Bligh and Baird: Brazen private bank spruikers.

Nothing like an industrial grade testing of the gag reflex first thing on a Monday morning!

A flock of recently retired senior politicians from the major parties are out and about, with juicy Banker paychecks in their pockets, spruiking the Banker’s line and demonstrating they have no idea of the difference between sectional private interests and the public interest.


Shameless and brazen attempts to conflate their ‘paymasters’ interests with those of the public.  What more does it take to make out the case that we need a Royal Commission into banking with a single term of reference as soon as possible.

“…What, if any, should be the role of the private banks in the Australian monetary system…”

Even the majority ‘status quo’ opinion in the 1937 Royal Commission understood that the privileges extended to private banks were exactly that – privileges – and could ONLY be justified if they were productive and in the public interest.

The majority also understood that the only way to ensure this, was careful and close regulation of private bank credit creation to ensure it was directed to productive purposes and not the kind of asset price pumping speculation they engaged in before the depression and Australia’s residential housing markets have been evidence of for the last 25 years.

APRA is a failure as it was never designed to do what is required.  Regulation of private bank ‘credit creation as public money’ is a job for government – aka the political process – and APRA is ‘independent’ of the political process.

APRA is  unfit for purpose because it assumes, pursuant to neoliberal deregulation theory, that the credit creation decisions of private banks do not require regulation.  APRA’s primary job, according to its mission objectives, is limited to trying to stop the banks blowing themselves (and the monetary system) when they abuse their privilege and run their loan books too hot in the pursuit of fat profits and executive bonuses.

This is why ‘macroprudential’ measures by APRA never seem to work effectively.

The conceptual underpinnings of APRA are fundamentally antagonistic to effective macroprudential policy.  Oh and the Reserve Bank of Australia is no better,  with senior staff having spent speech after speech in recent years arguing against credit creation regulation – let the free market work, in the form of bank lending officers allocating ‘credit’ to the ‘credit worthy’ is the core of their belief system.

APRA and the RBA are not ‘bad people’, they are simply an expression of the neoliberal model operating as intended.

The ALP, the Greens, the other smaller parties need to wake up, start to read a bit of history and abandon the horse poop they were sold about private bank deregulation.

There is nothing ‘natural’ about deregulated private banking it at all.   Banking is not like any other business.

But before people grab pitchforks and start to shout ‘nationalise’ the banks, they ought to keep in mind that there is no need to do that at all. The politics of doing so are a complete lemon – just ask Ben Chifley –  so be suspicious of bank apologists and hot heads recommending it.  Over reach will be as pointless as doing nothing at all.

All that is required is nationalisation of that which should never have been privatised in the first place ……the creation of public money and credit.

Plus most of the public already assume our monetary system works with public money already so promising to actually deliver what they think is already the status quo should not be difficult.

It is public money that should be nationalised not the banks.

Leave the private banks as closely regulated private intermediaries of 100% publicly created public money and nothing more.  If they want a bit more freedom we can let them create their own private bank notes or cyber currencies and let them try to find a market for them.

Shareholders who find the returns from boring mere public money  ‘intermediaries’ too small can shift their investments to organisations that run real risks without a taxpayer guarantee.

Categories: Macrobusiness

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s