims, ex Managing Director of Goldman
Sachs says “The global economy h...
Banks create money
Michael Kumhof, economist IMF
January 2013
The key
function of
banks is money
creation not
intermediati...
Banks and land-ownership
When banks create money as interest
bearing debt, they get the best security –
land
With rising l...
Each site is given value
by...
Site
Government
Local
Businesses
Local
Government Social
Organisations
Nature
21
The tax system should
incentivise what we want to
encourage
Labour - but when you work, you pay
Sales - but when you buy, ...
Hard to reform the tax system
Since people are already paying twice on their
land – their mortgage and their rates – it is...
The tax system benefits
banks. Banks want
Rising house (land) prices
which means rising debt
which means rising revenue fo...
What happen when
banks create money?
Banks create money as interest bearing debt
Prices rise
Growing debt
Wealth
concentra...
A welfare mess
Means tested benefits lead to
a benefit trap
Complicated, intrusive,
expensive, leads to housing
duplicatio...
Why not a
Universal Basic Income?
Universal Basic Income is a full Citizens
Dividend. If suddenly introduced, it would
sho...
Time to think differently?
“We can’t solve our problems with the same
level of thinking we used when we created
them.” Alb...
Central government
Should set the policies that can provide the right
conditions for strong, vibrant local economies and
t...
Politicians decide tax, money
and welfare systems
30
“To change something,
build a new model that
makes the existing
model obsolete.”
(Buckminster Fuller)
31
• The crash will happen at some point.
• Issue a new currency that can survive it.
• Spend it into existence to buy land.
...
A Living System
Complex
Whole
Feedback loops
33
Different interventions,
different leverage
A system has patterns which mustn’t be
broken
Choose where to intervene to get...
Possible interventions
in a living system
35
Interventions for most
leverage
Change major paradigms, common
assumptions and beliefs, about the
currency system and the ...
1. Lending into existence vs.
spending into existence
New paradigm:Instead of money being
created as interest bearing debt...
2. Parallel currencies
Change of paradigm: instead of one
national currency, two national currencies
acceptable for taxes
...
3. People have ability to issue
money
New paradigm: It is a country’s sovereign
right to issue their own currency.
Any gro...
4. Tax from monopoly use of
natural resources
New paradigm: the monopoly use of the
world’s natural resources should, and ...
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...
The power of currency design
A well designed currency system is a
powerful agent for change. You can:-
Can build in incent...
A good currency flows like
blood
43
The Plan
Create a new parallel
national currency
Link it to a very different
tax and welfare system
Grow the amount of thi...
Treasury issues a new currency for buying land.
This currency can be spent by citizens on taxes,
land rent and student loa...
Not the Reserve Bank, which is too close to the
private banks, even in New Zealand
46
Overview of the process
1. Local land committees establish Land Rental Index and
recommend which land should be bought fir...
Government
Treasury
Citizens
Resource rental revenue
shared three way
Local
government
48
Treasury
Local monetary
authorities
Monetary authorities,
acting together, make
sure there is no
inflation
49
Central Land Committee
Local land committee
Land committees,
working together,
decide on a
programme to buy
up land. Budge...
1. Land Committees set up
Committee in each local board
area that has good Maori
representation from local
hapu.
Establish...
Land which is not
under dispute
from a Maori iwi
(tribe) or hapu
subtribe)!
52
The Waitangi Tribunal meets to hear Treaty claims
53
2. The land committees might
choose any combination of:
Land owned by land trusts who want to take land
out of the marketp...
3. Treasury buys land
•Assess rentals on bare
land by auction in order
to find true value, and
set up the Local Land
Renta...
What is a just lease?
Never in perpetuity
Possible to pass to a
relative
Security of tenure
Rent adjusted yearly
Protected...
Crown Leasehold land exists
Many high country stations,
Reclaimed land e.g. Napier port,
Auckland port
Land Information NZ...
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 ren...
4. Use of Land Dollars
•A long term investment?
•Pay taxes in advance?
•Lend them to their children to pay off student
loa...
Can I sell Land Dollars for NZ
dollars?
The Land Dollar is issued at par and
redeemed at par by Treasury
In between let th...
Resource tax on use of the
commons
61
Of course there will be ‘sin’
taxes
Tobacco, gambling and alcohol will continue to
have taxes, once called Excise Taxes.
62
Treasury receives land
dollars
Refresh and re-date the Land Dollars they receive
• From taxes or student loan repayments
•...
Paid to all who have lived in NZ for a year,
including children.
Will be spent by most people on essentials like food.
64
• Choice of inputs directed
towards local and non-
fossil fuel
• Labour has no income tax
so farmer employs more
labour
• ...
Results –Affordability
improves
No tax burden so
prices drop
No interest built
into the price of
goods so prices
drop
66
Thriving building industry
No GST on materials
No income taxes
on wages
67
Thriving post fossil fuel
economy!
•As people spend their Land Dollars on labour
intensive industries within the country,
...
Has it been done before?
Wōrgl 1932
1923 German
hyperinflation
Age of cathedrals 10th to
13th centuries
BUT A CURRENCY
HAS...
Alternative: Create national
currency at local level
Why not give money creation power to community boards?
And give them ...
Why a locally created national
currency?
Wairoa, part of Hawkes Bay, part of NZ
Power to local #relocalisation
Care needed...
Three levels all coordinated
All equally
important and
have their
integrity
75
Summary
Money should be created by the people for the
people. More than one model.
It should be backed by land.
It should ...
All new paradigms appear preposterous for a
start
79
A glimpse of hope
80
`
84
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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.

