Gerard Rennick (Queensland, Liberal Party) Share this | Link to this | Hansard source

At last year's G20 summit in Bali, the leaders' declaration contained an innocuous statement, in paragraph 30:

G20 central banks are strongly committed to achieving price stability …

…   …   …

Central bank independence is crucial to achieving these goals and buttressing monetary policy credibility.

This statement couldn't be further from the truth. Central banks are the cause of the current bout of inflation and upheaval in the world, and their independence is the problem. The rise of independent bureaucrats has led to the rise of a powerful class of people called autocrats: government officials who are accountable to no-one. They have no place in a democracy.

Monetary policy is the least understood role of government. In fact, monetary policy is so little understood that there was no controversy in the 1990s when the RBA became independent. Imagine if today's Treasurer was to allow the Australian tax office to set rates independent from the parliament, yet that is exactly what the RBA can do with regard to the price of money without any parliamentary oversight. This price fixing arrangement should dispel any notion that the people of Australia operate in a free market. It is time the people and elected politicians woke up to the importance of monetary policy as a tool critical for good government. To do that requires a far greater understanding of how monetary policy works and its history.

Many wars have been fought and are currently being fought over who controls the printing press. Before paper money, wealth had to be stored as a form of hard asset, whether it be gold, land or livestock. While hard assets were always vulnerable to conquest and theft, the custody of wealth was always much more transparent. The introduction of paper money to Europe in the late 17th century changed the way monetary policy worked and saw the rise of a powerful new business class: the banking industry, an industry which produces nothing but controls everything.

From the 17th century through to the early 20th century there has been a constant battle between governments and the private sector as to who controls the price and volume of money in the system. A stable currency is vital if it is to maintain confidence as a medium of exchange. The revolutionary war was just as much about the control of the new colony's monetary supply as taxation with no representation.

In the mid-1700s, the USA was not indebted to a privately owned central bank. It used its own currency called the colonial script which provided a reliable medium of exchange. Most importantly, these were notes, not bills, so the colony didn't have to pay interest to private banks. America had learned the secret of money, much to the dismay of the Bank of England. Not surprisingly, the British parliament hurriedly passed the Currency Act of 1764. This prohibited colonial officials from issuing their own money so that Britain could, instead, lend to the early settlers and bleed the new colonies of their wealth—much like the petrodollar of today, which I'll touch on later on.

Benjamin Franklin claims that this was the cause for the American Revolution. He said:

The colonies would gladly have borne the little tax on tea and other matters, had it not been that England took away from the colonies their money, which created great unemployment and dissatisfaction … The inability of the colonists to get power to issue their own money permanently out of the hands of George III and the International Bankers was … the Prime reason for the Revolutionary War.

No country is truly democratic or independent unless it controls its own currency. Currencies are underwritten by taxes on the people. As a result, it is the people via the democratic process—and not unelected bankers—who should control the currency. I don't have time to go through all the political battles in regard to monetary policy throughout the 19th century in the United States. But it is worth noting that, unlike today, monetary policy was a political issue.

Unfortunately, in 1913 the private bankers gained control of the US printing press. Unbeknown to most people the federal reserve is privately owned, unlike most other central banks in the world. I should note that The Wonderful Wizard of Oz, a story more associated with the children's movie than the original book, was based on William Jennings Bryan, the 1896 Democrat US presidential candidate who advocated against private banks controlling the monetary supply. He was represented by the lion in the book: 'Bryan Lion'.

In the original story, Dorothy wore silver slippers and represented the American people. The scarecrow represented the farmer and the tin man represented the worker. The yellow brick road was, of course, gold. The emerald city was the same colour as the greenback, and the man behind the curtain represented the central banker. In the end, Dorothy realises that the wizard is nothing but a fraud—much like today's central bankers. The power in her shoes was represented by silver—and was outside the control of central banks. Bryan wanted silver as a part of the currency standard so that banks couldn't control the currency.

The US dollar gained hegemonic status at the end of World War II when the Bank of England was nationalised. Unbeknown to the British people, they were forced to repay the cost of war in US dollars for the next 60 years. The transfer of wealth from the Old World to the New World was complete. Paper money must be backed by a hard asset if it is to retain its value and credibility.

That nexus was broken in 1971, when Nixon went off the gold standard due to the USA's inability to fund the Vietnam War. Inflation quickly reared its ugly head. To curve it, the petrodollar was created, with the cooperation of one of the world's worst perpetrators of human rights: Saudi Arabia. Because oil has to be paid for with US dollars, countries need to borrow US dollars. This means they pay interest to the private owners of the US federal reserve. All users of US dollars, including US citizens themselves, must pay interest to these unelected bankers. The USA of the 1970s found itself in the same position as Britain in 1764, forcing other countries to use its currency in order to pay for foreign wars. Any threat to the petrodollar must be destroyed at all costs.

The greatest threat in recent times has been the creation of the euro. The Iraq War was the result of Saddam Hussein wanting payment for Iraq's oil in euro, which was a threat to the petrodollar. The same goes for the war in Ukraine. The sale of Russian energy via the Nord Stream pipeline to Germany will undercut energy supplies backed by US dollars. 'US dollars' is a misleading term as it is really the deep state dollar. What else is misleading is the idea that soldiers fight wars in the name of democracy and freedom. Nothing could be further from the truth. Wars are fought to protect the private unknown bankers who control the world's printing press.

It is time the spotlight was shone on these central bankers and they were held to account for the financial hardship and bloodshed they cause. I believe the 1937 banking royal commission got it right when it said the government should regulate the volume of credit in the system with oversight of its distribution, while privately owned training banks should be responsible for the distribution of credit.

The RBA should stop relying on foreign debt to fund Australia's growth. This only transfers wealth offshore. Rather than adopt an austerity policy by raising interest rates—which is going to have catastrophic results for many homeowners in the next 12 months—the RBA needs to adopt a productivity policy through the funding of government infrastructure. Why should Australian governments—both state and federal—have to pay private banks interest to fund the construction of infrastructure? These are hard assets that generate wealth for a nation. If the government builds a dam for $1 billion and funds that via offshore debt then the first $1 billion it creates will have to be repaid offshore. That's not to mention the accumulated interest which often ends up being more than the original amount of principle.

This strategy isn't new. Lachlan Macquarie was the first governor to see Australia as a country and not a colony. He knew, perhaps based on the experience of the US patriots, that countries should have their own currency, which is why he introduced Australia's first currency: the holey dollar. Unfortunately, today the holey dollar logo is used by Macquarie Bank, whose business model is to help manage the privatisation of our nation's infrastructure. It's time the RBA adopted quantitative, productive measures that will fund infrastructure to build our nation rather than destroying it via this ridiculous austerity policy that is only going to result in the asset-stripping of hundreds of thousands of Australians in losing their homes.