By Andrew Mackinnon
The economy in Australia was going very badly last year before the bushfires started that the government lit to distract attention away from the failing economy and before the latest Coronavirus hysteria to provide a scapegoat onto which to project the blame for the failing economies all around the world. In Australia, the banks create money when they lend and then charge interest on it. This is the same in most countries around the world. However, the citizenry is waking up to this scam and is therefore reluctant to borrow from the banks. This has caused the size of the money supply in Australia to decrease since money is created when the banks lend and since money is destroyed when principal lent by the banks is repaid. As a result, there is insufficient money in circulation to support economic activity in Australia. This is why the economy is languishing.
In fact, Australian citizens were reluctant to borrow from the banks even back in the 1990s in the aftermath of the recession of 1989 to 1991. The Australian government has always responded to this reluctance not by acknowledging that the interest charged on money lent by the banks that they create out of nothing is unconscionable and unjust, but by bringing new citizens into Australia via mass immigration in the hope that they would borrow from the banks to make up the shortfall in borrowing. It has been doing this for the past thirty years. We are now in a situation where the Chinese who have come into the country don’t want to be in debt; the Indians who have come into the country don’t want to be in debt and the existing Australian citizens certainly don’t want to be in debt either. Nobody wants to be in debt and why would they? People are not stupid, even if the Australian government and the Jewish-controlled media have deliberately made it very difficult to understand how the banking system in Australia actually works.
In Australia, when banks lend for any purpose, they create that money and the size of the money supply subsequently increases. The banks debit their loans asset account for the amount lent to signify the debt owing to them and they credit their deposits liability account to provide their customers with the amount they have lent to them so that their customers can utilise those funds in the bank accounts that they hold with the banks. When principal lent by the banks is repaid, the customer’s deposit account out of which the payment is made decreases by the amount of the principal repaid so that the money supply in Australia decreases by this same amount. The customer also makes interest payments out of his or her deposit account in the course of repaying the money borrowed. These payments are credited to the revenue account of the bank that lent the customer the money and are used to pay the salaries of bank employees, with the remainder constituting the bank’s profit, out of which dividends are paid to the shareholders of the bank so that they can share in this interest revenue also.
The Reserve Bank of Australia was established in 1959 via the Reserve Bank Act. It commenced operation early the next year on 14th January, 1960, just over 60 years ago. The purpose of the Reserve Bank of Australia has always been to maximize the interest revenue collected by the banks under its authority, which were first publicly owned then later privately owned by shareholders.
In 2015, in Australia, which had a population of about 24 million people at the time, about $30 billion dollars was paid to the staff who run the banks and another $30 billion was earned in profits for the shareholders of these privately-owned banks, all courtesy of the fraud of interest charged on money created out of nothing and lent to the citizenry. That’s a total of $60 billion in one year paid in interest to the banks by Australian citizens on money that the banks created out of nothing and lent to them. It’s the equivalent of $3,185 paid in 2015 by every adult citizen of Australia aged 18 years and over to the banks in interest. Around 78.5% of the population of 24 million in 2015 was aged 18 years and over, being around 18,840,000 citizens.
97% of the money in circulation in Australia, constituting the money supply, is money created by the banks when they lend for any purpose. The other 3% is physical notes and coins. The majority of this 97% arises from mortgage lending. The majority of the money that banks create is the result of mortgage lending. Mortgage lending constitutes the majority of bank lending. When a bank lends money to a customer as a mortgage with which to purchase real estate, the customer pays the overwhelming majority of the amount borrowed to the seller of the real estate that the customer chooses to purchase. Apart from stamp duty paid on the real estate purchase by the customer to state governments, commissions paid to real estate agents on the sale of the real estate by the seller and perhaps renovations of the real estate purchased, carried out by the customer using part of the money they have borrowed from the bank to fund their purchase of the property, the only way that newly created money as a result of mortgage lending is going to make its way into the economy and into the hands of Australian citizens is if the seller whose house has been purchased as a result of that mortgage lending spends the money they receive as a result of selling their house. If they predominantly invest the money in assets such as real estate or shares, then the majority of the money is not going to find its way into the economy involving the day to day transactions of the majority of Australian citizens.
This problem has been even further exacerbated by the inflation of house prices as a result of increased demand for housing via mass immigration and via concessions made to property ‘investors’ (who borrow from the banks so that they can ‘invest’) via negative gearing so that they will be able to afford the repayments on their mortgages for their ‘investment’ properties, which they otherwise wouldn’t be able to afford. They wouldn’t otherwise have sufficient cash flow to afford the repayments. As a result of the inflation of house prices, the proportion of money in circulation in Australia as a result of mortgage lending by the banks is even higher.
In Australia, we need a money supply in which a large proportion of the money supply didn’t come into existence as a result of lending. There are activities that occur on a regular, consistent and ongoing basis in order to support the lives of Australia citizens, such as the growing and distribution of food, the production and distribution of electricity and the accumulation and distribution of water and gas, to name just a few. These activities need to be supported by a large proportion of the money supply that didn’t come into existence as a result of bank lending but instead came into existence as a result of government spending over time, such as payment by the government of the salaries of citizens employed in the public service in Australia.
The problem that many Australian citizens are currently experiencing is that there is insufficient money in circulation as a result of a decline in borrowing by Australian citizens from the banks. In addition, the supply of money that is in circulation does not offer stable support to their day-to-day economic activity. Because 97% of the money in circulation is created via bank lending, the size of the money supply is in a constant state of change. When principal is lent by the banks, the money supply increases in size. When principal is repaid by borrowers, the money supply decreases in size.
