Some readers of the Glass Pyramid have requested a Quick Guide to the key points of the MyRBA proposal that they can send to friends and family to get them up to speed quickly.
Here is the 10 Key Point summary.
Following the Quick Guide are a series of links to more detailed posts on aspects of MyRBA for those who like a bit more fibre in their monetary reform proposals.
The MyRBA Quick Guide – 10 Key Points
1. It is our RBA
The Reserve Bank of Australia (RBA) is a publicly owned institution and its balance sheet is the foundation of the Australian monetary system. Every Australian has an interest in that balance sheet. It is time to end the deeply dysfunctional and unproductive RBA / private bank monetary cartel and give the RBA a clearly defined and very limited role as the democratic foundation of our public monetary system.
2. RBA Deposit accounts
The critical reform of the MyRBA proposal is that every Australian will be allowed to operate a deposit account at the Reserve Bank of Australia (RBA).
A MyRBA deposit account at the RBA will be like using notes and coins issued by the RBA only a lot more convenient.
4. 100% safe
A deposit account at the MyRBA is 100% safe and risk free because as the foundation of our monetary system the balance sheet of the Reserve Bank of Australia cannot fail. There are no technical or practical reasons for denying all Australians the right to open and operate a deposit account at the RBA, the safest bank in Australia.
5. End the bank monopoly of RBA deposit accounts
Currently only banks are permitted to operate deposit accounts at the RBA and this means that anyone who wants to operate a bank account is FORCED to enter into a business relationship with a private bank. Naturally, those who trust bonus chasing private bankers with their transaction data more than a bored public servant will be free to keep using a private bank account for transactions.
6. End bankers power to create public money
The key reason that the Australian public continue to be denied access to RBA deposit accounts is because that protects the private banks’ license to create public money out of thin air. Give Australians the right to open and operate MyRBA deposit accounts at the RBA and the private banks must lose their power to create public money. This does not require nationalising the banks or stopping them from lending money (just as non-banks have been happily lending money for years without having the extraordinary privileges the banks possess) . Banks will still have a role just a different role.
7. End bankers abuse of the power to create money
Removing the power of private banks to create public money is essential because repeated Royal Commissions and many decades of evidence demonstrate that the banks will always use their power to create public money to put their profits and executive bonuses before the interests of the Australian public.
8. Bank Police – The current system costs the public billions
Protecting the power of private banks to create money, and trying to stop the banks from failing or going bust, is very expensive. It requires a mountain of regulations, constant inquiries and investigations and an army of regulators (i.e. Bank Police) and results in other bad government policies and economic distortions that cost the general public many billions of dollars EVERY year. The rewards to private bankers from corrupting our politicians and regulators with perks and juicy job offers are immense and the revolving door between game keeper and poacher has never spun faster. The public simply cannot afford to continue to underwrite the private bank business model.
9. MyRBA will help build a better and fairer Australia
Giving Australians the right to operate MyRBA accounts is not difficult and will start the process of building a more productive Australian economy that rewards hard work and innovation over speculation, leverage (massive debts) and all the perks and lurks that currently dominant the Australian economy.
10. It is time to fix this problem
The current monetary model where Australians are denied access to deposit accounts at the RBA and the private banks have a license to create public money out of thin air is out of date (it dates from the horse and buggy era), is hopelessly broken, impossible to regulate effectively and it is time to fix the problem.
Links to more detailed posts about MyRBA on the Glass Pyramid (this is a work in progress as more links to past posts are added)
Posts often touch on several of the Key Points. We have grouped posts under the Key Point that is the main focus of the post. Following that are posts on a range of subjects of general relevance to the reform of the public monetary system.
Posts relevant to Key Point 2 – RBA deposit accounts
- MyRBA: Banking without the banks – Written in May 2018 this post launched the MyRBA concept and argued that the Banking Royal Commission confirmed that every Australian had the right to operate a bank account without being forced into a relationship with a private bank.
- MyRBA: What is the new CBI Account? – This post provides a detailed explanation of the role of the new CBI account at the RBA and how it is important both to end the private banks power to create public money but also to provide the public with the option of a fully reserved deposit at the RBA or if they prefer they can continue to use an account at the private bank (or other institution) of their choice.
Posts relevant to Key Point 5 – Ending the Bank monopoly of deposit accounts at the RBA
- RBA Watch: Ending the bank monopoly of the RBA – This post relates to Key Point 5 and explains what the bank monopoly of deposit accounts at the RBA is and how giving every Australian the right to open and operate a deposit account at the RBA and have a direct interest in the balance sheet of the RBA is so important.
- MyRBA: Letting 100 monetary flowers bloom – This post relates to Key Point 5 and explains why the introduction of MyRBA is not about reducing choice but will increase options so the public can pick and choose the monetary system that suits them best but will always have the option of a super safe deposit account on the balance sheet of the Reserve Bank of Australia. MyRBA will keep everyone on their toes and everyone else will keep the RBA on its toes.
