Call for governments to inquire if money and the financial system is fit for purpose?

Jay Owen Reforming Global Finance

The crisis of legitimacy of the political and financial systems

In my view Government is not “fit for the purpose” of facilitating a transition to “Democratic Money with Environmental Values [to] Reduce Market Failures”. I suspect the reason why “the Australian Government has led the way by setting upa Financial System Inquiry” is driven by the crisis of trust that the Australian people have regarding the legitimacy of their political and financial systems. Here are some corroborative extracts from online sources:

Faith in Federal Parliament has come crashing down in less than 10 months in a wave of cynicism which has swept several of our other major national institutions.

The Reserve Bank also has had its reputation battered, with the 67 per cent trusting it last September but now just 49 per cent prepared to take the central bank at face value.


A recent ‘Truth About Politics’ study conducted by McCann New York among respondents in the US, UK and India, which found that 72% of people agreed with the statement: “When it comes to politics, it is impossible to find the truth these days.” It’s no different in australia. Roy Morgan’s Image of Professions 2013 survey, which asks respondents to rate professions based on honesty and ethical standards, also ranks politicians at the bottom of the heap, just above car salesmen, ad men and real estate agents. –

Citizens are said to be disillusioned about politics and politicians, turned off by a dysfunctional media. Although australia has a compulsory voting system which, to a degree, masks public dissatisfaction and disengagement, there is a widespread perception that citizens are fed up with the political process, in large part because of the way in which it is represented in the media. –

Fully two-thirds of Australians do not believe federal and state governments are working well together, while confidence in the federal government as the most effective of the three levels at doing its job has plummeted from 50 per cent in 2008 to 29 per cent today.


The Australian public is losing faith in their politicians and in the political process. But something even more insidious is beginning to occur, as this week’s Essential Report suggests. Loss of trust is contagious. We’re not just cynical about politicians; we are also losing faith in the institutions that underpin public life. The Reserve Bank is down a whopping 18 percent. –

Despite five years of intense regulatory effort and management action,banks and financial institutions are still the least trusted sectors in the whole global economy, according to the just-published Edelman Global Trust Survey of 2013. Given that trust is the very foundation of banking, the result is troubling. Are banks themselves doing enough to restore their battered reputations? Is regulation helping or hindering? Is another financial crisis in the making? –

One of Australia’s top banking regulators says that recent global bank scandals ranging from the Barclay’s Libor affair to Wall Street bank JP Morgan uncovering billions of dollars in trading losses has further undermined “the bond of trust” between banks and the community.

Banks, both here and around the world, needed to stop complaining about increasing regulation and focus more on rebuilding trust, Reserve Bank of Australia deputy governor Philip Lowe said.

The banking system globally is not doing enough to rebuild that bond of trust among the public and the problems with Barclays is just another illustration of that,” Dr Lowe said.

“So if the banking system wants the regulatory pressure to ease up a bit and it wants the political pressure to ease up a bit it needs to do more to build its bond of trust,” he told a Australian Centre for Financial Studies Forum. –

The Australian Government’s Financial System Inquiry (FSI) looks like political spin

From this perspective, the Australian Government’s Financial System Inquiry (FSI) looks more like an exercise in political spin – an attempt to regain public legitimacy for the political and financial system, through a fraudulent reformatory process that ensures (through clause 7 of the Draft terms of reference), that the role and function of the Reserve Bank of Australia is never questioned!

The Global Corporatocracy is Almost Fully Operational

As Thomas Greco said in his Mid-October Newsletter – 2013 : “It is clear that national governments are ceding sovereignty [of the people], not to global democratic institutions, but to transnational corporate entities resulting in a New (fascist) World Order that bypass all the checks on power that have been built into democratic governments over the past three centuries”.

The betrayal of the people by their supposed political representatives is now racing ahead on a global scale, as Don Quijones, a freelance writer and translator based in Barcelona, Spain, posted on his blog : “The new generation of trade treaties goes far beyond what was envisaged for NAFTA and GATT. What they ultimately seek is to transfer what little remains of our national sovereignty to the headquarters of the world’s largest multinational conglomerates. In short, it is the ultimate coup de grâce of the ultimate coup d’état. Not a single shot will be fired, yet almost all power will be seized and transferred into private hands – and all of it facilitated by our elected representatives who, by signing these treaties, will be permanently abdicating their responsibilities to represent and protect the interests of their voting constituencies. At the root of this model is the basic notion that corporate profits and investor returns must at all times supercede all concerns about public interest.” This transatlantic trade deal is a full-frontal assault on democracy, confirmed George Monbiot, in The Guardian newspaper. Also see: new Trade Agreements on 21st Century Wire – Part OnePart Two.

