Structural Unemployment as an Economic Warfare Tool in Neo-Colonial New Zealand

Crown Baggage: Alister Barry’s 2002 documentary In a Land of Plenty: The Story of Unemployment in New Zealand  has yet to become an induction video at the corporatized social welfare department, Work & Income New Zealand.

Successive New Zealand governments have stealthily maintained what is now a 34 year-old state policy of structural unemployment. From mid-1984 onward, the Lange-Labour and then the Bolger-National governments pursued this secret state policy to keep the level of people out of work at around 6% of the labour force. Because huge pools of unemployed people create the visible spectacle of poverty, it works as a coercive mechanism to keep wages and salaries low to satisfy big businesses investors, as Alister Barry’s 2002 documentary, In a Land of Plenty: The Story of Unemployment in New Zealand revealed. The Neo-Colonial Crown’s maintenance of joblessness is designed to weaken pay-bargaining power thereby working as a coercive downward pressure on a major production cost – labour – and therefore, keep profits margins up.

Despite the Arden Labour–led coalition’s 2018 Policy Target Agreement with the Reserve Bank to achieve ‘maximum sustainable employment’, while still attempting to maintain stable inflation in the cost of living,  this initiative will have a subterfuge effect – of trying to please everyone – while being largely ineffective in its overt goal. This new Policy Target Agreement leaves the broader Shock Doctrine economic warfare framework intact. The first Policy Target Agreement explicitly set forth an inflation-targeting goal of keeping the general prices of goods, as measured by the Consumer Price Index, between 0-2% and was legislated in the 1989 Reserve Bank Act. It was sold to the public as a necessary move to get control of inflation, without saying that the Reserve Bank had colluded with banking cartels to maintain high interest rates in the 1980s in order to scuttle jobs en masse. Widespread job destruction was exploited as a vicious means to drive down cost-side inflation, while the rich could still make wealth amid a share-market and commercial property boom. This investigation shows with three examples that international and domestic bankers use the overnight inter-bank lending rate market as a transmission mechanism to issue ‘ransom notes’ to state managers. These Nightly Ransom Note Rituals are the market’s way of voting for its political-economic policy preferences, the wholesale ‘cash rate’ deemed ‘just right’, and for regulating the level of unemployment as a coercive mechanism that translates into maintaining a low-wage economy. Snoopman shows the banking cartels’ collective control and influence over economic activity, and therefore political institutions, is exerted through interest rates, which is the fee that banks charge for continued supply of credit – the lifeblood of a Neo-Colonial economy.

 

By Snoopman, 19 November 2018

 

Creating Structural Unemployment: The hidden links between high interest rates, corporatizing the public sector and wild West South Pacific finance

Snapshot: The NZ Government corporatized the state sector while the Reserve Bank maintained high interest rates – to inflict industrial-scale job destruction.

 

Following the political-financial coup of the Lange Labour Government in 1984, the head of the Treasury, Finance Minister Roger Douglas moved to phase one of the planned shock treatments. Controls on prices, wages, credit, dividends, foreign exchange and out-bound capital were lifted. Not surprisingly, the inflation rate soon rebounded to 16% from its Wage/Price Freeze suppressed value of 5% per annum in mid-1984 when Labour became government, and peaked at 19% in June 1987 and then dropped by 6% in two months at the end of 1987 following the October 1987 Sharemarket Crash.[1] The double-digit inflation sent prices upward, including the costs of mortgages, rent, food and other essentials. This situation exposed struggling business owners, low-waged workers and beneficiaries on fixed incomes to the most strife. Ironically, the Bank of New Zealand, which had recklessly ‘lent’ to fuel speculative the sharemarket boom, received a $600million bail-out.[2]

Tracking the Cost of Living? NZ’s Inflation rate as measured by the Consumer Price Index (CPI) between 1970 and 1994 reflects the economic warfare waged by the ruling class elites, foreign and domestic.

 

During this time, the Reserve Bank opted to keep the wholesale ‘cash rate’ high, which is the interest rate charged for the wholesale credit supplied to banks trading in New Zealand. Their purpose was to inflict pain, knowing that by keeping wholesale ‘lending’ rates high, businesses would lay-off workers, or go bankrupt amid strains on household budgets.

Former Reserve Bank director Suzanne Snively (1985-1992),[3] stated in Alister Barry’s documentary, In a Land of Plenty – The Story of Unemployment in New Zealand:

 

“It was a manageable thing for the Reserve Bank to initially to use employment and unemployment as a way to get wages down. It was easier that any other means of getting inflation down. So they used it.” [4]

 

From mid-1984 through to the 1987 Sharemarket Crash, the Reserve Bank kept the wholesale interest rates high at between 20% and 30% per annum. In the two months following the stocks bust, the inflation rate dropped by 6% because many businesses either laid-off workers, went bankrupt, or succumbed to mergers, amid a general downturn, broken business contracts, and a tempering of spending. It was only then, with this fall in inflation, that the Reserve Bank dropped the wholesale ‘lending’ rate below the 20% barrier. Moreover, the Reserve Bank did not allow this wholesale credit rate to penetrate the 10% barrier – on July 31 1991 – until three key measures were in place. The first measure was the passage of the Employment Contracts Act of May 15 1991 that provided a mechanism to establish individual employment contracts to end collective bargaining in workplaces and hand more bargaining chips to big businesses. The second two measures were delivered in a July 30 1991 budget to the House of Representatives – frivolously dubbed the ‘Mother of All Budgets’ – that made deep cuts to Welfare payments and entitlements; and introduced user pays fees for schools and hospitals.

Downward Wage Pressure: The Reserve Bank, Treasury and banks set interest rates to stimulate or cool the economy, thereby maintaining persistent structural unemployment.

 

For its part, the Labour-led New Zealand Government (1984-1990) pursued more shock therapies in addition to freeing up controls on the financial system that would be within the purview of the Reserve Bank and the Treasury. Ironically, given the political party’s name, the Lange-Labour Government inflicted the pain of callous industrial-scale job cuts to the public sector. The Labour Government did so with a blitzkrieg strategy to overwhelm and gain submission of whole sectors of society – in collusion with key big business beneficiaries. The Lange-Labour Government removed subsidies that insulated the farming sector, tariffs on imports that sheltered domestic producers from cheaper-produced products made overseas and statutory approval thresholds for foreign investment were progressively raised, thereby paving the way for foreign capital to buy up New Zealand businesses. Moreover, the Labour Government corporatized public sector commercial trading entities, infrastructure and services, meaning business models were applied to the public sector under the rubric of introducing efficiencies, but with the covert intention inflicting mass lay-offs and readying them for privatization, called ‘state asset sales’ to create a toll-booth economy.

Politics as Performance Rituals: Minister of Overseas Trade and Marketing, Mike Moore (1984–90), signals to keep tight-lipped; NZPM David Lange (1984-1989) poses with Finance Minister Roger Douglas (1984-1988) to publicize a brainwashing book, Toward Prosperity; Douglas reads the 1984 bugdet.

 

In this epic strategic sabotage of industry, between 1987 and 1995, tens of thousands of New Zealanders lost their jobs. In the public sector, 62,100 people were sacked by the state, while in the private sector, manufacturing employment dropped by 30%.[5] In 1983, the unemployment rate was 6% of the workforce and peaked at 16 percent in December 1992.[6]

Managing Discretionary Idleness: NZ’s unemployment rate average 6% from 1983 to 2014, and had been only 1% in 1971. [Source IMF World Economic Outlook 2015; Trading Economics Data]

To drive down inflation, the Labour-led New Zealand Government had, in effect, scuttled the goal of achieving full employment long before the 1989 Reserve Bank Act explicitly set first Policy Target Agreement. It occurred the moment that Labour’s Cabinet capitulated to Reserve Bank and Treasury officials on winning power in mid-July 1984. International and domestic bankers created a currency crisis in July 1984 to make the incoming Labour Government face a predicament. The goal of this financial coercion was to force the new Lange Government to move to phase one of financial and economic warfare package that was ultimately intended to transform New Zealand into a ‘Switzerland of the South Pacific’ Utopia. The predicament that all Governments face is known as the ‘policy trilemma’ – as Bryan and Rafferty outline in their book, Capitalism with Derivatives.

