The collapse of the Australian economy in the land boom of the 1890s had many consequences. One was the development of Canberra on a leasehold system of land tenure.
Another was the establishment of the (public) Commonwealth Bank of Australia. In 1911, the Labor Government established the bank on a radical principle for the time.
The bank would extend credit unbacked by gold or silver. Remember, these were the days of the gold standard.
The argument for the bank said all the backing it needed was the credit of the nation. This had some powerful ramifications.
Banks create credit out of nothing. The Commonwealth Bank was able to extend loans but — crucially — at a fraction of the interest equivalent private banks were charging.
And so it did. Ellen Brown, in her book The Public Bank Solution, cites an article on the bank’s early days:
‘At a time when private banks were demanding 6% interest for loans, the Commonwealth Bank financed Australia’s first world war effort from 1914 to 1919 with a loan of $700,000,000 at an interest rate of a fraction of 1%, thus saving Australians some $12 million in bank charges.
‘In 1916 it made funds available in London to purchase 15 cargo steamers to support Australia’s growing export trade. Until 1924 the benefits conferred upon the people of Australia by their Bank flowed steadily on.
‘It financed jam and fruit pools to the extent of $3 million, it found $8 million for Australian homes, while to local government bodies, for construction of roads, tramways, harbours, gasworks, electric power plants, etc., it lent $18.72 million…
‘The bank’s independently-minded Governor, Sir Denison Miller, used the bank’s credit power after the First World War to save Australians from the depression conditions being imposed in other countries…’
There’s no natural law that says commercial banks should create the money supply.
The history of banking over the last 500 years is a story of banks monopolising the public money supply to enforce their usurious system of debt.
Arguably America’s greatest ever statesman, Thomas Jefferson, understood this implicitly.
Jefferson argued repeatedly against both the size of government and allowing too much power to the banking establishment.
Jefferson believed that if society was not careful, banks would end up owning the earth. Jefferson’s predictions have come true.
That’s because we allow them to mortgage the earth. Banks have become far too large as a proportion of the economy today. As land price goes higher, this is only going to get worse.
Another consequence of this system is that instead of governments financing themselves from their natural tax base — land and natural resources provided by nature — they trespass and snatch at the genuine and rightful earnings of capital and labour.
This is a violation of our natural rights. And all taxes distort production except one: the land tax.
The Leviathan State that springs from Australia’s insane and Byzantine tax system comes from this system.
Here’s why you need to know…
It passed without notice. Nobody really seemed to care. We hardly seem to think about it these days, such is the relentless growth of government.
Take a look…
Source: Tax Freedom Day Report
4 May was the day.
In other words, every day from 1 January up until 4 May this year, you worked only to pay your government the taxes due. That’s the first 123 days of this year.
That’s a genuine mayday!
As Terence Duffy reports in his latest study for Cycles, Trends and Forecasts, Tax Freedom Day has been gradually inching out for the last 50 years. Back in 1960, you’d be all done paying the pollies by 20 March.
In the 1950s, the average Tax Freedom Day was in February. In the 1920s you could remove the Treasurer’s hand from your trouser pocket in January.
But here, in 2015, you spend one full third of your life working for the government.
A recent article noted that the Centre for Independent Studies says over the next 30 years, you’ll spend 10.8 years working for the Canberra machine.
That’s an entire decade where the fruit of your labour — quite possibly your ripest, tastiest fruit — goes straight onto the Treasury’s credit card.
Phillip J Anderson,
Editor, Cycles, Trends and Forecasts