Bank Policy

Banking Policy

"Money is a new form of slavery, and distinguishable from the old simply by the fact that it is impersonal – that there is no human relation between master and slave"!  Leo Tolstoy - Russian writer

 

Many people struggle to grasp the concept that banks create money. The consequence of private companies creating our national currency may sound benign - but the result is perpetual debt.

For digital money to exist - a debt must be incurred. Looking at the aggregate of all such debt, we know that as interest is applied, the debt continues to grow. However, the quantity of new money that was created (when the debt was originally incurred) stays the same.

The consequence of this - is that our existing supply of digital money can never pay off this increasing debt. This is the very essence of economic slavery!

The ASP policy on Banking is:
  • Only the government has the right to create our national currency.
  • Banks should only lend money that has been deposited with them.
  • Deposits are the property of clients and not those of the bank.
  • Depositors should determine how their money is used.

The role of banks

The ASP is non "anti-banking". Banks provide a valuable service to the economy - we just want them to operate within an honest money system. Below are the main differences between our current banking system, and what the ASP proposes:

Current-system Honest-money

 

  Current system   Honest Money system
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Banks create digital money (as credit).

agree

The government creates all our money.

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Digital money is borrowed into circulation.

agree

All new money is spent into circulation.

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For money to exist - there must be debt.

agree

For money to exist - there is infrastructure.

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Banks have a profit incentive to create money.

agree

Banks earn income by lending existing money.

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The bank owns your deposit.

agree

You own your deposit at the bank.

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When you deposit money - you are a creditor.

agree The bank is your agent and you are the principal.
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Banks decide how to use your money.

agree You deceide what your money is used for.
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Government guarantees your deposit.

agree Banks offer you insurance for your deposit.
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If a bank collapses, you can loose your money

agree

If a bank collapses, you retain your money.

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Banks earn income from financial services.

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Banks earn income from financial services.

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Banks earn income from interest rate margins.

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Banks earn income from interest rate margins.

 

Separation of commercial banking and Investment Banking

A Glass Steagall act for Australia. The ASP will legislate to ensure there is a separation of commercial banks and investment banking in Australia.  Everyday commercial banks that provide financial services to Australians, such as the keeping of saving deposits, and the provision of credit such as personal, car, business and home loans, banks that provide these services should not be allowed to use depositors funds on risky derivative speculation and other high risk ventures.

If Australian investors seeking high returns wish to gamble on derivatives and other risky speculative financial instruments, they are free to invest their money into investment banks that are separate from every day commercial banks.  Everyday Australian depositors will be insulated from the risky bets made by investment banks.  If an investment banks goes bankrupt due to the risky nature of their investments, only those who willingly took the risk seeking higher gains will loose their money, and not ordinary depositors.

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