In this scenario, governments cannot simultaneously pursue the following three broad policy agendas: (1) sustain the wealth that accrues to the workforce; (2) facilitate vast, fast international movements of capital; and (3) manage exchange rate stability. At most, only two of these three ‘policies’ can be maintained.[7] Wellington’s political elites of the time fell in with the technocratic elites in Treasury, the Reserve Bank, domestic and foreign think-tanks – whom had all bought into the will of super-wealthy international bankers – by prioritizing high international capital mobility. Once capital controls were lifted ‘haphazardly’ – actually by callous design – exchange rate volatility became a financial weapon for speculative attacks on the New Zealand currency – as it had become increasingly frequent around the world throughout the 1970s.[8] Wherever the ‘free market’ economic framework was deployed, labour became the ‘swing mechanism’ of the ‘policy trilemma’ – like a pendulum. The goal was to eventually stabilize unemployment after a lengthy shock therapy period. (In New Zealand, an average level of 6% unemployment was set, as the historical data shows). This way, central banks such as New Zealand’s Reserve Bank could be expected to attempt to maintain a stable currency amid high international capital flows.

 

Monopoly Money: Cash, credit, and interest

Snapshot: The Reserve Bank, Treasury and banks set interest rates to stimulate or cool the economy, thereby maintaining persistent structural unemployment.

Biggest Scam: 92-96% of currency is created as commercial bank credit when ‘loaned’ funds are  ‘borrowed into existence’. [Source: The Biggest Scam in the History of Mankind].

 

For its part, the Reserve Bank of New Zealand initially made small changes to the quantity of ‘settlement cash’ in the banking system – with the goal to tighten or ease the supply of currency, or cash with which to settle transactions. As time went on, the Reserve Bank took a ‘quantitative approach’ that involved holding the liquidity in the banking system stable, which was evidently an easy task because of the free float of the NZ dollar and easy capital flows to fund Treasury bond sales to finance Government fiscal deficit spending – according to former Reserve Bank Governor, Don Brash.[9] The Reserve Bank calibrates the wholesale interest rate for credit supplied to the New Zealand economy from the overnight inter-bank lending rate.

Finance gets more political: Reserve Bank Governor Don Brash won the power for NZ reserve Bank to test the banking Fraternity’s ‘independence’ policy: 1-3% inflation targeting to keep unemployment at around 6%.

 

In practice, this wholesale interest rate usually matches the overnight inter-bank lending rate, meaning the Reserve Bank takes its cues from the international and domestic banks about the wholesale fee charged for credit, euphemistically termed ‘interest’. Brash stated that from time to time he would perform “open mouth operations” via the news media to draw attention to monetary conditions endangering the inflation rate target. He recalled that to express Reserve Bank’s preferences for financial conditions, he would hold another press conference about ten days later to essentially say ‘that’s about right’ to ‘the market’ – which gave the appearance to the public and the news media that the Reserve Bank did not know what it was doing. These implied threats were enough to adjust the supply of scarce ‘settlement cash’ resulting in an easing or tightening of monetary conditions, in conjunction with a monetary policy tax on deposits to discourage banks holding too much cash. In this way, the supply of credit would shrink or expand, and the fee for not withdrawing that supply – interest – would fluctuate in price, thereby heating and cooling economic activity on the basis of the ‘loan’ approvals or declines, and their costs.[10]

Frivolous Elite Humour: Former Labour Government Finance Minister Roger Douglas [left] plays Monopoly with back-slapping Reserve Bank Governor Don Brash at a Barnadoes fundraiser for poor families in 1995.

Together, these adjustments to liquidity in the banking system and the shock therapies exacted by successive New Zealand governments continued to help the Reserve Bank achieve their revised 1-3% cost inflation target that, in turn, supplies wealthy investors with cheap credit. Access to cheap credit means the rich and super-rich are free to pursue maximum asset wealth ‘creation’ in an economic environment now characterized by asymmetric inflation, where the ‘flattened’ costs for labour are most starkly contrasted with high prices for essentials such as food, power, fuel and housing. Because all industries are dominated by a small handful of New Zealand Rich-Lister-owned franchises, or foreign-quartered transnational consortiums – and supported by industry lobby groups, including producer boards – such cartelized markets are free to set high prices that earn exorbitant investors profits. The extraction of exorbitant profits over and above production costs and modest returns for investment, actually represent extortion fees for not withdrawing supply. With cheap credit as a reward keeping cost-side inflation of wages and salaries suppressed, the ‘property rights’ of the rich – which are code for asset wealth – are protected. In short, cost-side inflation is tightly controlled while speculative booms are encouraged, because wealth-side inflation grows wealth for the rich.

 

Applied Game Theory: Threats & rewards with NZ cash & credit

Snapshot: Interest rates are, in fact, fees that transnational banking cartels charge for not withdrawing supply of credit funds and to signal threats and promises to state managers.

The float of the New Zealand dollar on 4 March 1985 gave the international and domestic banking fraternities – euphemistically termed ‘speculators’ – the opportunity to send the Reserve Bank’s wholesale lending rate (the overnight inter-bank lending rate) shooting up to a Banana Republic rate of 265% on March 8.[11] (It did not help that the Reserve Bank had abdicated its supervisory function inside banks’ dealing rooms in early 1985).[12] The speculative spikes averaged out to an all time high for the ‘cash rate’ at 67% for March 1985. By 29 March, the ‘cash rate’ had come down to 21.5%, and fluctuated between 20% and 30% through 1985-1987 and finally came down below 20% after the October 1987 Sharemarket Crash because this collapse in stock prices caused a curtailment in spending and a 6% drop in the inflation at the end of 1987.

Money Games: ‘Speculators’ drove up NZ’s Wholesale Credit Rate to a monthly average of 67% in March 1985 when the dollar was floated – as a price signal threat to move to ‘phase two’ economic warfare shocks.

 

The Treasury’s original justification for loosening control of the exchange rate mechanisms was that it claimed that it would protect the currency from speculation, but because further ‘monetarist’ measures extended to lifting on controls in most areas of banking, finance and property, the Treasury’s actions said otherwise. Rather than sound ‘Economic Management’ Treasury had deliberately created the conditions for Neo-Colonial capitalists to focus on exploiting speculative market mechanisms, to maximize short-term capital accumulation or profit.[13]

The hostile attacks on the ‘cost’ of wholesale credit during March 1985 coincided with the end of the first financial year since the Lange Labour Government had won power. The spike in interest in this month shows that ‘the market’ – were in effect sending a coercive ‘price signal’ to ‘stay the course’. Like a ransom note, this ‘price signal’ was a signal by international bankers that they required the Reserve Bank to keep interest rates high, so that the credit rates could be used as an automated transmission mechanism to drive unemployment upward. In effect, the encoded message in this financial data was telegraphing to ‘move on to phase two of the shock therapies, that would involve prolonging high interest rates to cause the strategic sabotage of industry through business down-sizing, closures and mass worker lay-offs.

Because the high interest rates would mean higher mortgage costs, rents and credit card bills, consumer spending across the economy would fall and amid plummeting sales businesses would be compelled to make workers redundant or go bankrupt fast.

Yet, throughout Douglas’s time as Finance Minister, his annual budgets for 1984-1988 emphasized measures that would maintain low inflation and this would in turn reduce ‘price distortions’ in the market. Therefore, a lower inflation rate – the rhetoric went – would enhance competition, feed growth and provide more jobs and revenue for the government to reduce its deficit. During this time, the ‘economic missionaries’ in Treasury asserted that inflation clouds the price signals between consumers and producers causing inefficiencies resulting from supply and demand imbalances.[14] Inflation thereby increased the overall costs of the economy’s production, so it undermined the capacity for exports to earn receipts from the global ‘free’ market.[15]

However, the New Zealand Reserve Bank, Treasury, the Labour Caucus and the New Zealand Business Roundtable failed to fully disclose to the New Zealand public that a covert strategy of economic warfare had been embarked upon – supposedly to ‘combat’ high inflation. While it is true that the wealthy hate high general inflation – because it attacks the monetary value of their investments and increases costs to their businesses – the wealthy will tolerate it if they are making super-returns elsewhere, such as in property and stock market speculating. Between 1984 and 1987, the pace of capital accumulation for investors and speculators was rapid and reflected in the sharemarket price index, which grew 140 percent, thereby outpacing the general inflation rate. The main reason the general inflation rate dropped by 6 percent in two months at the end of 1987 was because the sharemarket crashed on October 19.[16]

In other words, the relatively high interest rates would eventually drive down inflation as businesses went broke, or laid-off workers. Meanwhile, well-resourced big businesses could access cheaper international credit to exploit the sharemarket and commercial property market booms as a means for asset portfolios to inflate rapidly. Therefore, Treasury, the Reserve Bank and the Douglas ‘Treasury Troika’ comprising Finance Minister Roger Douglas, and his associates David Caygill and Richard Prebble, avoided explaining this vicious scenario that was in essence an asymmetric inflation paradigm.

