Monetary Policy

The story of modern money and

The Monetary Policy of the Australian Sovereignty Party.

 

The wool has been pulled over the public’s eyes for too long!  The Australian people are in dire need of an education in fundamental monetary policy and the swindle being perpetrated by the private banks, the ultimate con job that has been permitted and endorsed by a lengthy succession of traitorous Liberal/Labor governments.  Please take the time to read and understand, because this is an issue that only a tiny minority of people truly comprehend, with key understanding lacking even amongst those who think they have sufficiently researched and studied the matter.

The issue is vast, very complex and multi-dimensional, which is in part why the overwhelming majority of people either cannot, or will not wish to gain a basic understanding on the matter, particularly as there is a lack of simple to understand yet accurate literature on the topic.  In circulation you will find an abundance of factually incorrect and/or misleading articles and videos that only serve to confuse the public.  This piece is an attempt to break it down accurately, in the simplest of terms, using basic illustrations and representations in order to convey the concept as clearly as possible, and to equip you with a fundamental and vitally important understanding on the issue, particularly as it relates to the Australian economy today.

Once you can sufficiently grasp this understanding, you will then be able to comprehend the Australian Sovereignty Party’s Monetary Policy contained herein, and how it will help to transform Australia into the most prosperous nation on earth.  So get ready to take the red pill, as the Matrix is revealed and the web of lies is unravelled before your eyes.

ON FRACTIONAL RESERVE BANKING

The employment and definition of fractional reserve banking has changed over time, and so it is important we understand what fractional reserve banking means as it is applied TODAY, as opposed to what it used to mean a long time ago.  In simple terms, early forms of fractional reserve banking started a couple of hundred years ago, when we saw the creation of the first modern forms of paper currency. 

For thousands of years, currency was almost always embodied as tradable commodities, particularly in the form of precious metals such as gold, silver and copper, most commonly found in the form of readily identifiable coins minted by nation states.  As wealth and trade increased, and as property and other assets grew in both abundance and value, it become impractical for the wealthy to carry around and have on hand large quantities (weight) of gold and silver coins that were needed for them to engage in their regular trade and business.

The early nouveau riche (the new rich class), would tend to deposit most of their liquid assets, namely their precious metal currency, at various institutions such as at respected gold brokers and early banks. These institutions would write up fancy “notes”, basically receipts/tokens that could then be traded in lieu of the real metals, and reclaimed by the bearer at any time for the quantity of gold/silver denominated on those notes, when presented back at the original depository or at one of their affiliated institutions.  Thus, instead of carrying around so heavy a weight in coins, it was safer and more convenient to carry around these notes, using these notes in place of the currency/metals needed to engage in trade, and for purchasing valuable property.  These notes formed the first modern “paper” currencies.

This is an example of an early bank note from the 1840’s, which promises to pay the bearer on demand 5 pounds sterling (real silver) when exchanged, currently with an equivalent face value of about AUD$1,600.

After some time, these early banks began to realise that only a small fraction, roughly 10% of the “note” bearers, ever actually returned to reclaim the quantity of physical precious metals denominated on the notes.  So what followed is a matter for the history books.  These early banks simply created/issued new notes “out of thin air” so to speak, often up to 10 times the value of their actual gold/silver deposits, and started using this new fiat, fake and fraudulent money to buy up the planet! 

The banks got away with this fraud because they had successfully convinced the public that they could always be trusted to hand over the quantity of gold/silver that was denominated on those notes.  Of course if everyone did simultaneously decide to trade in their notes for metals, these banks would not have been able to cover it, not by a long shot.  This is where we get the first use of the term “fractional reserve banking”, as these banks held only a fraction of precious metals on reserve to the value of the notes/money they had issued.  The banks then used these un-backed or fiat notes to buy up real assets, thereby fraudulently enriching themselves.

As governments and central banks started regulating and controlling the issuance of notes, we hear of the adoption of the “Gold Standard”.  The Gold Standard basically assured the population that the Government treasury / Central Banks would always cover the notes in circulation with the value of precious metal denominated on those notes.  During the early part of the 20th century, the Australian government sent most of our gold reserves overseas to pay off foreign debts, and so we were gradually taken off the gold standard, with these metal backed notes / paper currency being phased out of circulation.  As we were taken off the gold standard, fractional reserve note issuance was phased out over several decades, starting in the 1930’s.