- RBA Watch: The Lowe down on Magic Money – This post discusses a speech by the RBA Governor about COVID-19 and makes it clear that the RBA is only interested in responses that maintain the protected role of private banks in the public monetary system and that the RBA balance sheet will only be used to support that private bank role.
Posts relevant to Key Points 6 – End bankers power to create public money
- COVID-19: Who are the real “Money Printers” This post relates to Key Point 6 and 7 and explains in detail, using an comparison of the RBA balance sheet and the balance sheets of the private banks, how most (about 66%) of the public money is currently created by the private banks.
- RBA Watch – Money Money Money! – This post dissects a speech by the RBA that discussed the nature of money but implicitly assumed that a system where the majority of “money” is created by private banks is the only viable option.
- Bank Watch: Bootcamp for bankers This post relates to Key Point 6 and explains how MyRBA will not abolish private banks or nationalise them or even stop them from lending money. It describes how MyRBA is like a fitness “bootcamp” for flabby bankers who have grown fat and lazy from too many public subsidies and too much public protection.
- Fixing Public Money: Is a Gold Standard the solution? – This post discusses how the abuses by bankers of their privileges in the current monetary systems is driving calls for a return to the “gold standard”. The post explains why those calls are understandably but that a better solution is to remove the private bankers powers to effectively create public money and to give all citizens the right to open and operate deposit accounts at the Central Bank.
- A Productive Banking system? A job for RBA and APRA – This old post from 2017 discussed the idea of productive investment and the role, if any, of the RBA targeting nominal GDP growth. The post concluded it was a terrible idea as there were far more effective ways of directly encouraging productive investment including removing completely the privilege of private banks to create money and spray it at asset prices.
Posts relevant to Key Points 7 – End bankers abuse of the power to create money
- Bank Royal Commission: The wisdom of Ben Chifley in 1937 This post relates to Key Point 7 and explains how concerns about the power of private banks to create public money have been around for decades including after the great depression in the 1930s.
- Will the Banking Royal Commission ‘pop’ the Liberal Party’s housing bubble? This post was written when the Banking Royal Commission was announced and speculated whether the Royal Commission would achieve any lasting changes when the government was desperate that nothing changing. Subsequent events confirm that the cynical tone of the post was justified.
- How to fix what the Banking Royal Commission has found is broken This post discusses the findings of the Banking Royal Commission and concludes that the best solution is to end the power of private banks to create money in the monetary system and to make encouraging productive investment and economic activity an explicit objective of public policy.
- Australia fixed it’s gun problem: Now it should fix it’s ‘private bank’ problem. This post was directed to those who claim that private banks are not the problem and instead like “guns” it is the bad people who run the banks that are the problem and we just need better “regulations”. The post argued that we have more than 100+ years of evidence that regulating a privatised power to create public money does not work.
- Real economic reform starts with a Banking Royal Commission – This old post from December 2017 was written when the draft Terms of Reference for the Banking Royal Commission were released. It was critical of the draft Terms of Reference and proposed some amendments so the Royal Commission would not miss the core of the problem.
Posts relevant to Key Point 8 – Bank Police – The current system distorts policy and costs the public billions
- MyRBA: Bank Bail-ins? Problem solved – This posts discussed the concerns that when the next private banks meltdown occurs the bank regulators might not protect the unsecured investments of bank customers (aka bank deposits) and instead impose haircuts or force the conversion of those unsecured investments into effectively worthless equity in the failing bank. It explains how introducing the MyRBA proposal ends concerns about bank bail-ins permanently.
- RBA Watch: Unintended and Intended consequences! – This post dissected a speech by the RBA where the RBA talked about the the importance of supporting productive “growth” but completely ignored the fact that RBA policy over the last 30 years had encouraged a massive unproductive debt driven bubble in the prices of existing assets.
- NSWOSR Watch – Gladys keeps foreign buyer data top secret – This post discusses one of the policy distortions that arise when the public monetary system is dependent on private bank money creation for the purposes of asset price speculation. The NSW state government was so desperate for revenue from foreigners speculating on NSW housing that it forced the NSW Office of State Revenue to stop publishing statistics that showed just how much local housing was being bought by foreigners and temporary residents.
- Population Ponzi and our broken monetary cartel – This post explains how a public monetary system built around money printing by private banks can become so addicted to population growth that continuing high rates of population growth becomes critical to the survival of the privatised monetary system.
- Population Pressures: Why isn’t decentralisation working in Australia? – This post from August 2017 discusses how decentralisation cannot work in Australia when we have a privatised public monetary system that is hell bent on spraying money at land prices in the largest cities in Australia. With private bank domination of public money and “trickle down” theory in play it makes sense that everyone would want to get as close as possible to where money is being created and injected into the economy.
- APRA and the Oz house price bubble – This posts discusses how the then Head of APRA was quick to advise that APRA had no responsibility if banks chose to blow massive bubbles in asset prices. The post discussed how this “do nothing” stance of one arm of the Banking Police was unsurprising as bank deregulation was intended to free banks to create credit for whatever purposes earned them the biggest profits (regardless of the public interest) and punting on a sure thing like residential housing was guaranteed.