Despite strong pro-Labour support through the party’s hierarchy, there was no effective worker protection in the Labour Relations Act passed on May 27 1987, which required unions to have a membership of no less than 1000 people.[17] This contributed to the number of unions halving in the three-year period between 1986 and 1989 from 254 down to 112, but also resulted in union amalgamations that saw the newly formed Council of Trade Unions (CTU) in 1987, acquiesce to the ‘Neo-Liberal’ paradigm. Its president, Ken Douglas mimicked Roger Douglas’ rhetoric when he claimed it would benefit its members if it could pursue “common interest defined by the need to develop a flexible, innovative and efficient industrial relations system”.[18] Then, the State Services Act, passed in 1988, scripted by the quintessential technocratic policy wonk, Deputy Prime Minister Geoffrey Palmer, handed the corporatized State Owned Enterprises (SOEs) a private sector model that gave the CEOs control over the workers in their employ.[19] Lay-offs swept through the private sector, the rollout of short-term contracts followed and unemployment climbed steadily. Meanwhile, in phase three of this epic rort, the ‘Treasury Troika’ of Douglas, Caygill and Prebble, readied 13 state assets for sale in cahoots with other accomplices in the Neo-Colonial Free Market Sect – without a general elect mandate. With these measures either completed or in the pipeline, unemployment rose and New Zealand wholesale credit rate fell incrementally.

Selling the Family Silver: NZ Finance Minister Roger Douglas, Minister of State Owned Enterprises, Richard Prebble, and Electricorp Chairman John Fernyhough pose with a ceremonial cheque of $6.3 billion in April 1988.

 

After six years of the Labour Government in power, many unions either collapsed or their power was eroded, despite the fact that as a broad interest group, they were significant in bringing a party into government, only to find its Lange Cabinet had a class warfare policy agenda.[20] Protests across New Zealand, big and small, were either ignored, disdainfully ridiculed, or treated as an exclusionary blackballing exercise by Government, the Business Roundtable and big businesses.

Tellingly, when James Bolger’s National Party won power in 1990, his new government was faced with a financial crisis too. The privatized Bank of New Zealand asked for second welfare hand-out in the form of a huge bailout $720million, with Fay Richwhite stumping up $100 million if this amount. The BNZ claimed it needed to avoid collapse.[21] The Secretary of the Treasury and Centre for Independent Studies member Graham Scott sounded a warning of a fiscal deficit that claimed could blowout to an arbitrary figure of $5.2 billion (a multiple of the prime number 13), which slyly signaled the Fraternity was advancing the game via the modus operandi of crisis. In her 1996 book, Revolution: New Zealand From Fortress to Free Market, Marcia Russell wryly observed:

“It was like a re-run of 1984 with different actors.”[22]

Where the Labour Government had hit the National’s core constituency first, the farming sector with the sudden shall fall in tariffs on imported produce, the new National Finance Minister Ruth Richardson wasted no time attacking the sacred cows that the Labour Government would not kill – welfare reform and employment contracts.

Re-run of 1984: New political actors exploit another buffet menu of financial crises when Bolger’s National Ministry takes power in 1990.

 

When Finance Minister Ruth Richardson delivered her ‘Mother of All Budgets’ speech in the Parliamentary-debating chamber in 30 July 1991, she stipulated deep cuts to welfare payments. The unemployment benefit was cut from $144 to $130 a week. As a multiple of 13, $130 stood to signify ‘unity’ to advance the game with the banking fraternity. As such, Richardson’s budget speech was a Hostage Postage Ritual. The National Government had already announced reductions to the Welfare State budgets six days before Christmas in 1990, and it included across-the-board cuts to social welfare benefits that were written prior to the election by Treasury and National’s Minister of Finance, Ruth Richardson. Minister of Social Welfare, Jenny Shipley explained the logic that the government needed to “create the gap between work and welfare”. In the process the gap between the poor and the rich got bigger too, as taxes for high income earners and businesses were cut too, and while the number of people living in poverty had reached nearly 600,000 or 16.3 percent of the population in 1992/93.

Significantly, the ‘cash rate’ finally fell below 10% on 31 July 1991 – the day after Finance Minister Ruth Richardson performed her ‘Mother of All Budgets’ Hosting Posting Ritual in the Parliament – demonstrating ‘the markets’ vote of approval for deep cuts to welfare payments and the passage of the Employment Contracts Act, which was designed to drive down wages and therefore cost-side inflation. The deep cuts to welfare payments would ensure that Treasury could prioritize debt servicing to private ‘creditors’ that own the transnational banking cartels. Therefore, this threshold through the 10% barrier for wholesale credit costs demonstrates the precision with which the international banks – working as a price fixing cartel – could regulate the economic growth, and inflict ‘discretionary idleness’ through ‘strategic sabotage of industry’.

By using the debating chamber to announce major cuts to welfare benefits, changes to employment law, and new user-pays requirements in hospitals and schools were all announced, without explaining how international and domestic credit and interest rates worked as mechanisms for the transmission of structural unemployment, Finance Minister Ruth Richardson’s ‘Mother of All Budgets’ speech was vicious subterfuge.[23]

By December 1994, 13 state-owned enterprises were sold for a mere $13 billion: New Zealand Steel, Petrocorp, Development Finance Corporation, Rural Bank, the National Film Unit, the Government Post Office, Telecom, Housing Corporation, Forest Corporation, the Bank of New Zealand, New Zealand Rail, Export Guarantee Corporation, and Government Computing Services.[24] By December 1996, firms linked to the Business Roundtable accumulated $12.542 billion of the $15.322 billion privatized assets, including Fletcher Challenge, which bought one-fifth.

Ubiquitous Power Criminal: NZ Business Roundtable Chairman Ron Trotter chaired the industrial conglomerate Fletcher Challenge, that picked up numerous state assets from his pivotal post as chairman of the State-owned Enterprises Advisory Committee.

 

The stunning sell-off of state assets, including New Zealand Rail, Telecom, ForestCorp, Electricorp and the BNZ – represented an epic transfer of wealth upward and outbound, while their workforces were decimated. For instance, between 1987 and 1990, Roundtablers Alan Gibbs and John Fernyhough sacked 4,473 employees or 63% of ForestCorp’s workforce, in preparation for privatization. Between 1987 and 1996, the Roundtablers chairing Telecom’s board, Ron Trotter and Peter Shirtcliffe, oversaw the sacking of 15,900 workers, or 65% of the workforce. Between 1987 and 1991, the Roundtablers of Electricorp’s board, John Fernyhough, Rod Deane, and Roger Kerr, sacked 2270 workers, or 38% of the workforce. Between 1987 and 1991, NZ Railways sacked 9,000 workers, or 60% of its workforce. Therefore, deep cuts to employment were inflicted despite no one voting for (or against) such an eventuality because it was not tabled openly as an election platform.

New Zealand Rail was sold in 1993 for a mere $328 million to the Tranz Rail consortium comprised of Wisconsin Central Transport, Berkshire Partners, Fay Richwhite and founder of the Huka Lodge, Alex van Heeren. At the time of sale, it was debt-free because the government had injected $1.3 billion tax dollars into its balance sheet.[25] NZ Railways indebtedness of $1.2 billion by 1989 was used as propaganda to say the state corporation was inefficient under government management. What was omitted was the fact that Booz Allen Hamilton’s report in 1983 advised the Muldoon Ministry to invest in the rail network and restructure under a corporatized business model amid a ‘deregulation’ of the transport industry. Some of its inefficiencies were in-built capacities of engineering, labour training, and absorption of workers during economic slumps. Merchant bank Fay Richwhite advised the Bolger National Government on selling New Zealand Rail, and bought 32% of the shares with its investment vehicle Midavia. The Securities Commission investigated Midavia for insider trading for acting on a tip from David Richwhite and this case dragged on until finally parties associated with Fay Richwhite settled for $20 million in 2007 without admitting liability, while Berkshire Fund and one of its executives paid $7.4 million. The Tranz Rail consortium later cashed-up its stake making $370 million in profit. Tranz Rail subsequently sold the asset-stripped rail operation to the Melbourne-based consortium Toll Group in 2003, and in 2008, the New Zealand Government bought back the poorly maintained rail infrastructure, plant and machinery for $665 million. Financial analyst Brian Gaynor estimated in 2008 that New Zealand Tax Slaves had been forced to spend $4 billion since 1990 on the rail network with debt write-offs, equity injections, asset buy-backs, subsidies, grants and track expenditure.[26]

Reflecting a Switzerland of the South Pacific Vision? Formerly known as Fay Richwhite Tower, the Auckland CBD skyscraper was merchant bankers’ brazen statement that New Zealand’s oligarchy, and their foreign associates, had taken over the economy.