So basically, in the old days fractional reserve banking referred to the private institutions, and later central banks, creating/printing new fiat money, not being fully 100% backed up by the denominated value of precious metals.  This form of fractional reserve banking DOES NOT OCCUR TODAY, as we are no longer on the gold standard.

Today, the term “Fractional reserve banking/lending” really has no relevance in the modern banking industry. In Australia the “reserves” that the commercial banks keep at the RBA are used solely to make inter-bank payments. In fact, if you look at the RBA web site you will not find any reference to “fractional reserve ratio” or something similar relating to Australian banks. Consequently, it is factually incorrect to state that the banks of TODAY are creating money out of thin air using fractional reserve banking, it just is not true! The fact is that they create money without regard to any balance they hold at the Reserve Bank.

The only other form of “fractional reserve” accounting that occurs today has nothing to do with “banking” or new money creation.  It has to do with such cases where large institutions like JP Morgan Chase, Goldman Sachs, sell hundreds of times more silver/gold certificates, than the amount of gold/silver they have on reserve.  This is called short selling.  These certificates are not considered money or legal tender today.  As an aside, these institutions sell these “short” certificates in order to deliberately manipulate the price of physical gold and silver on the international markets.  It is likely that when investors realise that these institutions are desperately short well beyond a hundred to one ratio, it will cause panic buying of the physical, driving up the price of physical precious metals.

So, in summary, “fractional reserve banking” existed in the past, but it has no relevance in the present or in the creation of new fiat money!

 

THE REAL PROCESS OF MONEY CREATION IN THE MODERN ERA DEFINED

As the year 2015 comes to a close, there is approximately $1.87 Trillion of Australian money in circulation. Of this $1.87 Trillion of what is known as the “broad money supply”, less than $70 Billion is in the form of actual notes and coins, otherwise known as “Australian currency”. Accordingly, 97% of Australian money in circulation is digital/imaginary.  The government, via the treasury, only creates the coin/note currency portion of our money supply, to the tune of about a few billion dollars per annum, which represents about 3% of the overall new money coming into circulation every year.  Subtracting the cost of actually manufacturing these physical coins and notes, the Australian government and therefore the public, only benefit marginally from this currency creation.  The profit made is called seigniorage.

So where did the almost $1.8 trillion in digital money come from?

The short answer is, via book/ledger entries at private banks.  Let me explain.  When you enter a private bank to borrow money, here is what actually happens, in the simplest of terms:

1). Borrower, that is YOU, wish to take out a loan of $500,000 to buy a house.

2). Once you have convinced the bank that you are capable of servicing the loan, and pass all the relevant credit checks, you are made to sign a contract with the bank called a loan/mortgage agreement.

3). The contract you signed is, in basic terms, a promise that you will pay back $500,000 worth of principle + “X” amount of interest + fees over a certain period of time, usually 25 years.  This is where we get the term “Promissory Note”, since you are promising to gradually pay them back $500,000 with interest.

4). The bank now owns this promissory note, a simple piece of paper that actually gets written up as an asset worth $500,000 to them. The bank then uses this promissory note to justify the creation of new money “out of thin air”.  They create $500,000 of new digital money, all done on a computer screen, and then LEND it to you to purchase your house.  This is a simple ledger entry.  On one side of the ledger they have an asset worth $500,000 (which you gave them), on the other side of the ledger they have created $500,000 of new money which they lend to you at interest.  

In essence, you have actually just given the bank the “asset” with which they use to “back up” the digital money they created out of thin air.  The bank is not lending you money which other people have deposited with them, they are lending you money that YOU gave them in the form of your promissory note / mortgage loan contract.  How about that for a magic trick!

5). You buy your house, which you never really own as you never get your “fee simple” title deed, but that is another story.  Welcome to the world of debt slavery that you have just signed yourself onto for the next 25 years!

6). You begin to repay the bank.  At 5% interest (exclusive of bank fees), your loan repayments will be about $2,923 per month.  Your very first repayment will consist of approximately $840 principle and $2,083 as interest.  When the bank receives your direct debit repayment of digital money, they keep the $2,083 interest portion as their profit, but they effectively destroy the $840 of principle.  That is right!  They created the principle amount of $500,000 out of “thin air”, and as that $500,000 is payed back to the bank, they send it back into “thin air”.

