Science of the Social Credit Measured in Terms of Human Satisfaction
Christian based service movement warning about threats to rights and freedom irrespective of the label, Science of the Social Credit Measured in Terms of Human Satisfaction

"All that is necessary for the triumph of evil is that good men do nothing"
Edmund Burke

Science of the Social Credit Measured in Terms of Human Satisfaction
30 October 1998. Thought for the Week: "As the situation stands at present, the banker is in a unique position. He is probably the only known instance of the possibility of lending something without parting with anything, and making a profit on the transaction, obtaining in the first instance his commodity free."
C.H. Douglas, The Breakdown of the Employment System

DISCOVERING THE ECONOMIC CRISIS

by Jeremy Lee
With the election safely behind him, Prime Minister Howard has suddenly discovered the global financial crisis. Even though gloomy predictions from round the world have been banking up for the last few months, the real situation never featured in the election. Now, apparently, it has arrived on the Howard agenda. The "fire-proofed" economy (Costello) providing a "safe-harbour" (Tim Fischer) is not as safe as made out.

Former adviser to Paul Keating and chief economist for HSBC Australia John Edwards, in a recent Australian Financial Review article, commented: "There is no novelty in financial crises, as the sorry history of the past two decades attests. Including the Asian economies, the world has seen 10 developing-country crises in just the past five years. Over the past two decades, at least two-thirds of member countries of the International Monetary Fund have experienced serious finance sector problems - as has Australia. What is new, however, is the wholly different scale, scope and speed of the present global financial crisis… what we are experiencing is the first global financial crisis in the new global economy - one that has travelled from a real-estate boom in Bangkok to the heart of global finance in New York..."

Despite some whistling-in-the-dark, the US is in trouble. The Australian Financial Review (October 23rd) reported: "Top executives of US manufacturing companies expect the global economic crisis to worsen, with many Latin-American countries soon falling into recession and with little chance of a rebound in Asia before 2000... US manufacturers and farmers have felt the brunt of the impact of the financial crisis that began in Asia 15 months ago, levelled the Russian economy in August and is now threatening Latin America. The Government (i.e. US) on Tuesday reported exports of manufactured goods and farm products have fallen for five straight months, sending the US trade deficit to a record high of $16.8 billion August. The lost foreign markets and weak commodity prices have US farmers facing their worst crisis in a decade and employment in manufacturing firms has fallen by 150,000 since April…"

An article in next day's Australian Financial Review (Weekend October 24th-25th) predicts a further one million jobs will be lost over the next year in the US. It is against this background, and the approaching APEC meeting in Kuala Lumpur that Prime Minister Howard has suddenly "discovered" the crisis that others have been warning about for over 12 months.


HOWARD CONFRONTS GLOBAL CRISIS

was the front-page headline in the October 23rd Australian Financial Review. "The Prime Minister, Mr. John Howard, warned last night that the global financial crisis had had a 'colossal' impact on the Asian region and Australia faced unprecedented instability in financial markets. The impact of the financial crisis on the region has been huge, in some cases devastating,' he said in a speech to the 10th international Conference of Banking Supervisors in Sydney. 'It is crucial that we reach practical conclusions as soon as possible'..."

Howard's warning, belated though it is, is right. His prescriptions, however, are ill informed, unrealistic and misleading...... The focus of APEC leaders 'must be to get back onto the path of sustained growth as soon as possible'." He warned APEC countries against revived fears that globalisation cost jobs and diminished national sovereignty. "APEC must stand against that view. Open markets provide the opportunity for economic growth and the enormous benefits from it," he said.

In an indirect swipe at Malaysia's new capital controls, and Japan's reluctance to agree to fast-tracking new APEC trade liberalisation, Mr. Howard said: "The worst possible response to the crisis would be to put up the shutters. That would result in competition to raise tariffs and barriers within the region and outside. We saw the consequences of this sort of policy in the Great Depression of the 1930s..."

We have heard all sorts of odd reasons given for the Great Depression - from sunspots to "too much money chasing too few goods". The real cause of the Depression was a massive and deliberate restriction of credit worldwide. It was eased here and there - Roosevelt's New Deal was an example - by government use of the printing-presses to create money, or, as it is officially described, "deficit-budgeting". When war replaced the Depression, it disappeared overnight.


HOWARD'S DREAM-TEAM THINK TANK

So concerned is the Prime Minister that he has assembled a high-powered think tank to come up with some answers. Under the heading "PM Banks On Dream Team For Blueprint" The Weekend Australian Financial Review (October 24th-25th, 1998) said: "John Howard will look to the private banking sector to provide him with a blueprint for international financial stability to take to the meeting of Asia-Pacific leaders... The Prime Minister yesterday oversaw the first meeting of a taskforce he has set up to advise the Government on methods to counter the current global economic instability... The task force consists of 10 leaders from the finance sector, including the Governor of the Reserve Bank Ian MacFarlane, and high-ranking bureaucrats from Federal departments and Telstra..."