 

Meanwhile, when Ronald Trotter was Chairman of the State Owned Enterprise Steering Committee, he also became Chairman of Telecom (1987-1990), to prepare the state-owned telecommunications company for privatization after it was split off from the New Zealand Post Office. In September 1990, the New Zealand Government sold Telecom for $4.25 billion to Ameritech (45 per cent), Bell Atlantic (45 per cent), Michael Fay and David Richwhite (5 per cent) and Alan Gibbs and Trevor Farmer (5 per cent).[27] Opinion polls at the time showed that 75% to 90% of people surveyed were strongly opposed to the sale of Telecom, as Colin James reported.[28] In four years, Telecom’s profits more than doubled to $528 million in 1994, at which time most of its 90 percent dividend was exported to its predominantly foreign-based owners, Ameritech and Bell Atlantic.[29] In 1997, when the initial investors sold their stakes in Telecom, it was estimated by that Ameritech and Bell Atlantic’s original combined investment of $3.8 billion would have made them a combined profit of $11.5 billion.[30] Gibbs – who became a director along with David Richwhite when Telecom was privatized – described his investment in Telecom as “the greatest coup of my business career”. Gibbs brought in Bell Atlantic and Ameritech and he and Fay Richwhite together ‘earned’ $100 million in brokering fees to organize the trade with Ameritech and Bell Atlantic and themselves. The once-Telecom director bragged later that the deal only required a down payment of $20 million, which was covered by the merchant banking fee, and the settlement could be made three years later, by which time the shares would likely have sky rocketed.[31] Merchant bankers Michael Fay ($920m) and former Business Roundtable vice-chair David Richwhite ($920m), who as partners of Fay Richwhite infamy, looted an estimated $800 million from Telecom ($600m) and Tranz Rail ($200m) for their orbit of corporate raiders in the first five years of operation as privatized toll-booths.[32] Alan Gibbs ($555m), who founded the ultra-right wing think-tank, the New Zealand Centre for Political Research, made $300 million for his orbit of investors between 1992 and 1997 by looting the former state-owned enterprises – Telecom and Tranz Rail.[33]

But, Alan Gibbs and his crony cohort of the Neo-Colonial Free Market Sect did not limit themselves to asset stripping to just two toll-booths. Between 1987 and 1990, Gibbs was Chairman of the NZ Forestry Corporation that was the corporatized makeover of the old New Zealand Forest Service. His fellow Roundtabler, John Fernyhough, was director from 1987 to 1994. After sacking 4,473 workers between 1987 and 1990, with his co-director, Gibbs oversaw the sell-off of much of ForestCorp’s machinery too. The Forestry Corporation of New Zealand or ForestCorp was sold in 1996 for $1.6 billion to Fletcher Challenge (37.5%), Brierley Investments (25%), and Citifor Inc (37.5%).

When Electricorp was headed by the Roundtablers – John Fernyhough (1986-1993), CEO Rod Deane (1987-1994), and Roger Kerr (1987-1994) – they made ‘consumers’ grow Electricorp’s market value by extracting exorbitant profits. Those profits grew from $196 million in 1988 to $404 million for the 1990-91 year.[34] However, when the trio announced plans to increase power prices by 20% over ten years, a backlash from the ‘publicforce’ caused the government to limit the Roundtablers’ enthusiasm for ‘marketforces’ – and the three disgruntled men soon quit. Also on Electricorp’s board was equally ubiquitous Alan Gibbs.

In 1992, the Bank of New Zealand was sold for $1.4 billion, or 80 cents a share, to National Australia Bank, compared with the BNZ’s estimated current value of about $7 billion. The Bank of New Zealand was bailed out twice, to the tune of $1.32 billion tax dollars to cover its credit manufacturing exposure to the property markets in New Zealand and Australia that slumped following the 1987 Sharemarket Crash.[35] In the second bail-out, Fay Richwhite stumped up $100 million for a 30% stake.

 

The Roundtable Shock Therapists

Snapshot:  In 1984, the Labour Government was captured in a silent coup to facilitate a sabotage of NZ by the Mont Pèlerin Society, the Business Roundtable & the CFR.

Shock Agents: [L to R] Knights of the Realm Sir Douglas Myers, Sir Alan Gibbs, Sir Roger Kerr and Sir Ronald Trotter were all prominent members of the Mont Pèlerin Society front group, the NZ Business Roundtable.

 

Ostensibly, the Neo-Colonial Crown-Reserve Bank-Treasury-Business Roundtable Nexus inflicted a hidden structural unemployment policy in the 1980s and 1990s to drive down cost-side inflation. This persistent structural unemployment policy persists today, despite tweaks to the revamped Policy Target Agreement (a sanitized name that hides it vicious purpose). Therefore, persistent structural unemployment was established through mass public and private job destruction. The Reserve Bank’s inflation-targeting policy works by setting the interest rate, directly or indirectly, for wholesale credit supplied to the economy from international and domestic banks. It is a key policy component for maintaining structural unemployment. The overt purpose of controlling interest rates is to stimulate or cool ‘lending’ relative to economic activity so that cost-side inflation stays within an agreed target of 1 to 3%. The covert purpose is to manage a Shock Doctrine policy that I call asymmetric inflation, which encourages asset price inflation by supplying cheap credit to fund house flipping, a landlord vulture culture and an uneven boom for the top 1%. This in turn produces crony capitalist class cohesion – as long as the vampiric prosperity for the rich continues to siphon upward off the host population.

Political Coup Co-Conspirator: NZ Business Roundtable Executive Director Roger Kerr co-wrote the blandly titled corporate takeover blueprint, “Economic Management” while he worked at Treasury (and prior to Lange’s Labour Party winning power in 1984).

 

To this end, pro-corporate groups such as the Employers and Manufacturers Association exist to lobby to keep wages and salaries suppressed.[36] Therefore, the inflation-targeting policy works as a mechanism of transmission for reproducing persistent structural unemployment. Therefore, the inflation-targeting policy is a coercive, exclusionary blackballing shock policy that ostracizes working class people socially from the human need to have security over their own shelter, food and other needs as captured Tax Herds. By placing more control over housing, employment, and business ownership into the hands of a crony capitalist class, which is dominated by an out-of-control Neo-Colonial Sect, the New Zealand Crown is deliberately facilitating an economic warfare paradigm. Therefore, the 34 year-old hidden state policy of ‘structural unemployment’ is a key component of the poverty crisis, itself a catastrophe borne from deliberate strategic sabotages of industry to inflict discretionary idleness.

The job destruction was designed to accumulate more power for the wealthy through exorbitant profits, or accelerated extraction of capital, as Wellington filmmaker Alistair Barry has shown in his documentaries, Someone Else’s Country: The Story of the New Right Revolution in New Zealand and In a Land of Plenty: The Story of Unemployment in New Zealand.[37] The collective action of key Crony Capitalists, and political elites, private sector professionals and public sector technocrats (some of whom became crony capitalists in their own right) – created a Neo-Colonial Oligarchy.

Lacking Bona Fide Mana: The NZ Labour leadership of the 1980s had no mandate to inflict a strategic sabotage of industries, from which provincial New Zealand has not yet recovered.

 

The debt based-monetary and credit manufacturing system is integral to exacerbating the widening gap between the poorest and the richest.

As I have outlined, cartelized transnational private banking consortiums, including the U.S. Federal Reserve, maintain structural alignments to ensure that actual cash is scarce. This structural scarcity of cash, set at approximately 3% of the quantity of any currency, compels governments, enterprises and whanau to ‘borrow’ the banking fraternities’ manufactured credit because most states, businesses and Tax Cattle cannot save enough to build a hospital, factory or a home, respectively.[38] Since Crony Neo-Colonial Capitalism’s hidden purpose is to make land scarce to as many Tax Cattle as possible,[39] global scale emancipatory moves to dismantle debt-based currencies, implement interest-free positive money economies and spearhead land redistribution are needed.[40]

Such asset sales were predicated on a corporatization of state trading entities, infrastructure and services, mass lay-offs of public sector workers, a stealthy form of flat universalized personal tax on most goods and services (GST), the introduction of ‘user pays’ fees, exorbitant private sector monopoly prices and widespread compliance fines. Thus, the public sector would be streamlined, while the general sales taxes, behavioural infringement fines, and monopoly tolls would create optimal conditions for corporate cronyism. In these pernicious ways, Tax Cattle have been tricked into building-out a corporatized technocratic dictatorship through performance targets, indicators and currency credits – that together provide incentives to enforce systems which riff off communism, fascism and other historical clichés of authoritarianism. Ironically, we don’t recognize the slick corporatized technocracy as totalitarian because it is slickly marketed in the Make-Fetish World of advertising to mock, deceive and brainwash. All the while, a Roman-esque universal income tax collection system was maintained and backed by state coercion to fund infrastructure projects, corporate welfare bailouts and ‘national debt’ servicing of foreign privately-manufactured credit. The state asset sales were designed to transfer wealth to Rich-Listers, enable extortionist pricing business models, and concentrate power. Rural and provincial communities were thrown into crisis because farm subsidies were suddenly removed first, hospitals and post offices were closed and state-owned enterprises were corporatized.

