Treasurer Josh Frydenberg is a bald faced liar. So too is his Assistant Treasurer Michael Sukkar and Prime Minister Scott Morrison.
All three have claimed on national television the $330 billion created by the Reserve Bank was borrowed and taxpayers are liable to pay it back.
The ABC broadcast this interview with Treasury officials who have stated categorically the Covid 19 bail-out Jobseeker fund to assist business maintain employee remuneration was created by adding extra noughts in Treasury computers. The ABC has rolled over yet again, under orders from Frydenberg, ignoring their previous radio interview about Treasury credit creation.
ABC reporter David Taylor naively claimed this was the first time Treasury had created credit. He is totally wrong- it has been doing it since the early 1900’s.
There is nothing new about credit creation by banks. Early bankers of the 17th and 18th centuries accepted gold as a deposit then issued notes against the gold held in their vaults. The value of the notes often exceeded the value of the gold in their vaults. These were the first bank notes used in every day transactions then and now. Except for the world’s greatest Treasurer, Liberal Peter Costello who sold most of our physical gold reserves to ‘balance the books’ and replace it with government paper.
Peter Costello agreed to sell most of our gold holdings in 1997.
The decision prompted cries of betrayal from the gold industry and, with the benefit of hindsight, was incredibly poorly timed. Since the sale of 167 tonnes of gold for $2.4 billion, or just over $400 an ounce, gold in Australian terms has rallied to record highs. The price peaked last July at $1819.44 an ounce, at which point the gold Australia sold for $2.4bn would have been worth $10.7bn.
In a vault deep in the basement of the Reserve Bank’s Martin Place headquarters in Sydney today sits a hoard of gold bars worth about $US500,000 each — all four of them.
The RBA now holds almost the entirety of the nation’s gold in vaults administered by the Bank of England.
Credit creation as espoused by social credit crusader Major CH Douglas before and after WW 2 has been around for centuries.
Charged with rebuilding a destroyed Japan after WW2, General Douglas MacArthur rebuilt its economy without borrowing external funds. He created the credit needed by issuing paper as do the central banks of every country. Japan turned into a powerhouse economy and led the industrialised world with manufacturing for decades.
Just as the Australian Treasury and the the Commonwealth Bank did for a century. Taxpayers should not be slugged to pay back the Jobseeker fund particularly as Frydenberg, a member of the Jewish fraternity, admitted $60 billion was created unnecessarily due to a book keeping error and not needed after the sums were done correctly.
This credit does not exist as legal tender, that is notes and coins, but as a blip in the Treasury computer.
He could use these created funds to complete construction of the Bradfield Scheme to water inland Australia, high speed rail and new generation, coal-fired, base power stations thus creating tens of thousands of meaningful jobs.