Fixing Oz Banks Pt 6: Making a difference?…a response to Joe

One of the most common ‘themes’ in questions received in the Glass Pyramid pigeon-post landing zone concerns whether any change is really possible.   How can anyone really hope to disrupt the well oiled and well resourced propaganda machine operated by the banking industry.   The answer is that change is always possible and because it is possible, the banking industry spends a fortune each year desperately trying to stop it happening.  Things like Bank Royal Commissions are like stake sharpening sessions at a Vampire Convention.   The first step in change is making sure that everyone YOU know understands what the problem is and why change is not only necessary but a lot easier than the ‘anti-change’ banking minion scare mongers would like you to believe. 

This is part 6 of the multi-part series “Fixing Oz Banks”.     Earlier parts appear below:

Part 1 discusses how private banks use their legal privilege to ‘take deposits’ to create deposits ‘out of thin air’ and extract interest in making these created ‘deposits’ available to the public.

Part 2 discusses how the private bank ‘deposit creation’ for profit model is dependent on and facilitated by the publicly owned Australian Central Bank – the Reserve Bank of Australia (RBA)

Part 3 discusses how the relationship between the RBA and the Private Banks with regard to ‘deposit creation’ should be reversed and instead the RBA become the exclusive and interest free creator of the deposits required by the public monetary system.

Part 4 discusses how the first step in the reform process involves nothing more than the RBA allowing any Australian to open a deposit account at the RBA so they can save conveniently and securely in 100% safe central bank liabilities.    See also the following additional post on how the RBA effectively forces Australians to save in the form of unsecured loans to private banks.

Part 5 is a discussion of some of the implications of allowing Australians to operate MyRBA deposit accounts at the RBA.

Part 6 – Making a difference?

Last night the Glass Pyramid received a comment from “Joe” and it raised some important questions about the project to reform Australia’s banking and monetary system.

The comment from Joe

So what is the next step besides another blog post? Are you going to start a lobby organisation funded by a kickstarter campaign? Or a community of like minded organised, wealthy and motivated people who won’t be fooled by moles which then after gathering a groundswell of support becomes a political party to actually change the rules? What happens if you win federal power and when you start changing the rules the governor general intervenes, are you then going to motivate the masses to convert Australia into a sovereign republic with no resource debt to anyone? In the end the real value Australia provides to the global elite is a population of motivated people who don’t get in the way of a healthy exploitation of the abundant natural resources

Here is an extended version of the response to Joe’s comment.


What is the next step?

I admire your enthusiasm but the first step has barely started and that has a long way to go.

So what is the first step?

The first step is nothing more than explaining the problem in a way that a growing number of people understand and agree that it is a problem that needs to be fixed.


To be honest that first step has been more difficult than I anticipated.   I thought that people would instinctively understand there is something deeply weird about treating the liabilities of private banks as if they were created by the public.   In other words treating private bank money as if it were created by the public. At the very least I thought they would want a very very good reason why it was a smart idea years ago to effectively privatise public money creation.

However, most people seem to find it very difficult to think that something that is so familiar, like how we organise our banking and monetary system, may have some fundamental defects.  Banks have done such a great job of integrating their business interests into the very core of the public monetary system and promoting them relentlessly, that people think it is a natural as mother’s milk.  Certainly they may not like banks at an instinctive gut level but they usually attribute that to a few greedy bank people doing the wrong thing from time to time “the few bad apples concept” rather than a fundamental problem about the role of banks in our monetary system.

The “status quo” has a lot of power, especially in a country as conservative as Australia, and that is enhanced by the constant and ongoing fear mongering by the banking industry, their paid minions in the various industry and private think tanks and of course their political minions – who often come from the banking industry or are working towards a nice cosy post-political career in the bosom of a bank (no need to mention any names we know who you are).  More and more of our public servants, who no longer have security of tenure as servants of the public, are also thinking about their next gig and that often includes a job at a bank, bank think tank, bank lobbyist firm etc.