After 5 years of repayments, the bank’s digital ledger entries look like this:  On one side of the ledger is your promissory note, “the asset”, which has reduced in value now worth $442,900.  On the other side of the ledger is $442,900 worth of digital money still owing to them.  As the bank gradually receives the principle back, the promissory note reduces in value to the same amount, until the loan is totally paid off.

7). After 25 years, you finally pay off the loan.  The bank created $500,000 out of thin air, and it has now finished wiping out that $500,000, back into thin air so to speak.  They created the money, then destroyed the money.  As the promissory note has been paid off, the ledger is wiped clean.  But in the process, they earned $377,000 worth of interest payments off you, more or less depending on the interest rate.  Easy way to make money, isn’t it!

 

There are of course a range of other factors that come into play, such as the (up to) 8% capital requirement a bank should keep on reserve depending on the risk factor of the loan, to cover loan defaults (the ledger must be accounted for), and issues like the selling off of the promissory notes to 3rd parties, etc, but it is sufficient for now that you have gained a basic understanding of how our modern debt based money is made.

Please watch this short video that explains how money is created.

DEBT BASED MONEY.

As 97% of all money in circulation has been created out of thin air and lent into existence by the private banks, that is why we have what is called a debt based money supply, since all this money in circulation has to be paid back to the private banks at some point…. WITH INTEREST!  Just think about the savings you have in your digital bank account. 97% of the money you think is yours, is actually no more than a ledger entry belonging to a bank.  The money you own is essentially someone else’s DEBT!

In fact, as of the end of 2015, the total amount of Australian debt based money in circulation amounts to about $1.8 Trillion dollars.  Think of this figure as the total amount of principle currently lent out by private banks at interest.  The trouble is, if banks were to suddenly stop this practice of lending new digital money into being, it would be mathematically impossible to pay back the current debt, since the total amount of Australian debt owing is an obscene $5.58 Trillion dollars

If you subtract approximately $1 trillion which is the total amount of foreign debt owing (which is outside the Australian banking system), we still owe $4.58 trillion dollars to private Australian banks.  That is $2.78 trillion more than the $1.8 trillion of “principle” the banks have created out of thin air and loaned into existence to create our modern money supply.  The reason the figure is so high, is because this ledger entry banking practice has gone on for over a hundred years (even before the old practice of fractional reserve note creation ended), and that $2.78 trillion figure represents the total amount of compounded interest that has amassed over the last century.  Interest, owing on interest, owing on interest to the stinking banks.

It is simply mathematically impossible to pay back $5.58 trillion to the banks, when we only have $1.85 trillion (that’s $1,850,000,000,000) of money in circulation, which is known as the “broad money supply”, with only $67 billion of that being actual coins and notes.  In fact, in order that we are able pay back just the existing loans, it is mathematically necessary that the banks continue increasing the total amount of debt based money in circulation by encouraging people to take out more and more loans.

For the last decade, Australian banks have on an annual basis lent into circulation roughly $100 billion more in loans than what has been paid off.  For example, as Australians pay $80 billion off the principle portion of their loans every year, the banks have been lending out $180 billion worth of new loans.  What this basically means is, the broad money supply in circulation has grown by about $100 billion a year for the last 10 years. At the end of the year 2005, there was about $800 billion of money in circulation, today, there is $1.85 trillion in circulation.  The Australian broad money supply has grown by a trillion dollars over the last decade.

In the year 2005, the Australian population was at 20,400,000. At that time, there was $800 billion of debt based money in circulation. That represented about $33,000 per capita.  Today as 2015 comes to a close, we have a population of 24,000,000, but with $1.85 trillion in circulation, there is now $77,000 per capita.  Courtesy of the private bankers, this increase in the broad money supply relative to the population level is the chief driver of inflation, which is of course tantamount to a banker tax on every person as your money is constantly being devalued, therefor the price of everything keeps going up.  THIS HAS TO STOP!

MONETARY POLICY 

THE GRAND SOLUTION OF THE AUSTRALIAN SOVEREIGNTY PARTY.