In short, New Zealand was mangled in the 1980s and 1990s.

Managing Brain-washed Herds: Visible poverty is inflicted by maintaining unemployment at an average of 6% to weaken the pay bargaining power of NZ’s Tax Herds.

 

The impetus for this re-set of the New Zealand Realm and the rest of the world came from the then-North Atlantic Capitalist Class, who faced several major crises in the mid-to-late 1960s. These calamities were a structural crisis of Declining Profit Rates for undead transnational corporations, a Crisis of Democracy presented by the numerous captive 1960s Peoples’ Movements and demands from a Developmentalist Movement in ‘Third’ and ‘Second World’ countries for Western technologies in fair return for the resources supplied to rebuild Western Europe and Japan following WWII. To counter these crises, the North Atlantic Capitalist Class developed a ‘free market’ economic warfare framework to transform the world, as the documentary Requiem for an American Dream shows.[41]  This economic warfare framework, later identified by Canadian journalist Naomi Klein as the ‘Shock Doctrine’,[42] was driven from overseas, through a network of think-tanks. These think-tanks included the Mont Pèlerin Society, the Business Roundtable and the Tasman Institute, whom operated in alignment with a broader blueprint known as the ‘1980s Project’, that was work-shopped at a New York-based global policy-shaping think-tank, the Council on Foreign Relations, throughout the 1970s. [43]

The Council on Foreign Relations members, and their Anglo-Swiss counterparts, intended to re-invigorate the dominance of the ‘Trilateral World’ – comprising North America, Western Europe and Japan – by exploiting speed to capture control of political spaces through the collapse of time. Their modus operandi was to engineer sudden fast-moving events broad in scope to overtake the deliberative processes of the public state, overwhelm citizenries in their efforts to mobilize counter-forces and coerce the capitulation of public and private sector institutions. To this end, key insiders at the Council on Foreign Relations planned the spread of ‘free markets’ by exploiting Chicago University professor Milton Friedman’s modus operandi of ‘speed, suddenness and scope’. These shock therapies were field-tested on Brazil in 1963, Indonesia in 1965-67, Chile and Uruguay in 1973 and Argentina in 1976, using US-backed military violence to destroy the Developmentalist Movement, as Klein details in her book, The Shock Doctrine. Another think-tank, the Trilateral Commission, was established in 1973 and tasked to formulate policies, strategies and tactics to deal with what was termed a Governance Crisis. The elite planners resolved to encourage political apathy, as this ‘governance crisis’ literature of this period makes evident.[44] From their perspective, there was a ‘Crisis of Democracy’ because there was too much participation from ‘below’.[45]  Strategic sabotage of industries ensued, as ‘Capital as Power’ theory could predict. As political economists Jonathan Nitzan and Shimshon Bichler showed in their book Capital as Power, dominant coalitions of monopoly capitalists ruin competing or captured enterprises that are accumulating capital at faster rates than their own cartels, or at times when broad-based wages and salaries are high enough that workers might develop self-determining communities.[46] Through such Deep State machinations, the world’s Tax Cattle were ‘disappeared’, terrorized and disenfranchised as the ‘free world’ spread Neo-Colonialism.[47]

Too Much Democracy: The Trilateral Commission was tasked with devising strategies, tactics and tricks to undermine democratic participation by de-politicizing important political issues.

 

Today, New Zealand’s Neo-Colonial Government administrates the still-operational broad-scope economic warfare policies that maintain structural unemployment.

The hidden state policy of structural unemployment that underpins persistent child poverty, which afflicts one third of New Zealand children – or 300,000 tamariki[48] can’t be underdone by a tinkering to the Policy Targets Agreement (PTA) 2018.[49] The PTA is a mechanism of a debt-monetary and credit-manufacturing banking system characterized by rivalrous international banking cartels whom work in collusion with the Reserve Bank and Treasury to manage cash as a scarce resource so that households, businesses and government never earn enough to fund necessities and are forced to borrow into existence privately manufactured credit.

Context Lite: The Reserve Bank’s new Policy Target Agreement omits crucial context about the economic warfare that the central bank, the Treasury, successive Crown cabinets and several think-tanks have inflicted upon NZ’s Tax Herds since 1984.

 

Embarrassingly, this debt-monetary and credit-manufacturing banking system was first formalized during the Masonic New Zealand Wars designed to lure households, businesses and governments into debt by maintaining a structural scarcity of cash and a relative abundance of interest-bearing credit. The British Crown played a long-game of conquest when it lured Māori into its jurisdiction with the parallel construction of two materially different versions of the 1840 Treaty – for the purposes of conquest on paper. The British Crown’s long-game of conquest involved gaining substantive sovereignty by driving ‘the natives’ – iwi by iwi and hapū by hapū – from Māori ancestral lands. A ‘wedge of war’ was driven into the ‘Native Estate’ by the stealthy hands of a secret brotherhood of Freemasons that bound the British Crown with its fraternal alter-ego – the Colonial Crown – as demonstrated in the illustrated essay, “The Masonic New Zealand Wars: Freemasonry as a Secret Mechanism of Imperial Conquest During the ‘Native Troubles’ ”.[50] By gaining a foothold to impose taxes, the British Crown, and its fraternal alter-ego Colonial Crown, spread a system of brainwashed social control based on artificial scarcities in land, cash and trade. These artificial scarcities were predicated on spreading devious systems of income-draining taxes, abundant credit and British law as witless settlers drained swamps, swallowed debt and valourized the Monarchy. Therefore, the legacy, swindle and impacts of this debt-monetary and credit-manufacturing banking system – that gained formal standing  during the Masonic New Zealand Wars – is a transmission mechanism for unnecessary, pernicious debt bondage that maintains the political power of banking oligarchs through their control over the life-blood of wealth accumulation: abundant credit and scarce cash.

Because the Children’s Commission reports on child poverty do not model for oligarchy, they therefore cannot sufficiently identify the phenomenon’s root cause: the diabolical philosophy of Oligarchism.

Economic War Zone: In their 2012 report for the Children’s Commissioner, 13 experts compared New Zealand with other countries in Section 1.3, finding that poverty affected 13% of the population in a 13-country comparative study. The causes of child poverty on page 13 omitted Oligarchism.

 

It is galling, therefore, to learn that then-Finance Minister Roger Douglas bragged in a private conversation in 1986 that there would be a top strata of wealthy and in 25 years most New Zealanders would not be able to afford to live in NZ.

Shock Policy Bugdet: Far Right think tank member of the Tasman Institute and Finance Minister Roger Douglas performs the 1984 Budget Speech Ritual, essentially a ‘1980s Project’ script.

 

Thus, whole sectors of New Zealand society were coerced to submit to this Shock Doctrine framework following the initial ruse of a currency financial crisis, deliberately triggered by Labour Party shadow finance minister and Tasman Institute deputy-chair, Roger Douglas, when he ‘accidentally’ released a statement several weeks out from the 1984 election his intent to devalue the dollar if elected. This ruse depended on the absence of multi-institutional substantive investigations that modeled for power crimes.[51]

In his 1993 book, Unfinished Business, former finance minister Sir Roger Owen Douglas recalled his boast from 1989 to the Neo-Colonial Deep State that attended a ‘free market’ Mont Pèlerin Society conference in Christchurch, stating that his strategy in deploying economic shock therapy was to overwhelm numerous groups simultaneously.[52] In Unfinished Business, he reworked his 1989 speech entitled, “The Politics of Reform: The Art of the Possible”, in which Douglas bragged to members of the ‘free market’ Anglo-Swiss Mont Pèlerin Society, that his strategy to deploy ‘free market’ shock policies had been to cast himself as a fast-moving target, to gain New Zealanders’ submission.[53] Here, Douglas was describing the modus operandi of Chicago-based ‘free market’ economics professor, Milton Friedman, who mentored his ‘Chicago Boys’ economic missionaries with a ritualistic mantra, “speed, suddenness and scope”. This mantra was the ‘key’ to ‘free market’ policy deployment – as Naomi Klein showed in her seminal 2007 book, The Shock Doctrine.[54] Friedman had made his first visit to New Zealand in 1981, the result of an invitation from Don Brash and a share brokerage, before he became Reserve Bank Governor.[55]

Many of 400 ‘free market reformers’ whom listened to Douglas brag at the Christchurch meeting of the Mont Pèlerin Society in 1989 about lacking a mandate to, in effect, deploy Friedman-style economic warfare policy shocks, comprised the core of Mont Pèlerin Society.[56] Among the Clergy of 400 Shock Doctrinaires were: the three New Zealand Members of the Mont Pèlerin Society – former ForestCorp and Electricorp chairman, Sir Alan Gibbs; former Treasury official, Electricorp Director and NZ Business Roundtable Executive Director Sir Roger Kerr; and National MP and future Health Minister, Simon Upton.

