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6 February 1976. Thought for the Week: "It is a common error in politics to confound means with ends. Constitutions, charters, petitions of right, declarations of right, representative assemblies, electoral colleges, are not good government; nor do they, even when most elaborately constructed, necessarily produce good government. Laws exist in vain for those who have not the courage and the means to defend them".
FRASER GOVERNMENT STOKES THE FIRES OF REVOLUTION
By Eric D. Butler
It was elementary that the increase in indirect taxes and postal charges imposed by the Labor Government would increase the inflation rate for the December quarter as measured by the CPI figures. I predicted that the increase would be at least 5 per cent. In pre-election statements Mr. Fraser and Federal Treasurer Lynch suggested that they also anticipated that the December quarter inflation rate would reach 5 per cent.
Mr. Lynch has observed since the announcement
of the 5.6 per cent increase that the indirect taxes and charges imposed
by the Whitlam Government were major causes of the jump in the inflation
rate. One would think that having made that observation, Mr. Lynch would
announce that his Government's first anti-inflation step would be to
remove the Socialists' imposition and to adopt at least part of Premier
Bjelke-Petersen's policy, slashing Sales Tax. But instead of taking
one single step to defuse the situation, the Fraser Government has done
exactly what the Marxists hoped they would.
The Fraser Government's retreat from pre-election
pledges started immediately after the elections when it was announced
that the Prices Justification Tribunal would not be abolished. Before
the election Mr. Fraser made the following specific promise: "The Prices
Justification Act will be repealed during the first session of the new
Parliament". When asked by Mr. Macillian Walsh of The Australian
Financial Review if his retreat on the PJT issue would not "reflect
adversely upon you and your whole policy?" Mrs. Fraser replied, "I would
have thought that it would indicate a degree of flexibility that's reasonable".
(Financial Review", February 2nd.)
We can now anticipate a further retreat from
pre-election pledges, on the issue of tax indexation. The Treasury has
never been enthusiastic about tax indexation and will be delighted if
the collapse of wage indexation enables Mr. Fraser to use this as justification
for not going ahead with tax indexation.
The attitude of employers in opposing the Trade Union demand for a 6.4 per cent increase in wages is understandable. Their wage bill would be increased by approximately $2,000 million. But even if the Arbitration Commission accepts the Federal Governments submission that it should award a 3.2 per cent wage increase, this leaves unresolved the basic problem wrecking the free-enterprise economic system and generating revolutionary forces.
Irrespective of the size of the increase in wages, that increase must, in the main, be financed out of new financial credit, created and loaned at interest. Employers must, to remain solvent, attempt to recover it in increased prices. These in turn are used to justify still more wage increases. The central Marxist thesis is that growing tensions between employers and employees are "inevitable" under the capitalist" system generating a developing revolutionary situation. But the only real cleavage between employers and employees concerns finance. That cleavage can only be removed, and harmonious relationships established, if financial policy is adjusted to realities.
The Treasury-Lynch credit policy is a sophisticated form of "credit squeeze". It is designed to reduce the rate of new money creation, the argument being that there is "too much money". This is a meaningless statement without a reference to prices. Anyone not brainwashed by orthodox Keynesian-Socialist financial theories knows that overall business generally is limited by inadequate consumer purchasing power. The quickest way to increase purchasing power without inflation is to drastically reduce Sales Tax on basic items in the economy, and introduce new credit, not by generating more wage costs, but by using consumer discounts, also on basic items, to reduce prices. This policy would reduce the pressure for higher wages.
The whole weight of the Marxist conspiracy in Australia is against this policy. The Marxists fear Premier Petersen because he has put forward this type of policy. But they are confident the Fraser Government is going to confirm their teachings on the "inevitability" of the "capitalist crisis". Unless deflected from the course now being travelled, the Fraser Government is taking Australia directly towards a major revolutionary situation.
PLAIN SPEAKING ON MIGRANTS IN LETTER TO EDITOR
The writer of a letter to the Editor of The Sun (Melbourne) February 22nd, says that he is fed up with hearing about under-privileged, impoverished, and exploited migrants. His key point is contained in the paragraph:- "Instead of migrant adults teaching their children their national language and customs, they should learn English themselves, and accept the Australian ways they see around them every day".
It is becoming increasingly obvious that we are importing many problems into Australia, along with many migrants that we can well do without. Already the Greeks and Turks have been at each others throats over the Cyprus issue; and lately Lebanese migrants have rioted in Sydney as opposing factions join violent issue here over the issues of the civil war which is raging over there (Lebanon). We can do without all this!
