In Question

 

Australia’s Independent Monetary

System




and

 

Industries Lost

 

Explained in Brief

(Draft)

 

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         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.  

 

‘Monetary Independence’ 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 equivalents.

 

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 multiplier effect.

 

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 prosper.



Originated  October 2020

For more details in regard to this insight go to:

 

 

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http://www.buoyanteconomies.com/

 

which includes the following:

 

 The Demise of Australian Industries

 

Understanding the Float

 

and

 

 

 

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Buoyant 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 misdemeanours:    

 

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 GrieveHow 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 theonly source of monetary growth’ (i.e. bank lending) courtesy of the ‘Independent Monetary System’???  (Para 3.6 above refers)

 

In any case, it would seem (from Para 3.6 quoted above) in adopting this ‘independent’ monetary system that “the great contribution to Australia’s 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,

and

trustworthy monetary system???

 

The incredulous might exclaim: 

 

“No 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”????! 

and

“We’ve been ‘selling-off the farm’ to foreigners to raise capital”?????!!!

 

 

Another might query:

 

“How can this ongoing damage to our nation’s economy be allowed to continue?

and

“Is it 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:

 

“Why are Australia’s domestic industries continuing to be put at risk by the nation’s

 currency being knowingly allowed to cause them to be uncompetitive against imports”??  and

 

Who is it that facilitates this – Who is culpable??? 

 

 

Aside from that, there are a few more questions that might be asked.   

 

 

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? –

·        One that develops monetary policy?

·        One to whom the Central Bank would be accountable? 

·        One 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

·        One 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  .

 

 


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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

http://www.buoyanteconomies.com/Guided_exchange_rate_system.htm

Updated 20 January 2021

JG

 

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National Monetary System

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