Until a decent percentage of the Australian public understand how banking currently works, how it protects its interests and why that is a problem for Australia and our children and the simplicity and logic of the alternatives, not much is going to change.

What do I mean by understand?

By understand I mean no more than that they are able to speak up at a BBQ,  family gathering, at the office ‘water cooler’, on the sidelines of kids sporting events, at the pub and confidently make the point that

“…Every Australian should have the same right as a bank to have a 100% safe MyRBA account at the Reserve Bank of Australia…”

Modest ambitions

My ambitions are modest.

I figure if I can get a few thousand people to think about the issue, and they adopt the same goal of getting a few thousand people (or even just a hundred or just 10) to think about the issue, we are quickly talking about at least a million people understanding the problems with our current model of banking.

Although most of the 40,000+ hits this site has received may well be my mum (waves) I like to think at least a few are from people who have gone away thinking

“So it really is a scam and now i know a bit more how it works”

1 million people is about 6% of the 16,176,487 million enrolled Australian voters.

A thousand people influencing a thousand people is a million.   Ten thousand people influencing one thousand people each is 10 million.

If the idea has substance and people are working to communicate it to people, it will spread.

Do we really think it is going to be a “hard sell” to explain to everyone we meet.

Every Australian should have the same right as a bank to have a 100% safe MyRBA account at the Reserve Bank of Australia…”

Keep in mind that as recently as the 1980s and the 1990s, the much more controversial idea that over 60% of the population would vote “Yes” in referendum on same sex marriage would have been considered absurd and outrageous.    Yet in a little over 30 years we went from an idea that would have been considered outrageous to the reality that over 60% of the Australian public voted “Yes”.

People do change their minds but it may take some time.

But what about the global ‘elites’ preventing the RBA from offering MyRBA accounts.

Don’t be too worried about the global elites and what they think.

Their ‘power’ is more talked about than actual. When we pull back the curtains there are no wizards. Just a few old farts with megaphones.

There is a very unfortunate tendency of imputing too much power to “global elites” and other string pullers.

What are they going to say or do if millions of Australia believe

Every Australian should have the same right as a bank to have a 100% safe MyRBA account at the Reserve Bank of Australia…”

Certainly the Australian bankers and their pet-minions like Anna Blight will squeal and complain and demand that the RBA not offer every Australian a MyRBA deposit account if they want one.   They understand that offering a simple MyRBA deposit account to every Australian is the logical first step in unwinding the effective privatisation of the Australian public monetary system.

Naturally the RBA itself will resist offering every Australian a MyRBA account.  Here is the current Governor Phillip Lowe discussing the issue earlier this year.

The point here is that exchange settlement accounts are for settlement of interbank obligations between institutions that operate third-party payment businesses to address systemic risk – something that is central to our mandate. A decision to offer exchange settlement accounts for day-to-day use would be a step into a completely different policy area.

and here

On this issue, we have reached a conclusion, rather than just develop a hypothesis. The conclusion is that we do not see it as in the public interest to go down this route.

He makes it very clear that the only role of deposit accounts at the RBA are to support the operations of private banks.  But then the real role of the RBA has always been to support and protect the business operations of the private banks.

Denying the general public access to deposit accounts at the RBA is really about forcing the general public to use the private banks.

When the RBA talks about there being a public interest in the public being forced to use the private banks it is hard not to laugh.     After all we are talking about private banks that are so flaky and distrusted that the government has to provide a private bank deposit guarantee scheme to the public to get people to use them.

There is no need to offer ANY guarantee for a MyRBA deposit account because by definition there can never be a run on the Reserve Bank of Australia.

Should I do more?

Perhaps, but I know there are lots of people who are really good at organising people,  pressing the flesh and love doing it (you know who you are  🙂 ).  The Glass Pyramid knows its limits.

If you know people who are good at promoting ideas in political organisations and community groups I recommend spending some time getting them across the issues and let them do what they do best.

