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The Forum > Article Comments > The economy: proposed narrative > Comments

The economy: proposed narrative : Comments

By Henry Thornton, published 2/5/2014

Did Treasury and/or successive governments really think Australia was a 'miracle economy' owed a living high on the hog for the feasible future?

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Henry Thornton like most ignore the real reasons why we had a GFC and why it continues.

The GFC was cause by the banking industry and Wall St. Bill Clinton eliminated the Glass Steagall Act back in 1998.Glass Steagall was brought in during the Great Depression to separate the banks gambling activities in derivatives from our real assets. Toxic financial instruments like Credit Default Swaps have brought down entire countries like Greece and Spain. They also made possible Fannie Mae and Freddie Mac. No one has been charged let alone convicted for these criminal activities. Bernie Madoff was jailed because he stole from the elites and not the masses.

The debacle continues with more money printing. Currently our big four banks have increased their fractional reserve ratio from 1:10 to 1:70.This means a bank can have $1 worth of deposits and create $70 of loans.

We did not need a Glass Steagall Act during the Great Depression because the Govt Commonwealth Bank controlled our banks and we has State Govt banks also.

The solution is to move back to Glass Steagall and bring back Govt Banks who can create infrastructure debt free and reduce our taxes and debt. Govts do not have to borrow OS if they have their own banks.
Posted by Arjay, Friday, 2 May 2014 7:23:32 AM
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Well it's hard to disagree much with Arjay, and the recent publication of 200 years worth of hard economic data, and the cause and effect reasons that data shows, why we had the Great Depression the GFC!
But most of all, why simplistic 19th century, same old same old, thinkers like Henry Thornton, are just plain wrong!
We are in our present position because of a structural deficit. Keating and Howard reduced tax by around 40 billions PA in total?
And guess what, the structural deficit is around 40 billions per! Connect the dots, PLEASE.
Had mining boom mark one not been squandered by economic illiterate Mr Howard, (quote unquote) but rather invested in a sovereign fund, we wouldn't have had to sell big cash cow, income earning corporations like Telstra, and the CBA!
This is what happens when Ideology replaces reason, and we get this sort of nonsense from both sides of the Isle, as politicians put, vested interest, their interests, (cronyism, corrupt outcomes?) and reelection, ahead of the national interest!?
A problem made far worse by the completely economically illiterate greens, and an economically incomprehensible wish list.
What to do?
Well there is now no other choice than quite massive tax reform, the like of which I've outlined in minutia, in earlier posts? [And we simply don't have the luxury of any further delay!]
And having reformed tax, just crack on with some nation building income earning projects.
It's possible to produce the world's lowest tax rate, while improving the budget position, mostly by removing unnecessary reconciliation expenditure and drones.
And it's also possible to produce the lowest energy cost, via public ownership of new carbon free, cheaper than coal thorium power; and extract our own oil.
[Private enterprise providing cheaper more efficient power, or cheaper oil? Bah humbug!]
Just these three things as sensibly engineered outcomes, will have the high tech corporations of the world and millions of self funded retirees, queuing to relocate here!
And that is exactly what we need to drag us out of the 19th century, and into the 21st!
Posted by Rhrosty, Friday, 2 May 2014 9:27:29 AM
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the economy/must be based on fair means of exchange
just terms/we formed govt to regulate trade/but govt has been betrayed

but the fix begins..with honest lawful tender[created by treasury/off bonds bills etc they monetized[i will be trying to explain it 6 may[in court]

a fine means
its an offer..that you may ignore or,sign into the value..A BOND

[ITS NOT meant to be punitive..its pure promisory/REVENUE RAISING]
if your happy with the service..YOU..simply sign it anD return it TO TREASURY-banker dept/who sends it to treasury who monetize it/paying off the debt in govt credit account.

see under the constituted law..

States not to coin money

A State shall not coin money, nor make anything but gold and silver coin a legal tender in payment of debts.