The taskforce is to be chaired by Treasurer Costello, and has until the end of this year to come up with ideas to "reduce the global crisis". It includes Commonwealth Bank managing director David Murray, AMP chief executive officer George Trumbell, Macquarie Bank chief Bill Shields and IBJ Australia Bank chairman John Phillips.


BANKERS TO BLAME

In a feature article by The Economist (UK) syndicated by The Weekend Australian (October 24th-25th) on the hedge funds scandal, the sub-heading read 'Who Is To Blame For The Turmoil On World Financial Markets? Probably The Banks…" What followed was a mild "wrist-tapping" for banks which had lent to the hundreds of hedge-funds responsible for the massive gambling bubble racing round the world's stock-markets.

A much more robust criticism was made 12 years ago by the former head of the international division of the Commonwealth Bank, Mr. John Fletcher. The Sun-Herald (August 24th, 1986) reported: "Foreign exchange dealers and multinational banks are using 'dirty tactics' to run down the dollar, according to the chief general manager of the Commonwealth Development Bank, Mr. John Fletcher. 'The multinational bankers should never be underestimated in the lengths they will go and the dirty tactics they will employ in pursuing their profit objectives,' he said. 'The international money market makes a rugby pack look like play school... The small people can't do it, it has to be the larger operators,' he said. '...They know they can manipulate the Australian exchange market, because it is such a small market. I call it dirty tactics. They would call it speculation. You just come in as a buyer. The law of supply and demand operates and if you put a whole lot of buyers on one side you send the price up. Then you sell while other people are at the high price. I think they are deliberately sending the Australian dollar down. If you take a forward position and you bring it down you are in a position to capitalise on it...'"

One or two men such as John Fletcher on John Howard's "dream-team" would serve Australia well. But there's no room for those who might challenge the system. Over the last few weeks the dollar has sunk to a 55-cent value against the $US, and then risen to the mid-sixties following Federal Reserve Chief Alan Greenspan's second interest-rate cut in a fortnight. There is evidence that an inflow of hedge-fund gambling money flowing into Australia is responsible for the fluctuation.

A recent speech by Reserve Bank head Ian MacFarlane seems to have recognised the danger, described by John Fletcher 12 years ago. The Australian (October 19th) reported: "If hedge fund speculation is behind the latest Australian dollar appreciation - as it was behind the currency's tumble four months ago - the players would be well advised to note carefully last week's warning by Ian MacFarlane... The Reserve Bank of Australia's governor very publicly put the funds on notice their unchecked gambling days are numbered... Very belatedly, MacFarlane criticised the IMFs harsh conditions for financial relief, and then urged measures to check the frenzied trade in speculative funds now demolishing the world's stock markets.

The same proposals will be put by John Howard in Malaysia to the APEC gathering. Some will notice that these proposals follow the action already taken by Malaysia's Dr. Mahathir - which highlights as nothing else can the miserable, jealous attitude of western spokesmen such as Howard and Costello. Mahathir's greatest crimes are, not only to be right, but to have acted unilaterally. That is the unforgivable sin! It's either got to be "all together" or not at all. And "all together" simply means when the international banking fraternity give the green light. In other words, we now are burdened with leaders who, while they still maintain the constitutional right to act on behalf of their nations and those who elected them, are frightened witless of doing so. The greatest calumny is reserved for those who point it out.

Whatever else is said, if the banking policy and system of the world is to blame in any way for the crisis, it is an act of either paralysing shortsightedness, or moral cowardice, to assemble a think-tank predominated by bankers to find a solution. This is not to impugn individual members of the Howard-Costello "dream-team", all of whom may be worthy in their way. It is simply natural prudence to preclude those with a vested interest in such an operation.


AUSTRALIAN DETERIORATION ANTICIPATED

While there may be a temporary escalation of hedge funds in Australia, it seems "those in the know" believe our longer-term future is not good. The Australian Financial Review (October 23rd) carried an article by Alan Deans in New York:
"Many of Australia's leading chief executives have received a rude awakening about the savage impact the global financial turmoil is having on their businesses. This week at an investment seminar in New York, 12 heads of companies like Telstra, QBE Insurance, Howard Smith, Coles Myer, Foster's Brewing, Goodman Fielder and David Jones were told by their host, Merrill Lynch, that investors should not buy their shares - regardless of the prospects faced by their corporations... International investors are so preoccupied with salvaging the wealth they have accumulated during the past five years by shifting into safe havens like US Treasury bonds that they are not interested in Australia - no matter how good the sales pitch. Not since the late 1980s, when debt-laden high fliers like Mr. Alan Bond and Mr. John Elliott sullied corporate Australia's reputation abroad, has such a brutal judgment been delivered. That it should come from stockbrokers normally expected to assist chief executives in making their sales pitches has been hard to accept. In their presentations, many of the executives were little able to disguise their shock and anger..."

