Australia’s Independent Monetary
Explained in Brief
There is often talk of ‘the great contribution to Australia’s
national income by its export industries’. But that ignores the reality
of Australia’s independent
monetary system that we have had since
1983, when Australia
adopted the Floating Exchange Rate System.
means that Australia’s economy is now isolated from the
benefits of international trade.
An independent monetary system is ensured by keeping
foreign receipts and payments equal. The more Australia exports the more it
must immediately import. That requires people to stop buying Australian
products and buy imports instead. The increase in exports causes the exchange
rate to rise and make imports cheaper and more competitive than domestic
Thus not only is there no gain to the nation’s total income from export earnings, export growth also undermines domestic industries.
It is questionable
as to whether the income ‘earned’ by exporters is adequate compensation to
the nation for the consequent loss
of domestic industries; and the trade, businesses, jobs associated with them, and the lower
It is possible that under the current ‘Independent’
monetary system, the more that Australia reduces its exports,
the more its domestic industries, and the nation as a whole, stand to
Originated October 2020
For more details in regard to this insight go to:
Economies Submission to the Financial System Inquiry -
Para 3.6 …..
.“Without money entering the economy from international trade, the only source of monetary growth was
from bank lending, or what many economists prefer to call “investment”…….. .. the
economy needs additional money to facilitate the increased transactions
associated with economic growth.
Therefore, the Australian economy became dependant upon more
“investment” (bank credit) to attain economic growth.”
This last observation is interesting in
the light of recent revelations about bank
The Royal Commission into Misconduct in the Banking …. Industry 2019 comes to mind. (??) Also of some relevance in this regard are
the fines by ASIC & AUSTRAC 2014 to 2020 (The Sydney Morning Herald article of 24 Sep 2020 by Charlotte Grieve “How Westpac's
record-breaking fine compares to others” offers comment in respect of this matter.)
What is to say that any sense of ‘self serving’ and ‘entitlement’
that was associated with these offences was not ‘at play’ in the banks
gaining and maintaining the position
of privilege that they have in the Australian economy as the “only
source of monetary growth’ (i.e. bank lending) courtesy of the ‘Independent Monetary
System’??? (Para 3.6 above
In any case, it would seem (from Para 3.6 quoted above) in adopting this ‘independent’ monetary system
that “the great contribution
national income by its export industries” has been replaced by expanding indebtedness and its associated vulnerabilities???
If made aware, many people might see the failings of ‘Australia’s
Independent Monetary System’ in stark contrast to the privileged
situation for the banking sector within that same monetary system?? They might then perhaps wonder why the
national needs are caused to be in second place to the ambitions of the
banking sector?? If so, they might then actually ask: “Why is it so”??? and
“Isn’t the Banking Sector supposed to be
serving the Nation, instead of the other way round”??
They might also say:
Surely, Australia is entitled to have a
better, more equitable, impartial,
trustworthy monetary system???
The incredulous might exclaim:
growth in national income from our exports”?! “We lose domestic industries, businesses, and jobs”??!
“We in effect give away our iron and coal to
foreigners”???! “But we gain lots of
big holes in the ground”????!
been ‘selling-off the farm’ to
foreigners to raise capital”?????!!!
Another might query:
can this ongoing damage to our
nation’s economy be allowed to continue?
the result of a breach of duty”??
Perhaps those that have lost their livelihood in consequence of
this system might say a lot more? A
restrained question from that quarter might be:
domestic industries continuing to be
put at risk by the nation’s
currency being knowingly allowed to cause
them to be uncompetitive against imports”??
Who is it that facilitates this – Who is
Aside from that, there are a few more questions that might be
A Better, More Equitable, Impartial, and
Trustworthy Monetary System?
It would seem that Australia's monetary policy shortcomings are more
likely to be resolved if it were oversighted by an authority that reflects
the nation's wider regional economic concerns? –
develops monetary policy?
to whom the Central Bank would be accountable?
that encourages an exchange rate that favours Australia’s domestic industries;
and the businesses and jobs that they represent?
One that has representation from each state??? and
that is not naturally linked directly to; and biased in favour of one
sector of the economy!
An example of such an organisation is the ‘European
Commission’ as described in ‘Saving the Euro’ by Leigh Harkness, Part 7,
Managing the Process to the Optimum Exchange Rate System (Pages 59 to 84), http://www.buoyanteconomies.com/SavingTheEuro.pdf .
Note: This page is intended to provide a window
into the considerable knowledge, experience, understanding,
research, and hard work evident at the Buoyant Economies website
e.g The guided
exchange rate and liquidity system
Updated 20 January 2021
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