Only a popularly elected Australian Sovereignty Party (ASP) majority government can and will put a stop to this fraud once and for all.  The feckless, ignorant, or perhaps altogether treasonous governments of the past have allowed this to continue for far too long, at the expense of the average Australian. That means YOU!

We will immediately put a stop to this racketeering by regulating (and strictly monitoring) the private banks so they will from hence forth only be able to lend out money that has been legitimately deposited with them.  If the private banking sector does not have enough capital / cash flow to finance demand for new loans, credit will be made available to them from the Reserve Bank of Australia (RBA). The banks will no longer have the right or ability to create new digital money out of thin air via their ledger entries.

 

Under an ASP government, the role of the RBA will be to strictly monitor and regulate the money supply, taking into account the primary factors of population growth and productivity.  This is what is going to happen once we introduce our policy:

1). All new loans provided by the banks will be legitimate and honest, no longer based on fake money creation. However, as Australians continue to pay off all existing loans that were based on this ledger entry scam, approximately $80 billion worth of principle on these loans will be paid off every year for the next 20 to 25 years (totalling $1.78 trillion), therefor the banks will continue to wipe off/ destroy this digital money that they created (they still keep the interest portion).  This will in effect lead to a reduction in the broad money supply. 

For example, if $80 billion worth of principle payments are made back to the banks in the first year after we introduce our policy, the broad Australian money supply in circulation will contract from $1.85 Trillion, to $1.77 trillion.  This means that the total amount of money per capita will start shrinking from the current level of $77,000 per head.  This would lead to deflation, something that we don’t want.

2). The RBA closely monitors exactly how much money has been taken out of circulation every year by the private banks by virtue of the old loans being repaid, and the principle portion of this digital money being destroyed.  For the sake of discussion, let us say that the figure is $80 billion, which is the close estimate we are working on.  In order to keep the broad money supply at the same level, thereby helping to keep the inflation rate effectively at ZERO, the RBA “re-creates” this $80 billion of digital money and then transfers into the consolidated government revenue fund.

3). In addition to the $80 billion the RBA creates every year to replace the debt based money being destroyed by the banks, an additional $40 - $50 billion of new digital money can be created by the RBA every year to account for population growth and productivity increases.  These levels will be very closely monitored by the RBA, to ensure we keep inflation rates at or as close to ZERO as possible. 

What that means in simple terms, is that if the Australian population grows by about 450,000 every year through natural birth rate and immigration, we need to increase the overall money supply so that we maintain the same amount of money at the current level of approx. $77,000 per capita.  Over time, depending on overall Australian productivity growth, GDP, the RBA can also gradually increase the amount of money per head of population without causing inflation.

4). The RBA creates in total about $120-130 billion per annum in new (or recreated) digital money.  All of this money will be transferred into the government consolidated revenue fund.  However, there is an important stipulation regarding this portion of government revenue that comes from the RBA.  It MUST be SPENT into circulation by building or investing in INFRASTRUCTURE. 

The reason why this is so important, is because this combination of new and recreated digital money must be asset backed, thus no longer debt based as has been the case for the last century.  The money supply must be honest, and not attached to a ballooning debt owed to private banks which by its very nature must keep on growing exponentially.  This policy also has the benefit of removing what is effectively a hidden 3% to 5% tax rate on all Australians by halting inflation.

5). An elected Australian Sovereignty Party government goes on the debt-free spending spree of a lifetime.  Where former corrupt governments were constantly putting Australian tax payers into more and more debt by taking out more loans from the private banks at interest, and increasing taxes to try and pay for their foolishness, struggling to afford the most basic of infrastructure spending; now the situation is reversed.  Instead of worrying about where the money is going to come from to afford the pittance of new infrastructure offerings, now the issue is coming up with enough new ideas to spend all this money on.

 

BUILDING OF INFRASTRUCTURE

THE ASP BRINGING AUSTRALIA INTO THE 21st CENTURY

Putting this infrastructure spend into context, for the last quarter century the Australian federal government, whilst putting us deeper into debt, has spent less than $2 billion per year on roads and less than $100 million per year on rail, totalling in about $45 billion spent over 25 years.  An ASP government could spend that amount in just one single year on roads and rail, and that would still only represent a third of our annual infrastructure budget of $120b per annum for the next 20 to 25 years.