WHY NOT THANK THE BANKS?

by David Thompson
For sheer hubris, former Prime Minister Keating would be hard to beat. We note that the ALP went to considerable lengths to keep his name right out of the election campaign. Keating was too easily associated with economic pain and social outrage on issues like the republic and the flag. Recent comments by the managing director of the Commonwealth Bank, Mr. David Murray, rank with the most outrageous "Keating issues". Mr. Murray, commenting on the performance of Australia's banks, said they had served Australia well, and in fact he believed that customers (and presumably also shareholders) should "send a telegram of thanks to each of the major banks".

Perhaps this gives a clue to how out of touch Mr. Murray is. Telegrams were discontinued years ago -about the time banks discontinued genuine service, and became voracious profit machines. The banks can take pride of place among the carriers of that social epidemic: economic rationalism. Together with many other big-business monopolists, the banks turned their backs on any concept of service, and certainly any suggestion of community responsibility. Those in rural areas well remember that their branch of the Commonwealth (if it hasn't yet closed) was just as quick as the next bank to make easy money available to primary producers one year, and suddenly insist on foreclosure the next. The damage that was done by voracious banks was just as bad as that done by drought or flood.

On top of this arrogance, Mr. Murray is not the least apologetic that his bank is closing branches all over Australia, whether remote areas depend on them or not. "Banks tend to follow commerce" was his explanation. Even where the local branch remains open, it is seen as a matter of commercial judgment by the bank, which once survived on interest payments from clients. Today the interest payments remain, but are supplemented by something like 28 different charges or fees. In the world of "user pays", the users of banks pay and pay and pay... But that's economic rationalism - the Market is able to justify any behaviour on the basis of mathematics, not what the community needs might be.

Perhaps the greatest transgression of the banks is largely an unconscious one. In their ignorance, it is doubtful that even their leaders, like Mr. Murray, would be aware that he and his colleagues have absconded with the nation's credit. The ignorance of the true role of banks in the creation of credit is alarming. The fact that Australia's banks and their managers are quite unaware of this question, and most indignant when challenged on it, is one of the great injustices of the modern age.

While we in Australia regard the four trading banks as "Australian" banks, the truth is that this is no longer so. All the four major banks have extensive foreign interests. The truth is that these are multinational corporations, with all the social conscience of any other multinational operating in Australia - none. We only hope that Mr. Murray isn't holding his breath for all the telegrams of thanks - particularly from rural Australia.

Recommended reading: The Money Trick, as an educational tool on money and banking in simple terms, is still one of the best. $6.00, or $8.00 posted. Two for $14.00 posted.


MERCENARY BASTARDS

The GST is not as cut and dried as the Coalition might think. The Advertiser (Adelaide, October 19th) reported: "Australia's new local government chief has launched an extraordinary attack on the Howard Government, describing it as a 'bunch of mercenary bastards'. Mr. Rod Nettle, whose appointment as the new Australian Local Government Association chief executive officer was announced yesterday, said a GST would severely impact on local authorities. And he warned that rates would rise significantly if Councils were saddled with a GST. That is despite the Federal Government indicating rates would be exempt from a GST.
'Those mercenary bastards in Canberra will do anything to get more money out of people, and if we don't work out issues such as whether council rates should be exempt, then ratepayers will effectively be taxed twice,' he said ... While the Federal Government had indicated rates would be exempt, councils would be slugged with other hidden taxes. Every service a council contracted out, or goods it had to buy, would be subject to a GST, he said. These hidden costs would force councils - which had limited budgets - to increase their rates to offset a blow out in costs..."

MAHATIR LEADS THE WAY

Malaysia's Prime Minister, Dr. Mahathir Mohamad, brought down his first budget as Finance Minister on October 23rd. The Weekend Australian (October 24th-25th) gave sketchy details: "The budget speech was an occasion for Dr. Mahathir to set the country firmly in the economic direction he favours by easing monetary policy and placing fiscal policy in stimulus mode while maintaining the capital controls applied recently to insulate Malaysia from foreign speculation in its currency and stock market..."
No wonder he's "copping it" from the global media and internationalists! Fancy daring to protect the Malaysian economy - and without permission, too!

THE FUTURE OF WORK

David McNicoll, commenting in The Bulletin (October 13th) on the election, made this point: ..... What particularly depressed me in the campaign was talk of curing unemployment. In my view, the more we become mechanised and computerised, the fewer workers will be required. Every week we read of 'down-sizing' and of banks and corporations trimming staffs by thousands. The task of reducing unemployment, particularly youth unemployment, is not only daunting, but is looking insoluble."

