The three year guarantee on deposits would be alright if it were part of a serious deleveraging and debt-paying frenzy. Since what has really being guaranteed is bank ponzi-money, if the three year guarantee came with such a fever to engineer a serious cash-building deflation, than that would be about as good, fine, and sensible as you could get. I could not object with the guarantee of pre-existing ponzi-loans if the frenzy was on to replace the ponzi-money with cash, to lock in the reserve-asset ratio, and to rally every council, state, individual business, bank and individual, to cut their borrowing, save more, build their cash balances and learn to live within their means so that they voluntarily restrict borrowing to almost only wealth-creating activities.
But Kevin Rudd, milky-bar-kid of Keynes that he is, isn’t going in for that.
What isolates us from foreign bank entanglements is the ability to pay our own way and live without borrowing. Its not that borrowing is always bad. Its just that you are vulnerable when you HAVE to be borrowing, rather than you are CHOOSING to be borrowing for a worthy cause. Then when you choose to borrow it will be for the now cheap dream house so that you and your lady can have the good years in while the kids are still young and fractional reserve team b hasn’t got their first and cranked the price up.
But in most cases borrowing will be to increase cash flow and that implies wealth creation.
Now banks borrow and lend for a living. Thats their business. Living within their means in their case means lending longer than they borrow, not having to borrow off other banks or the government, only lending what they have on term deposits, and learning to live within their spread and not off new money creation.
As a country learning to live within ones means…….. as a country this means running surpluses all the time, lowering total debt levels, going through a long period of slow money growth where you try and keep the value of your dollar down and not up………. so that the world short-sellers and market manipulators are too frightened to dump your currency………. And ultimately having a lot of reserves of commodities imbedded in your peoples private currencies, and in your governments stash, so that we could potentially take on crony-town international and still bankrupt their ass even while under military attack. That may seem implausible but more about that in future threads.
Living within your means for a company means 50% or better equity, not having to borrow if you don’t want to, which means high cash balances. And being in a country that tends to store a lot of producer goods rather than rely on the sugar-water and daydreams of derivatives.
Near the end of a traditional ponzi-gold boom everyone had low cash balances, high debts, low-savings rates, a national trade deficit, positive consumer price inflation, an overblown investment-asset price and many producer-goods prices, in relation to consumer goods, a high ratio of ponzi-money to cash money……….
…. But at the recovery you had high cash balances, falling consumer prices, the investment asset and producer goods prices to be traditionally low in terms of consumer prices, a trade surplus, bugger all ponzi-money, and a lot of cash…..
Where are we now? and where do we need to get too? for the sort of growth that makes us independent and sovereign and without nasty warlike measures like trade barriers?
Well we are at the first list, and we need to get to the second list.
So obviously the answer is financial triage coupled with a slowly growing reserve asset ratio, and monetization but monetization in such a way as to keep investment asset prices falling and to eventually lead to consumer prices falling as well……. all in the context of glacially growing total spending. Total spending that stays stagnant or grows very slowly. But total spending that does not fall.
Tough gig. Fucking tough gig. And perhaps if you are trying to pull it all off with great fervour and sincerity than indeed perhaps a three year guarantee on deposits will allow you to really nail all of these requirements without unpleasant surprises. Because after all if you make the banks live within their spread most of them will fail. They will go bankrupt in any case and thats a whole lot of national debt written off.
Remember that reducing debt levels is one of the goals to be reached to end the bad times. And there is no way to do it better than bankrupting the banks.
Now has little Kevvie got this sort of stuff in mind? Is he into financial triage? Does he want to reduce national, governmental and personal debt. As well as bring down and eliminate bank ponzi-money?
I don’t thinkso. And others might be willing to back me up in my suspisions. I got the financial review on the way home and there is talk of him increasing welfare payments MORE GOVERNMENT DEBT……… Now if we were talking about aged pensioners and carers well we want to do that anyway for reasons of decency and justice. But Kevvie probably hasn’t been for these things since he stopped wearing in his cowboy hat and cap gun. And we do not do these things in the perverse hope that they will bring on nationally a business recovery.
There is no point in increasing welfare to everyone else. Because one of the things we would need to do if we were serious would be to get every bugger working. Working so that they too can live within their means.
Yesterday I saw a clip of Kevvie talking about big public works projects. Who does he think he is? Il Duce? Yes we need good infrastructure. But not for the sakes of getting back to sound financial health in a crisis.
Then he says that he needed to guarantee banks ponzi-money (he said he was guaranteeing our deposits. But thats not his act) so that banks could borrow from other banks overseas or something similiar. Where is it that you think our trade deficits come from? For the most part our trade deficits come precisely from our banks borrowing from overseas. What happens if they don’t borrow overseas? Our dollar goes down, our exporters are advantaged, which is very much a part of us all living within our means.
Now I’m not dissing these Nambour children too much for getting it all wrong. I lived in Nambour for a short while, its a beautiful town, I once went for a council job there where my plan was to turn it into the business startup gateway to the Sunshine Coast. The people there were kinda neat. Somewhat quaint in some ways but thats good. And they had a great swimming team there. A terrific coach who had swum against people I knew. And a magnificent swimming pool.
So I’m blaming their Keynesian advisers. Was it YOU Gruen? Was it YOU Andrew Leigh?
Just resign fellas. And put these Nambour lads in touch with people who can do the job.