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Chairman's Commentary

Week 1:

Last month we reported that we had over $16 million being repaid to us interest-free and someone replied "Great work. How do we make it reach $16 billion?"

Now that's a question we have been asking too. And so I got to think about writing a weekly comment on Facebook sharing such things as some of our history and how and why we began an interest-free mortgage fund that (we suspect) is unique in the world. Why it works mathematically and where we believe it is going.

Launching a completely new form of money system almost 30 years ago without any start-up funds, or borrowing or receipt of grants, was scary enough, but especially so when we discovered that we could find no modern precedent to follow. Were we crazy? This was in 1989 in the middle of a world economic downturn. Bank interest-rates had suddenly trebled to 18-20% and unemployment in NZ was horrendous. Businesses were failing and and no one seemed to trust anyone. It is an interesting story, but this is only the start.

Next week - My introduction to Liberty Trust

Cheers to all, Kelvin
Liberty Trust Chairman
27 August 2018


Week 2:

My Introduction to Liberty Trust

It was in May 1988 when I received the phone call from Bruce McDonald. "Bruce here Kelvin. I've got something I'd like to discuss with you. Can you call in some time?"
Little did I know that that would introduce me into the most amazing story - the sort that seldom happens in the exciting world of an accountant - a story that would change my life. 
Bruce was our church pastor. I was newly redundant and commencing my own accountancy business. I assumed he needed some advice about money. Instead, Bruce related how he had been praying about the plight of so many families who had been caught up by galloping mortgage interest rates. An intercessor in the church had also been praying on the same topic, unknown to each other. In response she had been told that "those affected should pool resources and pay-off each others mortgages. Some people would not be ready for this, and that she was to tell her pastor (Bruce) because he would put this into operation." So she did this and then left him to it.

Regards Kelvin
5 September 2018


Week 3: Was this Crazy?

Bruce spent an entire afternoon with me. He sounded to me like a crazy life insurance salesman who believed he had just made the most exciting discovery in the world. But he used all the wrong accounting language to describe it so obviously, he didn’t know what he was talking about!

Bruce had shared the 'prophetic' words with his young team of elders. They suggested that he do a survey of the details of people’s mortgages in the church. So Bruce advertised for people’s details from the pulpit. Then with several business people they constructed a “model” of 52 mortgages from the survey.

How could people “pool their resources” when they didn’t have any to spare? - Bruce surmised that if they all went without “luxuries” like coffee and ice-cream they could all contribute $20/ week into a central fund. They then conducted a random ballot to establish the order that the bank mortgages would be refinanced with interest-free mortgages from the central fund. The money for these would come from the weekly $20's and the interest-free mortgage repayments. The faster the cash-flow from mortgage repayments and contributions – the faster that new mortgages could be advanced – and the more people could be helped. According to the model the last member’s bank mortgage would be taken over in 12 years. But astonishing, the 52 would save $55,000 each on average, after allowing for the cost of their contributions, and together they would save $2,860,000!

“Imagine if that could be put into God’s Kingdom,” cried Bruce, “instead of being given to the banks.”

In addition, the fund would finish up with over $600,000 in funds after all the mortgages were repaid, enabling new members to receive their mortgages sooner. The vision in the years to come was enormous. It could change “The Church” worldwide! - Bruce was running hot by now.

-And I rejected it. I told Bruce that if it was only half as good as he claimed, someone else would be doing it already, and if they were, I would have heard of something that good already, and as I hadn’t, then that proved it wouldn’t work. And so I left a very disappointed Bruce.

In short, I believed it was too good to be true.

Regards to all
12 September 2018


Week 4: Not so Crazy!

About two weeks later an engineer friend came to stay.  As engineers and accountants don’t usually have much in common, we ran out of conversation. So I got out the model workings and told him Bruce’s story.  He couldn’t make sense of the workings either.

“Rather than work with 52 of different sizes and interest rates and repayment terms”, he said, “Why not simplify it by working out the average size of each, and run the model with just six mortgages with the same $20/week contribution from each.”  So we did.

Once we had found our average it took us only 20 minutes on a calculator to reach the answer what had taken Bruce’s team 3 weeks – And the answer: “The last of the six would be refinanced at the end of the 12th year.”

“That’s funny”, I said.  “That’s what Bruce’s team found with 52”.

Let’s try it with 12”, my friend replied.

This time it took us 30 minutes with the calculator.

And the answer – the last of the 12 would receive their interest-free mortgage at the end of the 12th year.”

By now I had a funny feeling that Bruce’s team might be mathematically correct, and the answer would be the same no matter how many were in the scheme.

Realising that if we agreed with the team’s mathematical conclusion in one respect, we would agree with all, I sheepishly phoned Bruce the next day and told him what we had found.

“Well you’d better come in and see me”, he replied.  And as I still had his team’s workings to return to him I couldn't refuse.

Best wishes to all readers,

19 September 2018

Next Week- “The Research Team”