Here is an analysis of the relationship between government and banking which explains” why is the financial system is: (1) back to front, (2) upside down and (3) inside out” and why Government can’t do anything to change it.

Some important questions that the Australian people might ask are:

·        Who is the Reserve Bank really looking after?

·        Who REALLY owns the Reserve Bank of Australia?

·        Why are citizens demanding an audit of the Reserve bank of Australia?

·        What would happen to the deposits of Australian citizens and businesses, in the event of a “bail-in” of an Australian bank – after the banks get “seniority” for payout on their “secured derivative positions”?

o   According to the RBA, the Australian banking system holds $21.5 Trillion in “Off-Balance Sheet” derivatives exposures.

The legitimacy of Central Banking questioned

In November 2011, Dr Chris Leithner of Leithner & Company Pty Ltd – a private investment company based in Brisbane, proposed the termination of the Reserve Bank of Australia at a Mises Seminar in Sydney. He is also the author of the bookThe Evil Princess of Martin Place. which aims to “shock ordinary Australians into a greater interest in the utterly fraudulent foundations of modern banking and finance“.

In his last paper Toward a General Theory of Credit and Money 2001, the deceased economist Mostafa Moini said “Because of hitherto improper concepts of money, property rights in money have not been well understood and are still wanting effective de?nition within the existing legal frame-works. This is one reason why the credit-forging activities of the state and banks have gone on so freely, in spite of their colossal external costs.” And, “Within the limits of theoretical discourse, however, this much may be said without reservation: Given the fundamental differences noted in the nature of the operations of ?nancial intermediaries and fractional-reserve banks, it would be misleading to call them both by the same name. In so far as banks and certain related government agencies issue monetary instruments which provide the recipients with monetary rights, without concurrent occurrence of voluntary relinquishment of such rights elsewhere within the payment system, it would be misleading to call these organizations ?nancial intermediaries. “Money-forging” or “credit-forging” institutions would be more appropriate names.”

The emergence of “highly digitized non-bank competitors”

The concern by the central banking system to re-legitimise itself as the champion of the public good might also be linked to the emergence of “highly digitized non-bank competitors” – As the IBM Financial Services Sector White Paper of 2012summarised: “The message is simple: Trust has been lost and the digital world is here. Successful relationships with customers in the digital world are high-trust relationships. It is time for bankers to rebuild trust at the same time as developing all the communications and analytical advantages of digital technology. There is no other way. The highly digitalised, non-bank competitors are already taking the best parts of banking. Time is short.” IBM is not alone in this view, – in an article of September this year, entitled Tech Companies: Why Global Banks Are Running Scared, Sam Volkering says: “And there’s one thing that’s crystal clear about global banks. They are all petrified. And those that aren’t are delusional. Why are they all petrified? Because the very banking system they’ve all pillaged and plundered for decades is experiencing a revolution. Bank revenues are under threat from the likes of Amazon, Google, Bitcoin and other disruptive companies.

The real change agent is Civil Society

The real change agent is Civil Society, which through cultural creative initiatives, like the Transition movement, are already implementing practical experimentation of alternative economic approaches. “The likes of Amazon, Google, Bitcoin and other disruptive companies” are not the only “digitalised non-bank competitor” in town – there are Civil Society (Third Sector) initiatives like the Cyclos payment system, which can used to create interest free economic development on a regional and national scale.

I suggest the collective intelligence of the SMWG and its friends would be better used in supporting a Third Sector driven initiative to establish experimental economic zones (in partnership with the public and private sectors), to empirically test, pilot and refine alternative economic models, which address the root causes of our social and environmental problems, and which will function as laboratories and catalysts for economic regeneration, that can (after evaluation) be replicated freely throughout the world.

If the Chinese communist party could permit experimentation of capitalism withinspecial economic zones in the 1980’s, which led to China becoming a front rank global economic power – then why can we do so, but instead using economic approaches that are humanistic and ecological?

The future can be what we want it to be. We are brilliant, imaginative and bold. But there are limits. Limits to the amount of carbon dioxide our climate can handle, to the amount of energy available to us, and the degree to which economic growth is still possible. I believe we need to apply our brilliance to designing within those limits, and we can do it. Around the world, people are already seeing these limits as opportunities. They aren’t waiting for permission, they’re coming together to create stronger and happier communities, more resilient and viable economies, and taking their power back at the same time. It’s the power of just doing stuff, and I think it’s one of the biggest ideas of our time.” Rob Hopkins, Founder of the Transition Movement

Raymond Aitken, freelance REconomist

Capital is human ability applied to the Natural factors of production to create added value, in terms of goods and services. This added value can be exchanged within the economy, through the mediation of money, which is a species of credit, and hence a social relation involving rights and obligations – such as human rights, and our obligation to sustain the Natural commonwealth.

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