Sunday, Aug 08, 2010
How to avoid sovereign debt
Web of Debt: What a government can do with its own bank
Debt forces governments to relinquish their sovereignty to their creditors, which are private banks that create nearly all the money supply as loans. Here's another example of a government that didn't issue sovereign debt – bonds indebting the nation to pay private banks at interest on money created by those banks. – but instead issued sovereign credit, or loans backed up by the credit of the nation. This is a short history of the Commonwealth Bank of Australia, which financed Oz's contribution to WWI at under 1% instead of the 6% the government would have paid to private banks. Lots of other good things besides.
Posted by icarus @ 07:06 PM (929 views) Add Comment
10 Comments
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1. tenyearstogetmymoneyback said...
The flaw is right at the bottom of the article
"The Commonwealth Bank served Australia brilliantly well for its first 11 years under the stewardship of one honest man, Denison Miller."
The trouble is their are too many people (including politician hoping for a set on the banks boards when they leave Paliament) who have a
vested interest in the current system.
2. powerofnow said...
This is one of the cornerstones that hold structural poverty in place. It's quite simple to understand, but it will only be dismantled when enough people understand how damaging it is.
3. icarus said...
But in her first para she refers to the State Bank of North Dakota, which has operated under these principles since 1919.
http://www.webofdebt.com/articles/state_bank_option.php
4. doomwatch said...
JFK was trying to remove the Fed from the printing process, and look what happened to him shortly after.
5. the number cruncher said...
Abraham Lincoln, greenbacks etc - you could almost call it a conspiracy
6. the number cruncher said...
The is actually very interesting - how does one pay off the debt incurred by HPI without destroying the money supply and thus the economy? Answers on a postcard to Gideon Osborne C/O 11 Downing Street London
7. mark wadsworth said...
TNC, what's the problem? The money supply figure is merely the flipside of the house price bubble. Neither side of the equation contributes to the economy as such (and ultimately, both sides are a drag on the economy).
How's about people with mortgages just pay them off like they are supposed to? And if they have to work a bit harder to do so, rather than hoping that the debts will repay themselves out of future "capital gains" (i.e. by an ever increasing debt bubble/money supply) then surely that's good for the economy?
8. icarus said...
"work a bit harder" - but jobs are in short supply and more and more are part-time. From a recent NY Times report titled "More workers face paycuts, not furloughs"
"Factory owners sometimes warn that they will close or move jobs to lower-cost locales unless workers agree to a pay cut. In its most recent union contract, General Motors is paying new employees $14 an hour, half the rate it pays its long-term workers.
"Sub-Zero, which makes refrigerators, freezers and ovens, warned its workers last month that it might close one or more factories in Wisconsin and lay off 500 employees unless they accepted a 20 percent cut in wages and benefits."
9. mark wadsworth said...
Icarus, indeed, the fallout from a credit bubble bursting is most unpleasant and seems to hit people at random. Which is why it is best to avoid having them in the first place.
10. icarus said...
Mark W - which arguably brings us neatly back to the posted article.