Mr. Grassby can make the issue of migrants ("the family of the nation" was his favorite term he would trot out at every possible occasion) sound all so humanitarian. But there is no "family of the nation". It is an absurd term. A nation only has soul and being when it is homogeneous. It can absorb a small flow of migrants - but it must be very small; otherwise the inevitable tensions and frictions soon assert themselves. As is happening now. Our racial troubles are nothing as compared with those now lying dormant in Britain and the U.S.A.; and ready to explode, again, when the fuses are lit.
WORLD (AND AUSTRALIAN) COUNCIL OF CHURCHES CALLED TO ORDER
In the same edition of "The Sun" (Melbourne)
February 2nd appeared a letter over the name of the Grand Secretary
of the Loyal Orange Lodge of Victoria, Mr. J. H. Morris. The letter
is short, and to the point, and runs;
The League's view is that the clergy should not become involved in Party political issues but as political issues are moral issues, and morality is based on the acceptance of religion, the clergy should most certainly speak out, in the strongest terms, on the issues of politics. We agree with Mr. Morris that the World (and Australian) Councils of Churches have become more and more, political organizations. Furthermore, some of the material that has been issued in their names is subversive.
MR. ANTHONY AND THE RISING SUN
"If the business community is expecting Mr. Anthony to work miracles during his talks with Japanese Government and economic leaders over the next two weeks they are going to be disappointed". The Australian (February 2nd.)
The Japanese economy is in a depressed state. Mr. Anthony is eager to stimulate Australian exports of beef, sugar, and dairy products to Japan, and Japan, in turn, will want tariffs and import quotas lowered, especially on their Datsuns, Mazdas, and Toyotas. As pointed out in this week's On Target Bulletin under "Balance of Trade", every trading nation is trying to export more than it imports; and this is impossible. A young schoolboy could see this readily, but the economists cannot! Mr. Anthony will only see the Rising Sun setting for him; certainly this trip!
Daniel Moynihan, America's Ambassador to the United Nations has resigned. Moynihan has quite an interesting history of public life, as Gary Allen showed in Nixon's Palace Guard (sorry not available.) His record is that of a One Worlder. He has referred to the United Nations recently as the "theatre of the absurd" an apt phrase. He was infuriated by the General Assembly's denunciation of Zionism as "racist". He has referred to Idi Amin as a "racist murderer" - which is pretty close to the mark.
"Weekly Review" (U.K) in a recent report
states that inflation in Japan is now down to 9%; it was as high as
26% in early 1974. This would have been brought down by fiscal and monetary
policies of deflation, the same types of policies now being rather slyly
followed by the Australian Federal Treasurer Mr. Phillip Lynch. Mr.
Lynch is a pleasant enough man but his role in Federal politics is that
of the Treasury's ventriloquist dummy. He sits on the Treasury's knee;
the Treasury works the little levers and says the words; but they come
out of Phillip Lynch's mouth.
The same source has it that Cuban troops are now in Syria, and that other Communist countries will follow the Cuban example of supplying troops for Russian arms in other parts of the world, especially where the locals are unable, for reasons of racial inequalities and inabilities, as in Angola, to master the new sophisticated Russian weapons. The Russians don't believe the All-Men-Are-Equal myth either. They understand, as well as we do, that Africans could never be trained in, say, computer techniques. We can expect, therefore, to see Czechs, Poles, Hungarians, etc., more and more in "backward" parts of the world where the Russians (Communists) are spreading their influence.
BALANCE OF TRADEA contradiction of the theory that the only reason for exporting is to pay for imports, is the constant striving by every country to achieve a favourable balance of trade. We are regarded as having a favourable balance of trade when we have exported more than we have imported. But if the purpose of exporting is to enable us to import, the only way in which we can get the maximum of value for exports is to import as much as possible in return. Therefore, if we aim at having a surplus of exports over imports all the time we are, in reality, receiving nothing for this surplus. In other words, we are trying to give some of our export goods away.
As every other country is also trying to achieve a favourable balance, and as one nation's favourable balance must be another one's unfavourable balance, we have reached the ridiculous situation where every nation is trying to export more than it imports.
The "flow" of exports from one nation to another is witnessed most strikingly between enemy nations at war. Exports, in the form of bombs, shells, warships, fighter-bombers, etc. etc., are hurled at the enemy, without charge who hurls his own military hardware back; without charge. The factories behind the fronts are kept racing full pelt; there is no unemployment - anyone who can stand up is in a job - the pay envelopes are bulky. The reason, of course, is that Governments at war are creating (virtually unlimited) financial credit to pay for all this. More accurately, the Governments are monetising the real credit of their respective nations; the real credit being the rate at which goods and services can be supplied, as when and where required. As soon as the war is over, the austerity commences in one or more nations, the inflation appears and escalates (having been kept to a negligible rate during the war by the application of consumer subsidies), and all nations pursue the favourable balance of trade (as above). The unlimited money creation mysteriously disappears.
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