One question that has been asked about the MyRBA proposal is whether introducing MyRBA risks creating an oppressive “state” money monopoly that a big socialist government run by elites might use to “deliver” the policies they think are best for the little folk.
Nothing could be further from the truth. MyRBA is about allowing a hundred monetary flowers to bloom. The MyRBA public money will be forced to compete for users. As for the size of government, MyRBA is consistent with whatever size of government the public prefers. It will work well with small night watchmen sized public sectors and also Scandinavian cradle to grave safety nets.
What MyRBA will do is bring to an end to the “cartel” model where a private industry (the banking industry) have effectively privatised much of what should be a public power to create public money. However restricting the power to create public money to the democratic institutions of the public does not mean that private money must be hunted down and eradicated. Ironically, that is what our current “free market” neoliberal private bank / state cartel model considers to be an important priority.
Once the power to create public money is fully in public hands and millions of Australians are operating MyRBA accounts, public money will compete with a multitude of private and foreign monetary systems. The public will be free to vote with their feet if they think that their public monetary system is badly run or cannot be trusted.
To some extent this is already occurring as many people, disillusioned with the broken and thoroughly corrupted banker dominated and effectively privatised model of public money, are already dipping their toes into alternative monetary systems including, foreign currencies, gold, silver, precious stones, frequent flyer points and cyber currencies.
Not only will people be free to use whatever monetary systems they prefer but their ability to do so will be facilitated. Instead of the current obsession of the private bank / central bank cartel with hunting down and eradicating cyber currencies or people using cash or alternative monetary systems, the use of alternatives will be encouraged as stiff competition is important to keeping those administering the MyRBA model on their toes and protecting the stability of public money and confidence in the central bank balance sheet.
But why have a public monetary system at all?
Every democratic political community has the right to introduce and adopt a public monetary system if they believe it will serve the public interest. For practical purposes a public monetary system is nothing more than a balance sheet.
While some might argue that there should be no organised political communities it is highly unlikely that they are going away any time soon. What is important is that these political communities do not allow their public institutions like public money to be corrupted and privatised by private interests (e.g. debt peddling banks) and also that they ensure that the public has a choice whether or not to use a public institution such as public money.
While the government of the political community is highly likely to use the public monetary system to deliver the policies it was elected to deliver (i.e. taxing and spending using public money), that does not mean that every member of the public must use the public monetary system for all of their private transactions. Permitting the public the freedom to use private monetary systems is as important as ensuring that the public monetary system is not corrupted by private interests such as those of the banking industry.
But Central Banks are part of the current model, so why should we trust them?
This is a legitimate concern as one need only read the speeches of the current senior management of the RBA to see whose interests they are really focused on. Speech after speech simply assumes that there is NO alternative to an effectively privatised private bank dominated system of public money. Allowing the public or non-banks to operate MyRBA accounts is simply dismissed out of hand.
What is “good for the private banks is good for Australia” might almost be the current RBA mission statement.
How can we trust such people to administer the transition to MyRBA? Will they attempt to sabotage it at the first opportunity so a return to banker domination can be demanded?
Perhaps we cannot, and perhaps a changing of the guard at the RBA will be required. Potential staff may need to demonstrate an understanding and a commitment to responsible full public control of the public monetary system. It may be hard to find suitable staff amongst the graduates of the bank industry loving economics departments of our “export industry” universities.
A major problem with the current, mostly privatised, model of public money is that its propaganda is very effective. Even when the bankers run their money creation printing presses too fast and create too many “credits” and produce asset bubbles or overheating economies they do a great job of blaming it on their public partners.
As was explained in COVID-19: Who are the real “Money Printers” the current model is mostly but not completely privatised (approximately 66% of Broad Money as at June 2020 was banker created and the remainder publicly created).
Very very cunning.
Bankers are very proficient at dominating the public monetary system and soaking in the profits and power while the public does not understand the privileges granted to the banks. For years the banks insisted that “we are just intermediaries – taking in deposits and lending them out” and thus the public assumed when things went wrong on a regular basis (booms and busts, inflation and housing bubbles) it must be the fault of the public sector and thus were easily persuaded that the best solution, after the crisis was resolved by a public bail-out, was to give the bankers even more power (via deregulation) to dominate the private bank / central bank cartel.
At the end of the day banking deregulation has one objective. To allow the private banks to more thoroughly dominate public money creation and the private bank / central bank cartel.
And haven’t they done a splendid job of dominating the economy over the last 40 years.
Getting back to who will run the central bank when MyRBA is introduced.
The good news is that introducing MyRBA fundamentally changes the nature of the RBA. The private banks will lose all of their public money creation powers and their monopoly on operating deposit accounts at the RBA will be gone as well. The general public and non-banks will now be allowed to open and operate MyRBA accounts at the RBA.
No longer will the public and non-banks be given no choice and be forced to enter into a business relationship with a private bank in order to have access to a bank account. They can use their MyRBA account and ignore the banks completely if they prefer.
In one instant everyone in Australia will now has a direct and personal interest in the operations of the RBA and in particular its balance sheet. The scrutiny of what the RBA does to protect the strength and stability of its balance sheet will be intense. The kind of balance sheet debasement we are currently seeing from the RBA as they buy up musty assets from the dodgy banks and fill the bank’s deposit accounts at the RBA with freshly created deposits will not be tolerated by a public with a direct and personal interest in the security and value of their MyRBA balances.
There is no reason to believe that the media will be any less interested in monitoring and reporting measures of inflation. If anything they will be watching minute by minute for a rapid increase in the cost of potatoes.
There are reasonable grounds for confidence that once the objectives of the RBA are aligned with the introduction of MyRBA, most existing staff will accept the new priorities and new staff who are interested in those objectives will seek positions at the new MyRBA RBA.
Those RBA staff who fancied a post RBA career as a banker or just want to hang with their banking buddies might hurry up and go join them as they will not have any RBA favours to dispense as they are now kept busy keeping the Australian public and non-bank organisations happy.
My RBA is not about creating a authoritarian state monetary monopoly.
MyRBA is about ending a broken and dysfunctional private bank / central bank cartel that is obsessed with eradicating monetary competition for the private banks and blowing unproductive asset price bubbles with mountains of peddled debt.
Competition from alternative private and foreign monetary systems are welcomed by the MyRBA proposal as it will reinforce the intense scrutiny that resulting from a RBA balance sheet where millions of Australians have a direct and personal interest in its stability, security and value as a result of operating their MyRBA deposit accounts.