Others, too, are grasping the obvious. The Editorial in the Weekend Financial Review (October 24th-25th) said: "The end of the 20th century is not a particularly good time to be an unskilled worker in Australia. The march of technological change and globalisation clearly favours the skilled. Both white-collar and blue-collar jobs are disappearing as Australia increasingly specialises in capital-intensive and skill-intensive industries. The availability of increasingly cheap and powerful computers has wiped out hundreds of thousands of clerical and low-level administrative jobs across the economy. Improved communications have allowed white-collar keyboard-based jobs to be exported to low-income economies such as Barbados and India. That same improvement in communications and a decline in transport costs have also hastened the export of blue-collar jobs. The growth of intra-industry trade has seen manufacturers become ever more specialised, importing components in order to maximise efficiency and competitiveness…"

What some are tentatively pointing out in 1998 was clear to one man in the early twenties. Speaking to a professional association in Newcastle, England, on January 31st, 1923, a prominent engineer, C.H. Douglas, included these remarks: "One-tenth of the available labour, working short hours but with the whole of its attention directed solely to the objective of the most efficient production, could supply all the general demands of the population of this country, either by direct production, or by exchange of proper methods for the production of other countries, in respect of articles which cannot be reasonably produced at home; in other words, production, as a problem, has been solved long ago. There is not a single country where western methods of production are in operation, in which there is any technical productive problem at all, either agricultural or otherwise; and the problem we have to solve is a problem of distribution..."

Douglas went further in showing where the answer lay - the change of the economy from a full-employment-wage system to a dividend system - something like that partly operating in Alaska. The only way this can be achieved is by direct challenge to those currently monopolising the world's credit: the bankers.


GST AND THE OLYMPICS

It is now argued that the GST could jeopardise the financial success of the 2000 Sydney Olympics by adding another $200 million cost to the Olympic bill. Is this an argument against the GST or yet another excuse for the inevitable blowout in the Olympic budget? It is clear that for NSW the Olympics will be a substantial financial cost; the only question is how big the deficit will be when the fuss dies down. If it is accepted that the proposed GST will seriously affect the Olympic budget, why is it so difficult to accept that the same taxation measure will also damage domestic or small business budgets?

There may not be much to be done about the Olympics, except avoid it as an outbreak of temporary madness. We expect life to return to normal afterwards. But the GST is not a temporary form of madness - it is a permanent form of madness. It should be resisted like poison. Mr. Howard and his Ministers labour under the illusion that they have a "mandate" for the GST. The truth is that Australians could not bring themselves to vote FOR the ALP - we voted more against the ALP than the Coalition. We certainly DID NOT vote for the GST.

When the Swiss were threatened with the GST, a petition forced a referendum on the issue, at which it was heavily defeated. If Mr. Howard is so sure of his ground, have a referendum on the GST! Too costly? Run it at the same time as the referendum on the republic, and let's deal with them both at the same time!


IMPACT OF COMPETION POLICY REFORMS ON RURAL AND REGIONAL AUSTRALIA

The Productivity Commission is holding a public inquiry into the effects of competition policy on rural and regional areas. This covers compulsory competitive tendering and other areas introduced as a result of the Hilmer Report to Prime Minister Keating. Written submissions need to be sent by 6th November 1998, to Impact of Competition Policy Reforms Inquiry, Productivity Commission, P0 Box 80. Belconnen, ACT, 2616; OR FAX (02) 82403311, OR E-mail compol@pc.gov.au
An Issues Paper can be obtained form the Commission by ringing (02) 6240 3223.

As time is short we suggest written submissions on "the economic and social effects of the reforms on rural and regional Australia and on the wider Australian economy".


GAMING ENQUIRY SEEKS SUBMISSIONS

Activity that was once illegal has now become a multi-billion dollar "industry", with more than a dozen licensed casinos across the nation. Why was gambling legalized? It's a great tax-raiser for voracious governments. The Productivity Commission is now holding a 12-month enquiry into gambling in Australia. Submissions from the public are sought. For a copy of the terms of reference, write to the Commission: P0 Box 80, Belconnen, ACT, 2616. FAX: (02) 62403311; PHONE: (02) 62403215.

FLAG AND OLYMPICS

We note from press reports that the aboriginal industry is now pushing for the aboriginal flag to fly alongside the Australian flag at the Olympics. This seems to be the latest demand in the service of "reconciliation". But the Olympic rules permit only the use of national flags, and flags of local provinces, which rules out the aboriginal flag. As a strategy to downgrade the Australian flag, however, it is an opportunity too good to miss!