Spread the word and get people thinking.

If they ask you curly questions and you are not sure how to respond let me know and I will see what I can come up with.

Thanks Joe.

Every Australian should have the same right as a bank to have a 100% safe MyRBA account at the Reserve Bank of Australia…”

Categories: Macrobusiness

3 replies »

  1. I’m am fully supportive of your view, though would take it a little further ala Nick Gruen. The basic idea should be that we should try and offer a financial environment where people can go their whole lives without having to deal with a private bank. We do it in health, education, urban transport, etc – parallel public and private systems that counterbalance any defects/laziness/abuse of power/etc of each.

    Here are some of the challenge I have faced — note that I participated in a workshop last week of financial industry-types, including those intimately involved in the royal commission.

    1. People believe that banks ‘sell products’ and not ‘promises’ and that the system is not, in essence, a public payments and money-creation utility.
    2. People want bank shares to go up in value for their individual good (the banks make up most of their super) and their genuine belief that high share prices reflect a good economy. Taking millions of customers away will be a multi-billion dollar hit to private bank profits.
    3. I was repeatedly called a socialist for suggesting a public banking option. Even career finance type and financial regulator seem capable of ignoring the fact that we already have a public bank that supports and insures the whole private banking system.

    Strangely, both the left and right fringes support a public bank. The right for old-fashioned state investment role, and the left for the option to avoid the private banking sector.

    Liked by 1 person

    • Thanks Rumples,

      Yes, I know those challenges very well.

      It is really peculiar how so many people in finance/banking manage to cling to a “narrative” about how their industry works which simply does not make any sense. They really seem to believe that banks in our system are ‘natural’ parts of the public monetary system and not just creations of regulation.

      Of course holding that view is very convenient because it allows an industry that is now purely a creation of regulation to demand ‘deregulation’ which in practice is just a demand for ineffective regulation.

      It is a bit like a government granting private organisations the power to tax and then have those organisations demand that the grant of taxation power be ‘deregulated’ in the interests of free markets and cutting red tape.

      As for the appropriate role for a Central Bank, that is something I am going to discuss as some length (when i get some time).

      I agree there is definitely a need for public options in lending services, insurance services and even investment and retirement savings but I dont think they need be offered by the Central Bank. Other public organistations can offer those services as an alternative to the private options. New public banks and other financial institutions could be created but I think it is important that a distinction is drawn between them and the central bank.

      I think it is critical that the Central Bank role be greatly expanded but remain very limited. If the Central Banks offers any services beyond services fundamental to the operation of a public monetary system the proposal will be attacked relentlessly by the private banks and their cheerleaders.

      It should certainly offer all members of the public the ability to operate deposit accounts as an addition to the current entitlement to hold central bank liabilities in the form of notes and coins. But services beyond that are more problematic.

      It is very very hard to run an argument against this limited proposal …..though a few banking insiders of my acquaintance do try. They argue that running simple deposit accounts for the public in any form is too hard for the RBA. They also try to argue that forcing people to use private banks with a public guarantee is a perfect substitute for being allowed to operate a deposit account at the RBA. Oddly they are less willing to concede that the real reason for denying the public the option is to force them to use the private banks. At least Governor Lowe openly concedes that.

      Allowing nothing more than a right to operate some limited form of a deposit account at the RBA is a very very powerful reform step. Try it out on some of your more informed banking finance contacts and you may be surprised by the degree of resistance to what might seem like a very innocent and very doable proposal.

      I should note that I would support the creation of additional decentralised public monetary systems. I think there is a good argument that each state should operate a central bank that issues state money. NSW “Waratahs” might be an example. Ultimately monetary power is fundamental to political sovereignty and if our federation is to mean anything the states should have this power. Generally i dont raise this option as I suspect true monetary soveriegnty at the federal level may be sufficient but the option should be considered as some of our smaller states might benefit from the flexibility of an independent public monetary system.

      I will discuss this theme in greater detail in the next few weeks.


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