- Bank “Junk Food” credit, macroprudential and the Australian Banking Royal Commission This post from 2107 took a close look at the fad that claimed that macroprudential controls could be a solution to private banks abusing their power to create money. The post pointed out the problems were much deeper and in any event the meaning of macroprudential was uncertain when the prevailing philosophy remained that private bank credit creation should be as unregulated as possible.
- APRA and credit creation regulation: Economic secret business – This post from September 2017 discussed the bizarre and secret way APRA is allowed to regulate credit creation by the banks. The post called for more transparency about how the credit creation (money creation) by private banks was to be regulated.
Posts relevant to Key Point 9 – How introducing MyRBA is not difficult and will help build a better and fairer Australia
- COVID-19: Is a mountain of public debt for JobKeeper necessary? – This post relates to Key Point 9 and explains how it is not necessary to pay for JobKeeper by selling interest bearing bonds to bankers. And how it is an expensive scam that protects the power of private banks to create public money.
- Bank Watch: Essential Bootcamp equipment – The second post explains some of the essential “fitness equipment” that is required for the Bankers Bootcamp. In other words it is an explanation of the steps required to introduce MyRBA.
- MyRBA: What is the new CBI Account? – This post relates to Key Point 9 and provides a detailed explanation of the role of the new CBI account at the RBA and how it is important both to end the private banks power to create public money but also to provide the public with the option of a fully reserved deposit at the RBA or one at the private bank (or other institution) of their choice.
- Money Creation after MyRBA – This post relates to Key Point 9 and explains the sensible and practical options for public monetary creation after the balance sheet of the RBA has been democratised by MyRBA deposit accounts and the private banks have lost their power to effectively create public money.
- MyRBA: Ponzi-free loans and investment – This post relative to Key Point 9 and explains how a democratic RBA balance sheet produced by the introduction of MyRBA accounts will provide an ideal and highly competitive way of ensuring that investment funds are made available to the most productive purpose and ensure that all resources of the economy are deployed to best advantage. Which is in contrast the current private bank model which has a track record of unproductively driving asset price bubbles.
- Investment Manager special edition: MyRBA – Superior for productive capital allocation. This post explains how the introduction of MyRBA will break the incredibly unproductive strangle hold of the bubble blowing private banks on capital allocation and will allow for the development of a much broader, deeper and competition market for capital allocation.
Categories: Glass Pyramid Exclusive, MyRBA
Wonderful to have MyRBA in clear form for sharing with friends and family. I think it’s such a cool idea. I think we could cut-out the middle man a lot more with our financial systems in this country!
Speaking of all things RBA, I was wondering if you could answer me something else I wonder about with our economic systems here. Perhaps I’m missing something obvious, but I seem to be getting to the point where I no longer understand why we even “need” a housing bubble any more. Prior to QE and TFF, I always thought that the gov and banking cartel needed to keep housing prices going up because the retail banks got a large chunk of their funding from international markets which needed a valuable asset class to lend to Australia on.
Now with the TFF and the onshoring of bank credit at 0.25 interest rates (removing international creditors and consequences of downgrades), why are we even needing to keep the bubble going? If housing prices crash, why would it matter if Aussie RMBS fail or our banks are downgraded if they have the teat of the RBA to give them cheap credit?
Anyway – keep up the good work GP. I’ll be spreading the word about MyRBA on my FB.
Glad you enjoy it !
Yes – I agree. MyRBA allows for a lot of lazy middle men to lose their slice of the action.
One of the greatest economic “fails” of the last 40 years in Australia has been pumping a massive bubble in household debt into the price of housing…and mostly the existing housing stock at that.
MyRBA offers a simple an effective way of permanently dismantling the “Household debt pumped into housing” economic model and best of all it does it without driving the Australian economy into a crunching depression.
Certainly, those who have speculated with loads of debt to bet on house prices will not be happy as house prices stagnate or slowly deflate but speculation involves risk and so they can hardly complain about that.
With a new, democratic and fair way of distributing, as the economy requires, newly created public money to all Australians , sagging house prices will not be a threat. As a slow down in the growth of household debt exerts deflationary pressures, the rate of new money creation can be increased. Likewise if inflationary pressures arise the rate of new money creation can be slowed or stopped completely. If necessary, and this is unlikely, money can be removed quickly by having the government run a surplus or by issuing bonds.
As noted in this post, the steady expansion of the money supply as the economy and population grows does not require a great deal of new money and when distributed fairly to all Australians the quarterly payments are likely to be quite modest.
This is a lot more fair that having large lumps of money created by private banks and given to the “credit worthy” to punt on asset prices.
For the most part any significant redistribution of money or income will still happen via the taxation system by government elected to deliver on their promises.
In short MyRBA is a simple and very practical way of weaning the Australian economy off a monetary model centered around private bank debt peddling and instead center the monetary system around the balance sheet of the publicly owned central bank.