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Citizens Electoral Council of Australia

Media Release Friday, 1 April 2016

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
 

A national bank is the solution to Australia’s budget crisis

While Malcolm Turnbull scurries from thought bubble to thought bubble to balance the budget—first raise the GST, now return to different state tax gauges—his ideology and banking connections make him hostile to the obvious solution: a national bank.

The cause of the budget crisis is the shrinking productive economy; therefore, the solution is growing the economy, not taxing it further. (Tax the parasitical financial speculators, however—they aren’t productive in any way.)

A national bank is a government-owned bank, such as the original Commonwealth Bank. The government can use its bank to finance costly, long-term expenditure such as infrastructure, plant and equipment through a separate capital budget. It is ridiculous for the annual budget, which is short-term and funded through current tax receipts, to fund long-term investments such as infrastructure which can take decades to build. Separating capital expenditure out of the annual budget will by itself go a long way towards balancing the budget; moreover, by investing in such capital using credit instead of taxes, the projects will actually get built, instead of being perennially put off because “there’s not enough money”. This in turn will create tens and even hundreds of thousands of productive, full-time jobs that will both expand the tax base and reduce welfare expenditure, which is how to balance the annual budget.

The credit to fund the capital budget will come from the national bank; i.e., the government will borrow from its own bank, not from “financial markets” that are controlled, rigged, manipulated—call it what you will—by the City of London and Wall Street. The national bank can create the credit, just as the Commonwealth Bank did during WWII using Treasury Bills, and as the world’s major central banks have done since 2008 through so-called quantitative easing (QE) to prop up the too-big-to-fail (TBTF) banks that caused the global financial crisis.

The US Federal Reserve, European Central Bank, Bank of England and Bank of Japan created, electronically, trillions of dollars, euros, pounds and yen to buy financial securities from the TBTF banks, thus injecting free money into those banks to improve their balance sheets. QE has been a disaster, because the banks were supposed to invest that money into the real economy, but instead they refused to on-lend it, and ploughed it into more financial gambling instead. The CEC’s proposed national bank will limit created credit to productive investments. This is the principle laid down by the inventor of national banking, inaugural US Treasury Secretary Alexander Hamilton, who stipulated that the creation of public credit through a national bank must be “tied to its means of extinguishment”; in other words, it must be directed into productive investment that will increase national wealth and enable the debt to be repaid.

UK Labour Party leader Jeremy Corbyn has made the same national banking proposal as the CEC, which he has called People’s Quantitative Easing—he argues, essentially, that if the Bank of England can create £385 billion to prop up the City of London banks that caused the crisis, a national investment bank can create the same amount to invest in national projects to create prosperity for all.

Since Alexander Hamilton, private banks have violently opposed national banking because it is successful, and therefore threatens the monopoly that private interests have over banking. This monopoly, once commonly referred to as the “Money Power”, is centred in the City of London and Wall Street. Free-market-brainwashed modern politicians have been deluded to think it is a principle of economics that governments shouldn’t use national banks because “government should stay out of the economy”; in truth, this is not a principle of economics, but the extortionate demand of private banks to ensure that governments don’t upset their rigged game. Nineteenth-century British Prime Minister William Gladstone admitted as much, from his own experience as Britain’s Chancellor of the Exchequer beginning in 1852: “The hinge of the whole situation was this: the government itself was not to be a substantive power in matters of finance, but was to leave the Money Power supreme and unquestioned.”

The only reason for Malcolm Turnbull, aka Mr Goldman Sachs, to reject the national bank solution, is to perpetuate the Money Power’s banking monopoly. The Australian people cannot afford to tolerate this racket any longer—fight with the CEC to force the government to restore national banking.

Click here to watch a 17-minute video presentation, People’s Quantitative Easing—the principles behind it.

Click here for a free copy of the 16 March Australian Alert Service, which explains the principles of a capital budget.

Click here to join the CEC as a member.

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