During President Clinton’s Millennium speech from the steps of the Lincoln Memorial he suggested that this century would see the end of debt in the same way as the past century saw the end of American slavery.
The reference seems to have been removed from the transcript. Debt and credit creation are not subjects that the general public are meant to understand. As the great JK Galbraith wrote “The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent.”
I received Satyajit Das’s “A Banquet of Consequences” for Christmas. It is a masterly and depressing analysis of the declining resources of the Planet, fresh water being the most serious - particularly in Asia and Africa with growing, overpopulated countries.
However, the dominant subject in his book is financial debt. He analyses the increasing indebtedness and disparity between rich and poor; 85 individuals own more than the poorest 3.5 billion individuals.
Das ridicules the ‘Gods of Finance’ - governors of Central Banks, the IMF and World Bank, unelected people who have kept creating credit for their derivative-gambling and interest-rate-manipulating banking colleagues.
Meanwhile poverty and indebtedness of the masses increases partly due to these gods forcing austerity measures on indebted governments of smaller countries. If they stood in an election they would be obliterated, as their political party puppets are now learning.
The Global Financial Crisis resulted in a realisation that if credit can be created from nothing for the rich financial sector, it can be done for everyone. We have read of the US Public Service payments about to run out twice in the past few years but when payday came, the money was quietly created.
In Australia we hear inane debate on the federal deficit. Canberra will always create the credit to pay its bureaucrats. McKell and Chifley created the credit for the Snowy Mountains Scheme. A country with a central bank can always create credit in its own currency. The only barriers are ignorance and cowardly fear of the banks who cling to their monopoly.
There is a growing awareness that fast growing unemployment means trouble. The idea of a universal basic income is spreading. India, Kenya, Uganda, Canada, Finland and part of the Netherlands are operating schemes. An Australian scheme could allocate, say, $20,000 to everyone to be a safety net and to replace current safety nets. It would simplify Centrelink complexity and investigations into false claims.
In 1910 when JP Morgan masterminded the transfer of bail out responsibility for banks, from his colleagues to the US government, he wouldn’t have dreamed that he was sowing the seeds for the death of private banking.
