Citizens Electoral Council of Australia

Media Release Tuesday, 1 October 2013

Craig Isherwood‚ National Secretary
PO Box 376‚ COBURG‚ VIC 3058
Phone: 1800 636 432
Email: cec@cecaust.com.au
Website: http://cec.cecaust.com.au

Budget cuts kill! Time for a National Bank

There is a clear-cut alternative to the cycle of Labor and Liberal governments running up massive debts to private financial interests, and then imposing vicious austerity that victimises the most vulnerable, ostensibly to pay off those debts.

The alternative is for Australia to start another government-run National Bank, which can function as the Commonwealth Bank did in WWII.

Without it, Tony Abbott and Joe Hockey will deepen the budget cuts that the ALP already started, such as the cruel cut to single parent families; they will use the justification provided by a typically fraudulent commission of audit, to move on health and education, and then the privatisation of state-owned enterprises including Medibank Private and Australia Post.

Combined with the existing plans to legislate Cyprus-style bail-in powers for Australia’s regulators so that depositors will have their savings confiscated to prop up failing banks, the Abbott-Hockey austerity agenda will push Australia down the same path as Cyprus, Greece, and the other economies of Southern Europe, where austerity has already killed thousands of people through insufficient or nonexistent healthcare, starvation, and suicide.

The National Bank solution

With a National Bank, the government will have no need to borrow money from private financial interests, or to cut expenditure on essential services.

First, it is important for everyone to understand that such banks have the power to create credit. In 1998, then Treasurer Peter Costello famously ridiculed the idea of National Banks creating credit as “funny money”. But then the 2008 global financial crisis erupted, caused by his mates at Goldman Sachs and other protected criminal enterprises playing with the real funny money of derivatives. To keep the system afloat, the U.S. Federal Reserve, the Bank of England, the European Central Bank, and more recently the Bank of Japan, launched a multi-trillion dollar program called Quantitative Easing (QE), in which these big central banks bought both government bonds and securities from private banks, in order to inject extra money, or “liquidity” into the financial system. In recent times, the U.S. Fed has conducted QE at the rate of $85 billion per month. Where do they get the money to pay for this? In their own words, they invent it; they create it on the spot out of nothing. [Click here to view a short video by the Bank of England explaining how QE money is created electronically.]

There are two huge problems with QE. First, the central banks are privately controlled and usually privately owned, so it is done to benefit powerful private interests. Secondly, because they create the money just to prop up the private banking system, and not to invest in anything productive which can give that money real value, it is hyperinflationary.

With a National Bank, that power to create and direct credit is taken off the private financial interests, and put under the authority of the national government, which is democratically accountable to the people of the nation.

The government is then able to direct the credit into the important productive areas of the economy, to both ensure the economy is strong, and that the creation of credit is always given value, so that it isn’t inflationary.

In practice, that means directing credit into long-term investments in physical infrastructure, and into productive industries in the private sector, such as family farms and manufacturing plants, for capital upgrades.

The WWII precedent

This is exactly how the Commonwealth Bank functioned in WWII, from 1942-1945. In the nine years prior under the Liberal Party predecessor the United Australia Party of Joe Lyons and Robert Menzies, which was totally beholden to the private bankers, the Commonwealth Bank was stopped from taking charge of the financial system, and in that time it only created £5 million by issuing Treasury Bills.

When John Curtin and Ben Chifley took office in 1942, they immediately used emergency war-time powers to put the Commonwealth Bank in charge of all of the banks, and got it to start creating credit to fund the economic mobilisation for the war effort. H.W. Arndt’s 1963 reference book The Australian Trading Banks documents that in 1942, the Commonwealth Bank created £59 million; in 1943 £173 million; in 1944 £77 million; and in 1945 £68 million. The result was victory in the war, and an economic miracle that transformed Australia’s economy from an agrarian backwater into an agro-industrial powerhouse boasting a world-class machine tool manufacturing industry, all with virtually zero inflation. The private banks didn’t dare challenge the Commonwealth Bank’s authority while the war was on, but immediately afterwards, when Chifley moved to make the Commonwealth Bank’s powers permanent, the private banks and their London controllers organised to suppress those powers in the High Court and in the Crown’s Privy Council in London. Menzies eventually dismembered the Commonwealth Bank in 1959, and created the privately-controlled Reserve Bank, under the chairmanship of the self-described member of the “international freemasonry of central bankers”, H.C. “Nugget” Coombes.

With a National Bank, the Abbott government could immediately use national credit for all infrastructure expenditure, and take it out of the annual budget entirely. All of his election pledges for new and upgraded highways, his infrastructure pledges to the states, such as for Victoria’s cross-Melbourne tunnel, and public transportation extensions and upgrades, any expenditure earmarked for new hospital buildings and equipment, and new school buildings and facilities—all of this many billions of dollars of expenditure could be entirely funded through long-term low-interest credit from the national bank, instead of out of the annual budget. This will both ensure the projects get built, not put on the back-burner, and enable the government to build even more sorely-needed infrastructure. Furthermore, both state and local governments would be able to borrow from the National Bank at low interest to fund their own infrastructure responsibilities.

This can happen, if the Australian people demand it. The CEC is leading the fight in Australia to defeat the vested private interests centred in the City of London that are bankrupting Australia to maintain their power and profits. The focus of that fight is to: defeat the current plans to legislate bail-in powers in Australia; force the Parliament to instead legislate for a Glass-Steagall separation of the private banks to protect banks with deposits from banks that gamble in derivatives; and to ensure the future prosperity of Australia by establishing a National Bank.

Join the fight, by joining the CEC.

Click here for a free DVD pack featuring historical accounts of Australia’s fight for National Banking: Craig Isherwood on “Ted Theodore’s Fiduciary Note Issue Proposal of 1932”, and Robert Barwick on “National Banking in WWII and the Post-War Battle for Public Credit”.

Click here to join the CEC as a member.

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