Published in: Economy & Finance
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The land dollar : a national land backed currency

  1. 1. The Land Dollar: Introducing a land backed national currency The Land Dollar: Introducing a land backed national currency 1
  2. 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. 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. 4. Only two layers of government Local taxes are called Rates 4
  5. 5. Auckland is the biggest city with a third of the population 5
  6. 6. Climate change Inequality Economic instability Energy cliff 6
  7. 7. One global system = connectedness 7
  8. 8. Financial contagion 8
  9. 9. Ultimate needs Food, clothing, affordable housing Habitat restoration Jobs/basic income for all Create a thriving economy without growth imperative 9
  10. 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. 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. 12. 14
  13. 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. 14. Poverty in New Zealand 16
  15. 15. The widening gap between rich and the rest hurts all. (Inequality A New Zealand Crisis ed Max Rashbrooke) 17
  16. 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. 17. Banks create money Michael Kumhof, economist IMF January 2013 The key function of banks is money creation not intermediation. 19
  18. 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. 19. Each site is given value by... Site Government Local Businesses Local Government Social Organisations Nature 21
  20. 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. 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. 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. 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. 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. 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. 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. 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. 28. Politicians decide tax, money and welfare systems 30
  29. 29. “To change something, build a new model that makes the existing model obsolete.” (Buckminster Fuller) 31
  30. 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. 31. A Living System Complex Whole Feedback loops 33
  32. 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. 33. Possible interventions in a living system 35
  34. 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. 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. 36. 2. Parallel currencies Change of paradigm: instead of one national currency, two national currencies acceptable for taxes 38
  37. 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. 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. 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. 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. 41. A good currency flows like blood 43
  42. 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. 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. 44. Not the Reserve Bank, which is too close to the private banks, even in New Zealand 46
  45. 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. 46. Government Treasury Citizens Resource rental revenue shared three way Local government 48
  47. 47. Treasury Local monetary authorities Monetary authorities, acting together, make sure there is no inflation 49
  48. 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. 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. 50. Land which is not under dispute from a Maori iwi (tribe) or hapu subtribe)! 52
  51. 51. The Waitangi Tribunal meets to hear Treaty claims 53
  52. 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. 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. 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. 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. 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. 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. 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. 59. Resource tax on use of the commons 61
  60. 60. Of course there will be ‘sin’ taxes Tobacco, gambling and alcohol will continue to have taxes, once called Excise Taxes. 62
  61. 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. 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. 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. 64. Results –Affordability improves No tax burden so prices drop No interest built into the price of goods so prices drop 66
  65. 65. Thriving building industry No GST on materials No income taxes on wages 67
  66. 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. 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. 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. 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. 70. Three levels all coordinated All equally important and have their integrity 75
  71. 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. 72. All new paradigms appear preposterous for a start 79
  73. 73. A glimpse of hope 80
  74. 74. ` 84

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