Agent Saboteurs: Mont Pèlerin Society member and former Health Minister Simon Upton and Reserve Bank official Roderick Deane were among NZ’s leading Shock Doctors.

 

Also present were at the Christchurch meeting of the Mont Pèlerin Society in 1989:

Former Reserve Bank director, Telecom Chairman, NZ Business Roundtable Chairman, and member of the Tasman Institute, Sir Ronald Trotter; Chicago Boy and Tasman Institute member, John Fernyhough; former Reserve Bank official and State Services Commission chairman and Electricorp Director, Sir Roderick Deane; NZ Business Roundtabler and Lion Nathan brewing magnate, Sir Douglas Myers; NZ Business Roundtabler and merchant banker, Sir David Richwhite; Centre for Independent Studies member and former Reserve Bank and Landcorp official, Sir Peter Elworthy; NZ Business Roundtabler and property magnate Sir Michael Friedlander; NZ Business Roundtabler and Telecom chairman, Sir Peter Shirtcliffe; former economist and future ACT Party leader, Rodney Hide; future National Party Finance Minister, Ruth Richardson; then-Reserve Bank official Donald Brash; former Treasury official and CS First Boston merchant banker; Centre for Independent Studies member, Bryce Wilkinson; and also Centre for Independent Studies member, former Treasury official and CS First Boston and Fay Richwhite merchant banker, Rob Cameron.

Two British members of the Mont Pèlerin Society, and its offshoot, the Institute of Economic Affairs, that attended meeting in 1989 were, Lord Bauer and Lord Harris of High Cross.

As Mont Pèlerin Society member, Simon Upton, told the New Zealand Herald in 1989:

“New Zealand is well situated to be a supplier of raw materials to richer neighbours, a home to well fed peasants who hopefully would not unsettle things for the outward looking elites.”[57] – Simon Upton, Mont Pèlerin Society

Mont Pèlerin Society attendees – Christchurch 1989: [Top left to bottom right] Sir Alan Gibbs, Sir Roger Kerr, Sir Douglas Myers, Sir Ron Trotter, Sir Peter Shirtcliffe, Sir Roderick Deane, Simon Upton, Sir Michael Friedlander, Rodney Hide, Sir David Richwhite & Sir Roger Douglas.

Political Kryptonite Issues

Key Finding: The strategic sabotage of industries inflicted a discretionary idleness, which included a hidden structural unemployment policy that is now 34 years-old.

NZ’s Neo-Colonial Crown maintains joblessness at around six percent of the workforce to weaken Tax Cattle pay-bargaining power via the structural coercion of visible poverty, as the documentary, In a Land of Plenty: The Story of Unemployment in New Zealand revealed.

Therefore, ‘free market’ economic shock therapies were themselves mechanisms of coercion, because all sectors of society were thrown into crisis – deliberately, stealthily and callously.[58]

Under this project, ‘free markets’ were promoted with propaganda that promised freedom and prosperity for all, or that wealth would ‘Trickle-Down’. The intention all along was to increase the wealth and power of the super-rich Tax Farmers, by waging economic warfare. Therefore, ‘Trickle-Down economics’ was a wryly-encoded joke that signified the rich Tax Farmers would control the ‘wealth tap’. Canadian journalist Naomi Klein later identified this globalized ‘free market’ economic warfare framework as the Shock Doctrine.[59] To ensure the durability of this Global Neo-Colonial Project – otherwise known as ‘globalization’ – élite planners used a strategy known as new constitutionalism, which would lock-in changes and take them beyond the reach of indigenous and nation state populations.[60] Under a new constitutionalism framework, nation state sovereignty is transformed into a commercialized form of sovereign rule-making that occurs in an international arena, such as through so-called free-trade agreements. The intention is to favour the property rights of super-rich Neo-Colonialists, whose wealth is protected in a state-sponsored, worldwide Financial Secrecy Haven Complex.[61] Ironically, within such secret spaces, the politically and economically powerful were conferred with commercialized sovereignty to create shadow selves beyond the reach of authorities, as the authors of Tax Havens: How Globalization Really Works compellingly showed. In short, globalization is the accumulation of sovereignty.

Developmentalist Leaders: Both presidents were pro-development, as historian Anthony Chaitkin explores in a video interview, “JFK vs Empire”.

In his 1965 book – Neo-Colonialism: The Last Stage of Imperialism – former President of Ghana and friend of President John F. Kennedy, Kwame Nkrumah, wrote that a Neo-Colonial state has the outward appearance of international sovereignty, but because its economic resources and financial systems are controlled from the outside, the political apparatus takes external directions. Once a country is captured by Neo-Colonialists, a dynamic is set in motion that compels neighbouring ‘countries’ to adopt the Neo-Colonial framework.[62]  The documentary, The Spider’s Web: Britain’s Second Empire, show that when Britain ceased being a colonial power after WWII, the privately owned municipal City of London Corporation adapted to become a financial power by creating a web of secrecy jurisdictions where wealth could be hidden in offshore islands.[63] Via this Neo-Colonial system, wealth was captured from across the globe, so that control over former colonial jurisdictions could be regained and retained by stealth, and beyond public state scrutiny. Wall Street bankers set-up shop in London to exploit this offshore system and soon developed an American ‘Tax Haven’ system of financial secrecy jurisdictions including onshore states like Delaware, Nevada, Wyoming, South Dakota, and Montana and offshore ‘spidernet’ including Manhattan, the U.S. Virgin Islands, and Puerto Rico to compliment the U.S. Federal Reserve financial secrecy jurisdictions. By 2011, the emergent Transnational Capitalist Class steering Neo-Colonial Capitalism had concentrated their power through highly-networked corporate board directorships and ownership stakes comprising a core of just 147 corporations.[64] Neo-Colonialists adhere to the diabolical philosophy of Oligarchism, which is the belief in the right to rule the world, the stealthy schooling of psychopaths and the pursuit of world domination.

To sum up, a silent coup was orchestrated by Neo-Colonial Élites when they captured the Labour Government in 1984 to facilitate a sabotage of New Zealand, a corporate takeover of the economy and the implementation of a Neo-Colonial regime. Those Neo-Colonial Élites, whom were aligned with the Mont Pèlerin Society, the Business Roundtable, the Tasman Institute, the Trilateral Commission and the Council on Foreign Relations, inflicted mass lay-offs in the public and private sectors from the mid-1980s to the mid-1990s, as part of a broader ‘1980s Project’ blueprint to re-assert the dominance of the North Atlantic Capitalist Class. To this callous, devious and nefarious end, successive New Zealand governments have stealthily maintained what is now a 34 year-old state policy of structural unemployment. From mid-1984 onward, the Lange-Labour and then the Bolger-National governments pursued this secret state policy to keep the level of people out of work at around 6% of the labour force. Because huge pools of unemployed people create the visible spectacle of poverty, it works as a coercive mechanism to keep wages and salaries low to satisfy big businesses investors, as Alister Barry’s 2002 documentary, In a Land of Plenty: The Story of Unemployment in New Zealand revealed. The deployment of this hidden structural unemployment policy was first achieved by the NZ Government corporatizing and then privatizing the state sector. To assist, the Reserve Bank worked in collusion with Treasury, Cabinet, and the Business Roundtable to inflict industrial-scale job destruction by maintaining high interest rates, ostensibly to bring down inflation rate. Amid such conditions, higher mortgage costs, rents and credit card bills – consumer spending across the economy fell. With plummeting sales, businesses were compelled to make workers redundant or go bankrupt fast. Once the Reserve Bank gained the power to target inflation in 1989, the New Zealand central bank’s collusion with Treasury and the transnational banks was formalized as an experiment in central bank ‘independence’. Between them, the Reserve Bank, Treasury and the transnational banks set interest rates to stimulate or cool the economy, thereby maintaining conditions for persistent structural unemployment.  The Reserve Bank calibrates New Zealand’s wholesale ‘cash rate’ to the overnight inter-bank lending rate to adjust the supply of scarce ‘settlement cash’ resulting in an easing or tightening of monetary conditions, in conjunction with a monetary policy tax on deposits to discourage banks holding too much cash. In this way, the supply of credit shrinks or expands, and the fee for not withdrawing that supply – interest – fluctuates in price, thereby heating and cooling economic activity on the basis of the ‘loan’ approvals or declines, and their costs.