With more than $120 billion that unquestionably MUST BE SPENT on infrastructure every year, we could literally transform Australia into the most highly developed, technologically advanced, cleanest and greenest nation on earth.  This is without even taking into consideration the fact that an ASP government, under our 2% debit tax policy (please read) will generate $790 billion in tax revenue per annum (that is $360 billion more than the $430b currently generated by 125 different taxes).  Combined together, with our tax policy generating $790b and monetary policy generating $120b+ (totalling $910b+), freedom and prosperity will grow at such a staggering rate, that in just a few years’ time you won’t recognise the country you are living in.

 

Here are just a few of the mega infrastructure projects that the ASP will invest in:

# A high tech Mag Lev train capable of speeds upwards of 500km/h to connect Melbourne, Sydney and Brisbane, with a number of stops in between that include Canberra. Estimated cost, $60b.  (https://www.youtube.com/watch?v=Ovm6Y84pAXw)  Additional upgrades and extensions to heavy high-speed rail to connect the rest of Australia, particularly to improve the capacity to transport goods and commodities across the nation, reducing pressure and congestion on the roads network.  Estimated cost $50b. 

# A massive drought proofing project that includes a water pipe line to store and carry water from the wet Kimberly region to dryer southern states, also providing for a considerable agricultural capacity increase particularly throughout inland/central Australia. Estimated cost, $30b.

# A colossal investment to provide enough clean and cheap renewable energy to power 100% of Australia’s needs. Estimated cost, $200b.  This will include full funding to roll out residential and business solar systems with battery backup to reduce reliance on the grid and inefficient long distance transmission lines. 

The solar/battery systems, which will be Australian made/installed onto private property and paid for the by the public will continue to belong to the public, with the power being used charged for at a nominal rate of 15c/kWh, until such a time as the home/business owner decides to purchase the system back from the public, which if they do, they will be able to sell excess power into the grid for 12c/kWh. 

For base load power, we will build a diverse range of renewable power plants that include grid scale photovoltaic and thermal solar power plants, wind turbines, tidal/wave generators, geo-thermal, hydro-electric and more.  Just as important, we will invest in grid scale UPS (un-interrupted power supply) storage systems that complement the vast array of intermittent renewable power generators, which include giant battery storage units, large scale kinetic flywheels, molten salt thermal storage units, and more.

# A solar roads initiative. New developments in modular road segments that have built in solar panels, LED lights and pressure sensors.  (http://www.solarroadways.com/intro.shtml)

# We will re-acquire all public utilities and toll roads. Toll roads to be made free, utilities to be run as not for profit, providing high quality service and reliability to the public.  We will continue to roll out the NBN at an accelerated rate.

These are just a few of the projects possible thanks to the ASP monetary policy, we are only limited by our ingenuity and imagination, and possibly labour supply to build it all.  We are talking about multiple tens of thousands of new jobs being created.  As a final important consideration, it will come about that as Australians will have more disposable income under our tax policy, they will likely desire to pay off their existing loans much quicker than they would have otherwise if all else remained constant. 

In such a case, if all existing loans are repaid quicker than expected, then the $1.78 trillion figure divided over 20 -25 years (which gives us the figure of approximately $80 billion per year), may likely be divided over perhaps 12 years.  If that is the case, then for the next 12 years that it takes to repay the $1.78 trillion of principle back to private banks, our monetary policy will provide upwards of $190 billion per year (being roughly $150 billion to replace the destroyed debt based currency, plus $40+ billion to account for population/productivity increase).  This only increases the speed at which we are able to bring all these major infrastructure initiatives online.

Dare to dream with us Australia.  It is time to stand up, take action and join our ranks as we the ASP, defy the banking elite for control over our money supply.  Become a member of the Australian Sovereignty Party today, vote for us and we can and will bring this dream to life.  Please read, in conjunction to this Monetary Policy, the ASP Tax Policy.  Learn how it is we can abolish 125 different taxes, replace it with a 2% debit transaction tax, and still generate $70b more than is currently brought in by so many burdensome and oppressive taxes. 

Do you want to be freed from debt slavery?  Do you want to be prosperous, wealthy, free and independent? Do you want, truly want, A FAIR GO?  Join the ASP now.  OUR TIME HAS COME!  HUMANITY AWAKENS!

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