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Once, there was no Reserve Bank of New Zealand. What?

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  • Once, there was no Reserve Bank of New Zealand. What?

    The Reserve Bank is getting top billing in the media these days.
    Possibly the group of people with the most power over your future security and wealth, but little is commonly known about them.

    Q1.
    What did we do before they existed?

    A.
    In 1840, there was no Reserve Bank, but there was -

    The UNION BANK of AUSTRLAIA , a BRITISH BANK from LONDON -

    agreed with the NEW ZEALAND COMPANY -

    to accompany the SETTLERS and provide them with BANKING SERVICES.


    In 1844 the NEW ZEALAND GOVENOR allowed them to ISSUE their own notes.
    BUT had to be a minimum of 1 POUND and redeemable in GOLD and SILVER.


    Last edited by McDuck; 20-11-2020, 05:29 PM.

  • #2
    In looking at A WORLD WITH NO RESERVE BANK ,
    It's important to remember, that, originally, there was another way to do everyday business.

    Coins.
    Coins from Britain were in free circulation.
    Coins had real value back then, compared to the these commercial paper notes.

    ​​

    How much value.?
    Well, adjusted for time, the biggest coin would buy you about $200 worth of goods.
    (Compare that to our $2 coin now).

    Would you like to bypass the fees and control of the central bank and the commercial banks ?
    Would you like to deal directly with the Govt?
    Would you use a $200, $100, $50, $10 or $5, coin, if they were available right now?
    (I believe the RESERVE BANK does NOT control coins, in so much as they are the responsibility of the Treasury).

    Once you have an alterative, would banks still be " Too big to fail" ?
    Hmmmm?

    It's an interesting idea.​
    Last edited by McDuck; 21-11-2020, 06:56 AM.

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    • #3
      Very interesting McDuck - and the future is digital currencies.

      cheers,

      Donna



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      • #4

        Sure there is a place for digital transactions,
        however,

        The point of large denomination coins, for everyday transactions, is to cut out the middle men.
        Less middle men, less ticket clipping.
        Less room for fraud.
        Last edited by McDuck; 21-11-2020, 12:24 PM.

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        • #5
          Hence coins are yesteryear

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          • #6
            Coins in the past aren’t the same. Commodity money did have value (mostly gold) and fiat money these days is just a currency based on people’s trust. Guess what would happen tomorrow when everybody goes to the bank for “give me my money!”.
            The Reserve Bank can print fiat money as liability of the taxpayer as long as they have paper and banks create it as checkbook money as much as people are willing to give everything they own as security for a loan.

            People own the banknote they carry in their wallet, but not what is kept in the bank. Digital currency is one step further to lose the control over cash people worked hard for and controlled by governments – issued and managed by central banks.

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            • #7
              Originally posted by klauster View Post
              [FONT=Times New Roman]Coins in the past aren’t the same. Commodity money did have value (mostly gold) and fiat money these days is just a currency based on people’s trust./FONT]
              Yes, so true.

              Even if it's not gold or silver, a $200 dollar base metal coin, issued by the treasury, would still work.
              You could buy groceries with a few coins, and pay your taxes too.

              Even actual Silver (one ounce) coins would work, they are the right size and value.

              The main point is to cut the Commercial banks and Reserve bank out of the loop totally.
              And all their ticket clipping too.

              Plus, you'd have a backup money system in operation.

              It's all just a thought experiment, to define the role of the Central bank and the Commercial banks, from a new perspective.

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