Neo-Colonial Corporate Takeover: New Zealand was mangled in the 1980s and 1990s by a stealthily implemented shock doctrine economic warfare framework.

 

Interest rates are fees that transnational banking cartels charge for not withdrawing supply of credit funds. Bankers use interest rates as a transmission mechanism to signal threats and promises to state managers. Three examples of credit coercion show a clear pattern of international and domestic  bankers issuing ‘ransom notes’ through the inter-bank lending rate as cues to the Reserve Bank and other state managers. The first shown here was when the float of the New Zealand dollar on 4 March 1985 gave the international and domestic banking fraternities – euphemistically termed ‘speculators’ – the opportunity to send the Reserve Bank’s wholesale lending rate (the overnight inter-bank lending rate) shooting up to a Banana Republic rate of 265% on March 8. The speculative spikes averaged out to an all time high for the ‘cash rate’ at 67% for March 1985. The spike in interest in this month was, in effect, a ‘price signal’ ransom note sent by international bankers to the Reserve Bank. In effect, the encoded message in this financial data was telegraphing to ‘move on to phase two of the shock therapies, by prolonging high interest rates to cause the strategic sabotage of industry through business down-sizing, closures and mass worker lay-offs’. By 29 March, the ‘cash rate’ had come down to 21.5%, and fluctuated between 20% and 30% through 1985-1987. The second ‘ransom notes’ came when the ‘cash rate’ finally came down below the 20% barrier after the October 1987 Sharemarket Crash because this collapse in stock prices caused a curtailment in spending and a 6% drop in the inflation at the end of 1987.  The third ‘ransom note’ came when the ‘cash rate’ or wholesale ‘lending’ rate finally fell below 10% on 31 July 1991, which was the day after Finance Minister Ruth Richardson performed her ‘Mother of All Budgets’ speech in Parliament. By breaking through the 10% ‘barrier’, ‘the markets’ voted their approval for deep cuts to welfare payments and the passage of the Employment Contracts Act, that would drive down wages and, therefore, cost-side inflation. The deep cuts to welfare payments would ensure that Treasury could prioritize debt servicing to private ‘creditors’ that own the transnational banking cartels. This threshold through the 10% barrier for wholesale credit costs demonstrated the precision with which the international banks – working as a price fixing cartel – could regulate the economic growth, inflict ‘discretionary idleness’ through ‘strategic sabotage of industry’ and signal that the new benchmark fee for continued supply of credit came with conditions attached. Therefore, the wholesale interest rate functions as a coercive fee charged for credit that restricts or stimulates economic activity to privilege transnational and domestic cartels, by keeping poverty visible enough to be a threat, but not enough to de-stabilize ruling class power structures.

These political kryptonite issues are the Shock Doctrine economic warfare paradigm, especially structural unemployment, the unacknowledged adherence to the philosophy of  Oligarchism, and the hidden structural violence of debt bondage that was formalized during the New Zealand Wars. Both major issues not only breach the Treaty of Waitangi. Because they are about economic warfare and a pernicious hidden form of slavery – debt bondage – these forms of structural violence that are embedded as hidden state policy – are a deal-breaker for all New Zealanders, not just Māori.

———

 

[1] The cumulative inflation rate from 1967 to 1984 was 520%. Tyler Cowen. (Sept 1991). The Reserve Bank of New Zealand Policy Reforms and Institutional Structure, p. 9. New Zealand Business Roundtable. https://nzinitiative.org.nz/dmsdocument/179-the-reserve-bank-of-new-zealand; Kelsey. (1995). The New Zealand Experiment.

[2] Kelsey. (1995). The New Zealand Experiment, p.135.

[3] Suzanne Snively is currently a director of TINZ Governance. Retrieved from http://www.transparency.org.nz/Governance

[4] Barry, Alister. (2002). In a Land of Plenty. [Motion Picture]. Vanguard Films. Retrieved from http://www.nzonscreen.com/title/in-a-land-of-plenty-2002 [In 5-part video segments]; See also: Barry, Alistair. (1995). Someone Else’s Country. [Motion Picture]. Vanguard Films. Retrieved from http://www.nzonscreen.com/title/someone-elses-country-1996

[5] Steven Stillman, Malathi Velamuri and Andrew Aitken. (July 2008). The Long-Run Impact of New Zealand’s Structural Reform on Local Communities, p. 5. Motu Working Paper 08-11. Motu Economic and Public Policy Research. http://motu-www.motu.org.nz/wpapers/08_11.pdf

[6] Trading Economics. New Zealand Unemployment Rate 1985-2018 | Data | Chart | Calendar. https://tradingeconomics.com/new-zealand/unemployment-rate

[7] Bryan & Rafferty. (2006). Capitalism with Derivatives. 106-107.

[8] Bryan & Rafferty 2006: p.118-119.

[9] Dr. Don Brash. (5 January 2002). Inflation targeting 14 years on. Retrieved from https://www.rbnz.govt.nz/research-and-publications/speeches/2002/speech2002-01-05

[10] Tellingly, if monetary conditions were tightened too fast, inflation could go through the bottom of the target. Communicating these ‘market signals’ via Reserve Bank pressers were clumsy, so the bank innovated by producing Quarterly Inflation Forecasts.

[11] Historical Wholesale Interest Rates – B2 Daily (1985-2013) (XLSX 525.98 KB). hb2-daily-1985-2013.xlsx Reserve Bank. https://www.rbnz.govt.nz/-/media/ReserveBank/Files/Statistics/tables/b2/hb2-daily-1985-2013.xlsx

[12] Cowen. (Sept 1991). The Reserve Bank of NZ., p. 52. NZ Business Roundtable. Retrieved from https://nzinitiative.org.nz/dmsdocument/179-the-reserve-bank-of-new-zealand

[13] (Roper, 2005, Barry, 1995, 2002).

[14] Kelsey, Jane. (1995). The New Zealand Experiment: A World Model for Structural Adjustment? Pluto Press.

[15] (Barry, 1995, 2002).

[16] (Kelsey, 1995).

[17] (Kelsey, 1995).

[18] (Kelsey, 1995, p. 176).

[19] (Kelsey 1995).

[20] (Kelsey, 1995, 1999; Jesson, 1989, 1999; Roper, 2005).

[21] The BNZ was sold to National Australia Bank in 1992 for $850m. (Kelsey 1995: 135).

[22] Marcia Russell. (1996). Revolution, p. 219.

[23] As Mont Pèlerin Society member Simon Upton told the New Zealand Herald in 1989, “New Zealand is well situated to be a supplier of raw materials to richer neighbours, a home to well fed peasants who hopefully would not unsettle things for the outward looking elites.”[xxiii]

[24] Jane Kelsey. (1998). The New Zealand Experiment, p. 135

[25] Jane Kelsey. (2015). The Fire Economy, p. 51.

[26] Brian Gaynor. (9 May 2008). Government Toll Buy a sad indictment. NZ Herald. https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10509183; Lewis Evans et al. (10 July 1999). The Privatisation of New Zealand Rail: Part 1 – Assessment of History, Markets and Data. New Zealand Institute for the Study of Competition and Regulation Inc.  https://researcharchive.vuw.ac.nz/xmlui/bitstream/handle/10063/3923/tranzrail_part_1_100899.pdf?sequence=1

[27] [see Jesson 1999: 172; Kelsey 1995)

[28] Colin James. (1992). New Territory, p. 215.

[29] (Kelsey, 1995).

[30] Jesson 1999: 173.

[31] Beddoe 2006; Kelsey 2015: 51; Jesson 1999: 147.

[32] (Hager 2006: 230).

[33] (Hager 2006: 223, 225, 231).

[34] (in: Beddoe 2006; Kelsey 2015: 51). Jesson 1999: 147

[35] Brian Gaynor. (13 Jun 2003). A champion for corporate dogs in distress https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=3507359

[36] Private conversation with a former EMA employee and contractor.

[37] Barry, Alister. (1995). Someone Else’s Country. [Motion Picture]. Vanguard Films. Retrieved from http://www.nzonscreen.com/title/someone-elses-country-1996; Barry, Alistair. (2002). In a Land of Plenty. [Motion Picture]. Vanguard Films. Retrieved from http://www.nzonscreen.com/title/in-a-land-of-plenty-2002 [In 5-part video segments].

