John Carter, a fifth generational cattle farmer describes himself as an activist, an administrator, an innovator, and a writer. He is a planter of trees and veteran contributor to The Land Newspaper provided me with his little paper tiled ‘How does One Repay Someone Who Created Credit From Nothing?
In his introduction to me, he included a copy of an article written by Alan Kohler in the Australian newspaper titled ‘Accepted Wisdom Out the Window” in the weekend of April 11. The better explanation is to watch / Listen to a discussion between Kohler and Professor Bill Mitchell of the University of Newcastle. The conversation is about a new way to look at contemporary money systems Modern Monetary Systems or MMS.
Professor Mitchel says “MMS is a frame work for getting a better understanding” of the choices we have. He makes several points to Alan Kohler;
- We must stop using this Smoke Screen of ignorance to lie to the people and make poor political decisions
- The government, as the issuer of currency cannot run out of money.
- Government has no constraints on spending other than the availability of recourses, with huge labour and industry recourses idle, to get it working much more must be spent.
- The constraint is simply the inflation barrier.
- The spending does not have to be from borrowing through Bonds, it is simply central bank credit, or deficit spending.
- Current spending of the Commonwealth is about the same as the Rudd spend as a result of the GFC at 4.2% GDP, this spend will need to be much higher, perhaps as high as 10%.
- Thankfully the Government have abandoned their surplus obsession.
- The deficit needs to be sufficient to maintain full capacity.
- That the Government is not the same as a private institution.
.
Government finance is not like a private corporation or a household.
How Does One Repay Someone Who Created Credit From Nothing?
They have bankers’ blinkers on. It won’t be repaid.
A Reserve Bank can create credit for use in its own country from nothing. It is the lender that is supposed to be repaid. Why would a country repay itself?
It wouldn’t.
John Maynard Keynes was a freethinking Englishman who helped Roosevelt lessen the pain in the Great Depression. His thinking inspired Australia’s Ted Theodore and Jack Lang. They would have saved Australians the worst of the Depression had they not been removed from power by the Bank of England club forcing repayments on Australian banks. My Dad had 95% equity but was denied money from the bank to pay our shearers. He found a way round but never forgot.
The great Napoleonic Wars banker, Amschel Rothschild, said “Permit me to issue and control the money of a nation and I care not who makes its laws”. Private bankers have controlled Western Governments ever since. JP Morgan plotted and achieved the US Federal Reserve in 1913 to bail out his friends.
Some Australian economic journalists are belatedly realising that we have been conned by bankers who want to keep credit creation as their closed shop. A smokescreen of Government bond juggling confuses the people.
The big banks didn’t repay after they were rescued in the 2008 GFC -which they caused. Instead they made a fourfold increase in derivative gambling and took obscene salaries. Their Wall St dominance has widened the gap between rich and poor to French Revolution levels. Their abandonment of productive sectors has the USA’s infrastructure disintegrating. Their directors should be in Guantanamo Bay having done more harm to Western economies than all the terrorists combined. The behaviour of Wall Street over the past few months should see it relocated to Los Vegas.
Ben Bernanke, the Governor of the US Federal Reserve, pronounced in 2008 “We will drop money from helicopters”. The questions, which arise, are “Who gets the money and why should it go through banks. It should go direct to the people through Centrelink or the ATO as the current Australian payments are going. Our private banks are currently being subsidised by the Australia’s Reserve bank to the tune of $90 billion, which explains their sudden U-turn on generosity. Some of their earlier obscene behaviour was exposed by the Hayne Royal Commission-despite its restricted terms of reference.
An elected Government must be the arbiter on who is rewarded, rescued etc. A Government owned bank—a re- created Commonwealth Bank that doesn’t trade derivatives but takes deposits, should do it and finances productive fields as it did before Howard and Keating privatised it.
John Carter,
April 2020Lake Edward, Crookwell, NSW
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