Dr Liz Elliot

22 February 2016

Money drives most policies. Media and puppet governments tell us that there isn’t money for environment, education or poverty, that ordinary people must endure austerity. Money has become more important than real wealth: sanity, water, soil, our future!

If we want to create a sustainable just society for the future, our understanding money is crucial. If neo-liberalism has one key feature, it is that most money is going to the top few percent of the population. Actually, it is the very design of the interest bearing debt system that is structurally twisting all effort and resources to flow to the top 1 per cent.

Those who don’t create money, and that includes most governments as well as people, are stressed by debt payments. Mortgage debt stresses most families. Debt is growing exponentially. Debt is now so huge and job creation so minimal, that debt can never be paid.

Ecologically its disaster, the rush to pay off debts is liquefying our forests and poisoning our waters. “Growth” is driven by the need for interest. Because interest payments are usually 2 to 3 times the original loan, and the extra money for interest was not created with the loan, everyone is competing to get enough money to pay off debt. Competition, exploitation and resource gouging are some of the harsh ways people try to find the extra money. It’s a beggar thy neighbour world!

40% of prices are interest, 40 per cent of your efforts and resources!! 40 per cent of pollution and climate change! This shocking figure of 40% is verifiable by looking at the national accounts in countries such as USA and Germany.

So, who is all this debt owed to? Who makes money? Most people don’t realize that 3 per cent is government created as notes and coins and the remaining 97 per cent is from private banks. Loans are created at the flick of a computer key as an accounting debit entry supposedly balanced by an accounting asset.

But usually not created for needed infrastructure, or the environment nor small business. Currently most money goes to unaffordable housing and insane derivative speculation.

Massive superannuation and other savings go to the stock market. Small business, which creates 70 per cent of Oz jobs, is barely funded and heavily regulated and taxed. Much modern capitalism has become financialized, money making money, not creating much and rent seeking, whether from football clubs, mortgages, toll roads. Finance has become a parasite on the real economy, sucking up effort and resources to enrich the top 1 per cent of the population.

Our modern banking system is controlled by the Bank of International Settlements and the IMF, who control Central Banks, which control our hapless governments. Banks have become deregulated, with scandal after scandal showing that the situation since the banking collapse of 2008 is worsening, that deregulation and lack of effective oversight has led to a banking sector out of control. We are teetering on the brink of another major bank collapse, largely due to the monster derivative casino. The current enactment of “bail in” laws will suck depositors’ real savings to try to fill the derivative hole, whilst loans to small business which lubricate real economic activity will dry up. This will result in huge unemployment and destruction of communities.

Banking has become a parasite on the real productive economy.

Yet this is all easily fixable. Societies ceded the power of money creation to the private sector and can resume that power. Governments can create money for good purposes. Public banks can recirculate the vast amounts of interest towards good projects, including environmental repair, organic agriculture and care of young people. Public banks are normal for 40 per cent of the world’s population, especially BRICS countries (Brazil, Russia, India, China and South Africa) where real economy growth with reduced inequality has boomed. Public banks were normal until recently, in Australia, NZ, Japan, Canada and even the US. They are easy to set up. They help economies and small business and infrastructure.

Diverse money creation including local currencies, cyber currencies and small local banks are able to be regulated. We can also have debit tax. We can stop tax havens syphoning off wealth. We need to reregulate, break up too-big-to-fail banks and re-localize our economies. We need to firewall our local internal currencies from trading currencies; for example, the Greek Drachma. The BRICS countries are devising ways to end the destructive power of the US Dollar Debt System. These are effective and rapid ways to resume control of the unsustainable madness of our economies.

Bernie Saunders and Jeremy Corbyn in US and UK respectively are raising these issues. The Swiss people will soon have a referendum on private vs public money creation. Ellen Brown and Positive Money are just two of the excellent websites which detail the solutions inherent in money creation understanding. All over the world people are waking up to the power of local finance. Ninety-nine per cent of people can do better without Private Banksters. Austerity is not necessary!

Another world is possible. We can save our communities and our planet!

Dr Liz Elliot 22/02/16

Ngara Institute