In contrast, money that is in circulation as a result of government spending can only be taken out of circulation if the government decides to destroy money that it has collected via taxation because it believes that there is too much money in circulation which is causing excessive inflation of prices.
The way money is created in Australia needs to change. The Australian government should be responsible for money creation, not the privately-owned banks. The size of the money supply in Australia shouldn’t depend on citizens borrowing money. The only entity that should have the authority to create money in Australia and control the size of the money supply in Australia is the Australian federal government which would create money via a publicly-owned Australian Federal Bank by spending it into circulation or lending it to Australian citizens or Australian businesses for any purpose, including mortgages. The Australian Federal Bank would not charge interest when it lends, however it would need to charge a rate in the vicinity of 0.5% to 1% on all lending to cover the incidence of default on the loans by the borrowers. This rate would be different for different types of lending, such as mortgages and business loans. The sole purpose of this rate would be to cover the incidence of default on loans (ie. non-repayment of principal borrowed), not to profit from the lending.
There would have to be some mechanism for limiting government lending to the citizenry since the publicly-owned Australian Federal Bank would create all of the money that it lends so that the money supply increases when it lends. Unrestrained lending would lead to a rapidly increasing money supply and associated inflation of prices.
Citizens would be able to borrow in order to buy a house to live in and possibly a holiday house but they wouldn’t be allowed to borrow in order to buy a house as an investment to rent out in order to earn income. Investment would need to be funded out of savings, including houses and shares to name just two investments.
The amount that the Australian Federal Bank would lend to any given citizen for any given purpose, such as buying a house to live in, would be limited by factors such as the income of the citizen and the size of the deposit that the citizen has saved towards the purchase, with zero dollars obviously being the minimum possible size of the deposit saved. The Australian Federal Bank would decide upon the multiple of any given citizen’s income (such as three times) to lend to them for any given purpose, such as buying a house to live in or buying a motor vehicle.
If necessary, the Australian government could also create money and bring it into circulation in order to increase the money suppy by giving the money to the citizenry in proportion to the amount of net tax they’ve paid during their lives, defined as tax paid minus money received from the government in this manner as a result of money creation by the government.
The Australian Federal Bank would be run on a not-for-profit basis whereby the cost of running its operation would be covered by transaction fees and account keeping fees that reflect the true costs incurred by the bank to process transactions and maintain the accounts of Australian citizens, Australian businesses and other entities such as publicly-owned utilities, public service organisations and local government areas.
There would no longer be any need for the Australian government to borrow money by issuing government bonds to those from who it borrows, as is currently the case. This borrowing needs to repaid with interest (ie. principal and interest) out of taxation revenue, paid by the citizenry, when the Australian government could easily create this money to fund its spending requirements without requiring the citizenry to repay it via taxation or pay interest on it via taxation.
Our current predicament in which privately-owned banks create money out of nothing when they lend and then charge interest on it is a Jewish fraud whose perpetrators are committed to protecting it at all costs. The Coronavirus hoax has been instigated worldwide in order to provide a reason for the failing economies around the world which draws attention away from the real reason – insufficient money in circulation in countries all around the world as a result of insufficient borrowing from the privately-owned banks by citizens in countries all around the world who rightfully view the banks with distrust and disdain.
Providing a sound monetary system for the citizenry is one of the most important services that a sound government is obligated to provide. There is absolutely no reason whatsoever why any money in circulation should obligate citizens to pay interest on it, whether interest to privately-owned banks or interest to bondholders. When citizens pay interest to privately-owned banks as a result of money borrowed, they receive nothing of value in return, because the money lent to them was created out of nothing by the banks. This is a cleverly-disguised system of slavery whereby the citizenry work to earn the money required to pay the interest without receiving anything of value in return for that money. The recipients of the interest paid, being the bank employees and the shareholders of the banks, use the interest paid to buy the goods and services that the citizenry produce in the course of earning the money to pay the interest. This is a massive transfer of wealth from those paying the interest to those receiving the interest. Over the course of repaying a mortgage on a house, a borrower from a privately-owned bank under our current banking system pays in the vicinity of 80% of the principal amount borrowed in interest to the bank. This borrower repays the principal amount borrowed and also pays an additional amount to the bank as interest equivalent to around 80% of the principal amount borrowed.
If the principal amount borrowed is $500,000, the total amount repaid to the bank over the life of the mortgage is around $900,000. When the bank lent the $500,000 principal, a bank employee processed the paperwork and typed the $500,000 into a computer so that this money, created out of nothing with a few keystrokes, was available in the account of the borrower. In return for this negligible amount of work to lend the $500,000, the bank is repaid $900,000, which includes $400,000 in interest. About half of the interest of $400,000 is paid to bank employees as salaries and the remaining $200,000 is booked as profit, out of which dividends are paid to the bank’s shareholders.
We have been living under slave conditions for decades now. The Coronavirus hysteria is intended to keep us in slave conditions by providing a reason for the failing economies around the world which distracts from the real reason – the Jewish fraud of interest charged by the banks on money created out of nothing when they lend. The Jewish perpetrators of the Coronavirus hysteria intend to start new monetary systems in countries around the world in the aftermath of this hoax which similarly enshrine this Jewish fraud as their centerpieces.