[and even better it limits the amount that can be settled in l-awfull tender

IT HAS BEEN further clarified by high court[173 of 1993]
Legal tender

(1) A tender of payment of money is a legal tender
a/if it is made in coins that are made and issued under this Act
b/and are of current weight:

[its further clarified

(a) in the case of coins of the denomination of Five cents, Ten cents, Twenty cents or Fifty cents or coins of 2 or more of those denominations--[for payment of an amount not exceeding $5]..[* but for no greater amount;

(b) in the case of coins of the denomination of One cent or Two cents or coins of both of those denominations--for payment of an amount not exceeding 20 cents *..but for no greater amount;]

get it?
higher debts are paid for simply by signature/upon the 'BILL'

ITS ALL ABOUT HRH EXCLUSIVE Franchise....under siegnorage
please note the debasement=treason..of her coin/her realm.

forM OF BARTER..(c)see 6 may
Posted by one under god, Friday, 2 May 2014 10:51:39 AM
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I agree with a lot of what you say, but I think the one fly in the ointment is persuading the electorate and recipients of the government largesse to forego all this munificence, because the greater part of the population vote for the government that gives them the most hand-outs with other people's money.......An effort to create a level playing field is an impossible aspiration, however virtuous and well meaning. One of the drawbacks of universal suffrage.
Posted by snake, Friday, 2 May 2014 11:13:38 AM
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What a myth, Arjay.

The GFC was a product of a lefty US president making the banks extend housing loans to low income earners, & unemployed, who had no chance of not defaulting on those loans.

Most of those bankers, being reasonably smart, & a lot smarter than a lefty president, could see the train wreck coming as a result of this tomfoolery.

They packaged their liability & flogged it off to others, not so smart The problem only arose when some of the less smart bankers started believing their own bull dust, & bought their own troubles back.

So the blame rests with that twit Clinton, or perhaps with his wife, who was, I'm inclined to believe, standing behind him pulling the strings.

And the most amusing thing about the whole saga, the yanks came close to electing her president in her own right, only avoiding that catastrophe by electing that idiot Obama. Talk about frying pan & fire stuff.

Even funnier, particularly if you are Russian, Chinese, or a conspiracy theorists, those fool yanks are still playing with the idea of electing lady Clinton to the presidency next time round.

The whole thing makes Harry Potter look like serious drama. Perhaps this is why the lefties can pretend it never happened, & was all a capitalists stuff up, not a socialists catastrophe.
Posted by Hasbeen, Friday, 2 May 2014 11:28:53 AM
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Well Henry, is it not wonderful how you well argued comments give rise to such drivel in reply!

The GFC explains everything according to your commentators.

The GFC was misnamed . It was NOT "global". It did not cause China ( or India either) to blink and China was buying our commodities had an large and increasing rate. Tax refunds, pink bats, and useless school buildings were unnecessary. The government guarantee of Australian bank deposits was all that needed.

The so called GFC was caused by two factors

1. A moratorium system in USA restricting a lender to the mortgaged house and no recourse to the borrower's assets.
2. A securitisation system allowing the original lender to bundle mortgages and flog them, thereby escaping the consequences of dishonest and negligent lending. Making the original lender and broker , ie. companies and their employees, guarantors of loans not meeting acceptable standards, would be the answer. The rating agencies should be liable for most of what went on.

The country could save a fortune in unproductive tax agent fees and ATO employees by doing away with the churn of taxing in and giving handouts.DO away with "rebates". Line up tax with reality by giving a DEDUCTION from assessable income for childcare, reasonable cost of getting to work, health costs, income and life insurance and do away with subsidies to all but pensioners and very low paid.

Reality is that those expenses are necessary before you have any real income from which to pay tax. If tax and reality were in sync, rebates and handouts would be unnecessary.

Well qualified women with children would work while others would find it uneconomical and would devote their time to bringing up their children- the most important job in the world. The churning of handouts hides the fact that their employment is unproductive for the country as a whole.
Posted by Old Man, Friday, 2 May 2014 11:33:34 AM
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