[38] Mike Maloney. (2013). “The Biggest Scam In The History Of Mankind (Documentary) – Hidden Secrets of Money 4”. Retrieved from https://www.youtube.com/watch?v=iFDe5kUUyT0; SEE ALSO: 97% Owned – Economic Truth documentary – How is Money Created. Retrieved from https://www.youtube.com/watch?v=XcGh1Dex4Yo; “The Secret Of Oz” – The Truth Behind The Modern Financial System, And The Money-Political Complex” at: http://www.zerohedge.com/article/secret-oz-truth-behind-modern-financial-system-and-money-political-complex; Paul Grignon (2009). Money As Debt – Full Length Documentary. Retrieved from
https://www.youtube.com/watch?v=jqvKjsIxT_8

[39] Hutchinson, F. (1998). What Everyone Really Wants To Know About Money. Charlbury, England: Jon Carpenter; Stefan Molyneux. (2010). Human Farming: The Story of Your Enslavement https://www.youtube.com/watch?v=Xbp6umQT58A

[40] How Banks Create Money. Retrieved from http://positivemoney.org/how-money-works/how-banks-create-money/

[41] Hutchison & Nyks. (2015). Requiem for the American Dream. Retrieved from: https://www.youtube.com/watch?v=j9asVtLFxpU

[42] Klein, Naomi. (2007). The Shock Doctrine: The Rise of Disaster Capitalism, p.7. Camberwell, Australia: Penguin Books; Whitecross, M & Winterbottom, A. (Directors) & Eaton, A. (Producer). The Shock Doctrine 2009 [Motion picture] Retrieved from https://www.youtube.com/watch?v=v6yceBTf_Vs;

[43] Laurence H. Shoup. (2015). Wall Street’s Think Tank: The Council on Foreign Relation Relations and the Empire of Neo-liberal Geopolitics, 1976-2014. New York: Monthly Review Press; Hutchison and Nyks. (2015). Requiem for the American Dream; Shoup, L. H. & Minter, W. (2004 [1977]). Imperial Brain Trust: The Council on Foreign Relations and United States Foreign Policy, 254-284. New York, NY: Authors Choice Press.

[42] Shoup, L. H. & Minter, W. (1977). Imperial Brain Trust: The Council on Foreign Relations and United States Foreign Policy. New York, NY: Authors Choice Press.

[43] Naomi. Klein. (2007). The Shock Doctrine: The Rise of Disaster Capitalism. Camberwell, Australia: Penguin; Pilger, J. (2002). The New Rulers of the World. London: Verso; Laurence H. Shoup. (2015). Wall Street’s Think Tank: The Council on Foreign Relation Relations and the Empire of Neo-liberal Geopolitics, 1976-2014. New York: Monthly Review Press. Pinkus, Karen. “Nothing from Nothing: Alchemy and the Economic Crisis.” World Picture 2.

[44] The Spider’s Web – Britain’s Second Empire Revealed. https://www.zerohedge.com/news/2018-09-22/watch-spiders-web-britains-second-empire-revealed

[45] Douglas, J. (1976, October). The Overloaded Crown. British Journal of Political Science, Vol. 6, No. 4, pp. 483-505.Cambridge University Press.  Retreived from jstor.org.stable/193284; Rose, R. (1979, September). Ungovernability: Is There Fire Behind the Smoke?” Political Studies. Vol. 27 (3), 351-370; Shoup & Minter (2004 [1977]). Imperial Brain Trust.

[46] Nitzan, J. & Bichler, S. (2009). Capital as Power: A Study of Order and Creorder. New York, NY: Routledge. Retrieved from: bnarchives.yorku.ca/259/2/20090522_nb_casp_full_indexed.pdf; Tim DiMuzio (28 November 2013). The Weekly Sabotage: Week 1. Capital as Power. Retrieved from: http://www.capitalaspower.com/2013/11/the-weekly-sabotage-week-1/

[47] de Angelis, M. (2001, May). Global capital, abstract labour, and the fractal panopticon. The Commoner. Retrieved from http://www.commoner.org.uk/fractalpanopt.pdf

[48] Bruce, B. (Director & Writer). (2013). Mind The Gap: A Special Report on Inequality [Motion Picture]. Red Sky Television. Retrieved from http://www.tv3.co.nz/INSIDE-NEW-ZEALAND-Mind-The-Gap/tabid/3692/articleID/94816/MCat/3061/Default.aspx

[49] Vernon Small. Nov 08 2017 Reserve Bank move sees Ardern cast as ‘canary in the mine’ of central bank reform

[50] Steve ‘Snoopman’ Edwards. (25 April 2017). “The Masonic New Zealand Wars: Freemasonry as a Secret Mechanism of Imperial Conquest During the ‘Native Troubles’ ”. Snoopman News. Retrieved from: https://snoopman.net.nz/2017/04/25/the-masonic-new-zealand-wars/

[51] Although Prime Minister David Lange subsequently had his staff investigate the impacts of ‘free market’ policy shocks, he failed to authorize an inquiry to investigate their deployment as power crimes. See: Revolution. [In 4-part video segments] Television – 1996. Retrieved from https://www.nzonscreen.com/title/revolution-1-fortress-new-zealand-2009; Barry, Alistair. (1995). Someone Else’s Country. [Motion Picture]. Vanguard Films. Retrieved from http://www.nzonscreen.com/title/someone-elses-country-1996; Barry, Alistair. (2002). In a Land of Plenty. [Motion Picture]. Vanguard Films. Retrieved from http://www.nzonscreen.com/title/in-a-land-of-plenty-2002 [In 5-part video segments].

[52] Joseph L. Wallis (January 1997). Policy Conspiracies and Economic Reform Programs in Advanced Industrial Democracies: The Case of New Zealand. UNE Working Papers in Economics No. 38. Retrieved from: www.une.edu.au/__data/assets/pdf_file/0004/67378/econwp97-38.pdf; Dr Don Brash. (04 June 1996). New Zealand’s remarkable reforms. Retrieved from http://www.rbnz.govt.nz/research-and-publications/speeches/1996/speech1996-06-04

[53] Douglas, Roger. (1993). Unfinished Business, p. 221. Auckland; New Zealand: Random House; New Zealand’s remarkable reforms Release date 04/06/1996 Speaker Dr Don Brash Address to the Fifth Annual Hayek Memorial Lecture. http://www.rbnz.govt.nz/research-and-publications/speeches/1996/speech1996-06-04

[54] Klein, Naomi. (2007). The Shock Doctrine: The Rise of Disaster Capitalism, p.7. Camberwell, Australia: Penguin Books.

[55] Paula Oliver. (18 Nov, 2006). Friedman regarded as one of the greats. Retrieved from https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10411362

[56] Robert Barwick, Allen Douglas, Craig Isherwood, Noelene Isherwood & Michael Sharp. (January-March, 1997). Her Majesty’s Mont Perelin Society assaults New Zealand, p. 6-11. In: Nazi ‘reforms’ rip apart New Zealand – Australia Next. The New Citizen Report. Vol.4, No. 7. Citizens Electoral Council, Australia. See also: Douglas, Roger. (1993). Unfinished Business. Auckland; New Zealand: Random House.

[57] Simon Upton quoted in The New Zealand Herald, December 30, 1989.

[58] Bruce Jesson. (1999). Only Their Purpose is Mad: The Money Men Take Over NZ. Palmerston North, NZ: Dunmore Press; Jane Kelsey. (1995). The New Zealand Experiment: A World Model for Structural Adjustment? NZ: Pluto Press.

[59] Whitecross, M & Winterbottom, A. (Directors) & Eaton, A. (Producer). (2009). The Shock Doctrine. [Motion picture]. Renegade Pictures/Revolution Films.

[60] Gill, S. (1998). New constitutionalism, democratisation and global political economy. Global Change, Peace & Security, 10, 23-38. doi:10.1080/14781159808412845

[61] Palan, R., Murphy, R., & Chavagneux, C. (2010). Tax Havens: How Globalization Really Works. Ithaca, NY: Cornell University Press.

[62] Kwame Nkrumah. (1965). Neo-Colonialism: The Last Stage of Imperialism. London: Thomas Nelson; Eugene Jarecki (2006). Why We Fight.. Sony Pictures Classics.

[64] Carroll, W. K. (2010). The Making of a Transnational Capitalist Class: Corporate Power in the 21st Century. London: Zed Books; Coghlan, Andy & MacKenzie, Debora  Revealed – the capitalist network that runs the world. (2011, October 24). Retrieved from http://www.newscientist.com/article/mg21228354.500-revealed–the-capitalist-network-that-runs-the-world.html#.U4PmmoXelcw

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