Banking, free trade and fair trade

Peter Davis, Mayor of Port Lincoln, gives his personal view on the banking system, national debt and international trade.

An ancient proverb states, “A problem correctly addressed is half solved”.

Most people even vaguely aware of the way our “money system” functions knew that a day of reckoning was fast approaching some years ago. When the system would effectively collapse and how deep the disaster were the two unknowns. The unfolding events of the last two years have more than confirmed the worst fears we held.

In order to understand why the world money systems are in such disarray some important facts need to be grasped: In no specific order:

1. All the developed nations of the world function under a Private (as compared to a National) banking system. That is, about 98% of the money we use is created and controlled by the Private banking system. The following are some of these Private (meaning not under the control of individual National Governments) banks.
* The 7 Federal Reserve Banks of U.S.A., the most obvious being “the Federal Reserve of New York”.
* The Bank of England, established in 1694.
* The Reserve Bank of Australia.

2. The various private banking systems within Nations effectively operate on a global level through:
* The World Bank
* The International Monetary Fund
* The Bank for International Settlements, based in Basle, Switzerland.

Governments fund their various activities by selling BONDS to these different private banks who buy these bonds, thus funding Government expenditure and the private banks charge interest on their “Loans” to Government. By way of example, our Government is currently issuing $1.2 BILLIONS in bonds per week in order to fund its various economic stimulants that it believes will rescue our economy. This is how we accumulate our colossal National Debt and explains why all governments across Australia have over the last decade or so, sold off virtually all the Nation’s assets built over past generations to reduce National Debt.

Because the Private Banking System has such a strangle hold on the creation and control of credit explains the reason why Governments across the globe are doing their utmost to rescue the Banking Systems of various nations and are encouraging the creation of even more centralised power for the likes of the I.M.F. World Bank, et cetera.

Yet, if one believes that the fundamental role of Government is the provision of services that will ensure the health, welfare, prosperity and safety of its people it is absolutely fundamental that it, the Government should be in control of its own money supply. That is, it should not be selling bonds to the private banking system.

Has such a Government Banking system ever existed? Yes. The Commonwealth Bank of Australia, created by the Fisher Labor Government in 1912, created and funded the necessary “money” to fund the First World War, the Transcontinental Railway Line, long term, low interest loans for farmers, small business and home owners. What was a long term loan and what were the terms? Home loans of up to 20­25 years with fixed interest rates below 5% with just two payments annually. Similar loans were available to farmers and small business.

The Bank began with just $12,000 pounds ($24,000) capital in 1912 by Andrew Fisher’s Labor Government. But, its activities very seriously threatened the then private banking sector. In 1924 the Bruce-Page Federal conservative Government passed legislation that created a Board of Directors rather than its previous sole Governor, Sir Denison Miller. Slowly, but surely over the years the Government control over its own bank was whittled away eventually with its total privatisation as we know it today.

Both major parties have been in involved in this sell out of the greatest national asset we, the people of Australia, have ever had. That is why the C.B.A. was known as “The People’s Bank”.

In differing ways but with the same end result virtually all of the nations of the world have slowly lost control of their Financial Sovereignty.

Perhaps the most glaring example of the sheer power of the banking system now is how governments are accumulating massive national debt in order to shore up the collapsing private banking system. America is perhaps the best example but there are examples daily of these colossal bailouts that result in long term liabilities for the people of each and every nation as National Debt rockets upwards.

In similar manner, Governments have, over the last decade or so, passed and ratified two hugely important Bills regarding “Free Trade” that strike at the heart of National sovereignty. They are the G.A.T.T. and the G.A.T.S. agreements.
1. The General Agreement of Trade and Tariffs.
2. The General Agreement on Trade and Services.

These two International Agreements are the foundation upon which our national manufacturing industry is steadily being destroyed. There is no possible way that a highly developed economy (ours) can compete against less well developed countries where a manufacturer does not have to pay our costs of production. By way of example, the dollars per hour we are required to pay workers would be about what is received in cents per hour in some countries now exporting to Australia. Naturally, they do not have things like workers compensation, holiday pay, sick pay, long service leave, superannuation, et cetera. The net effect upon Australian manufacturers is one of two things:

The company will either move its operations overseas or will cease production, both happening regularly.

On the other hand multinational companies under these two agreements have the right to bring in labour from overseas, to transfer operations offshore and so on. They also have the right to fund their operations effectively free from control of the sovereign Government.

This sad truth can be seen in politicians demanding that “Free Trade” must continue through our current crisis. Any person suggesting that we should care for our own local jobs and protect our own businesses is accused of being a xenophobe. Further, that if local protection and consumption is practiced, the result will be to worsen and prolong the world financial crisis.

The Free Trade policy is causing political trouble world wide as politicians grapple with their own local economies. We have global trade difficulties involving payments (banking), unemployment difficulties and general community unease. Why? There is no such thing as “Free trade”. It is Free Trade that is part of our problem. Remember the proverb heading this article.

“Free Trade” is a contradiction of the English language. Trade involves the exchange of goods or services in exchange for payment. Thus, it is not “Free”. What we should aim for is Fair Trade. Fair Trade involves meeting National requirements first, then selling at a “fair price” goods or services desired by overseas nations. With the revenues so gained we are in a position to trade with another Nation that possesses something we desire or need.

The current world crisis has been in the making for many years. The above remarks are not the sole reason for our difficulties. There are other issues like derivatives trading, hedge fund activities, floating currency fluctuations and so on have had similar negative, cumulative impacts.

“May you live in interesting times”, said Confucius to an opponent 2000 years ago.

How we resolve our current issues, how responsibility for the present disasters is resolved and how the people of Australia survive will be “interesting” for us all. Yet the solution to our problems can be seen in our past history if we have the will to research and implement what our grandparents practiced.

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