Wednesday, February 6, 2008

An open letter to Kevin Rudd



Dear Mr. Rudd,

With interest rates going up and further rises forecast, the Reserve Bank certainly seems to be in the news recently. We witness discussion after discussion circling the topic but we never quite get to the centre of it. I'm wondering if I might ask you to clear some things up for me.

In your campaign commercials you brought up the topic of the Reserve. You swore to uphold its independence. Why did you do this? Surely these commercials were dedicated to convincing voters that you would address their concerns and thus that they should vote for you. These concerns are expressed in party meetings, letters and phone calls from constituents, and polls and research. Given that your advertising dollar is limited the party selects the most important of these concerns and packages them into an ad. I imagine in thirty seconds one might sensibly address perhaps half a dozen topics. Money aside, to address too many topics dissipates the message and only serves to confuse.

One has to assume that you and your advisers were of the opinion that voters were particularly concerned about the Reserve Bank's independence. This is astounding. In my travels, I've never heard a single person express such a thought, nor anything like. Sure, they're concerned about interest rates but how does this translate to wanting the Reserve Bank to remain independent? Does anyone get the connection? If voters stopped and thought about it, wouldn't they merely be scratching their heads?

Independent? Under whom? The government doesn't control the Reserve? Why not? Given the sine qua non ability of the Reserve to control our economy through monetary policy why shouldn't we control it through our elected representatives? Do we not own it? Is it not ours? Whose is it? Who owns the Reserve Bank? Why are successive governments reduced to pleading with it? What is this independence? Whom does it serve? Why do we imagine that people acting in a perfectely opaque manner, free of censure, act in our interests?

The interest rate the Reserve charges is for the money it puts into our economy. Why do we pay interest on our money? Isn't it ours? To whom does the interest go? And why does it exist at all? If we wished to control inflation why wouldn't we control our own money supply and simply print less of it? Or withdraw some of it as it entered the banks? Or perhaps, most crucially, print less of it to begin with? Why do we leave it to an 'independent' body to print as much as they like and then control the resulting inflation cycle by making us pay more for it? What sort of crummy mechanism is this?

Just yesterday, you said you would do everything in your power to control inflation. Would I be right in thinking that addressing the sanctity of the Reserve Bank's position of primacy is not within your power? What am I as a voter to think of this? It seems that not only may you not do anything about it, but you may not even discuss it. Astounding! What is the purpose of Government if something as singularly crucial as our own currency is not under our control? Who controls whom, here? And who were you addressing when you said you would ensure the independence of the Reserve Bank? The voters? Or the people who control the Reserve Bank? In whose interests are you working?

10 comments:

Anonymous said...

Dear nobody
With reference to your question: In whose interests are you working?

Now don't you worry about that young fellow.
We'll take care of all of that.
It's nothing for you to worry about.
Everything is in good hands.
Hmmm! Yes.

Signed: The New Prime Minister of Australia (He! He!) Kevin Michael Rudd

kikz05 said...

mornin noby...

hell, i've got an older cousin, who works for the FED... has no idea that it is not part of the US gov. i shouldn't have been surprised to've gotten the "you have 3 heads and they are on fire" look, asking questions about it, i already knew the answers to.

denial is a funny thing.....

nobody said...

Hey Kikz,

Yeah, believe it or not my brother is some variation of banking finance consultant something-or-other. He has all the jargon down pat (ie. I don't understand a word he says, job description included) but he has no idea how things work. The thing is everyone buys it. My economics teachers at school believed what they taught. It's a neat trick isn't it?

And wasn't it nice of the PM to stop by? I'm dazzled and, of course, reassured. What a nice man.

Anonymous said...

nobody,
I don't doubt that you are reassured by the PM's reassuring words.
Like me you recognise and understand that specific reassuring language.
Joh used to talk to us like that and the PM being an excellent student of political politicalness is using Joh's reassuring reassuringness methods.
As you say 'What a wonderful man'.
Tony

Anonymous said...

Hello nobody (are you sure that's your real name?)
It's me again John, er!... Kevin
I just thought I'd let you know; the Reserve Bank makes profits for Australia/ns!
This is from our brochure located here:
Australian Reserve Bank Brochure
I've places some of my signing notes in parenthesis (I learned that from W)
Profits
(1) Subject to subsection (2), the net profits of the Bank in each year
shall be dealt with as follows:
(aa) such amount as the Treasurer, after consultation with the
Reserve Bank Board, determines is to be set aside for
contingencies; (that's extra smoko expense, say an unexpected visitor drops in or we need to dry some notes out say after a flood or something like that) and
(a) such amount as the Treasurer, after consultation with the
Reserve Bank Board, determines shall be placed to the credit
of the Reserve Bank Reserve Fund; ( that allows for inflation) and
(b) the remainder shall be paid to the Commonwealth. (we give most of this to the little children)
(2) If the net profit of the Bank for a year is calculated on a basis that
requires the inclusion of unrealised gains on assets during the year,
the amount to which subsection (1) applies is to be worked out as follows:
(a) deduct from the net profit an amount equal to the total of all
amounts of unrealised gains included in the net profit; (that's ours, the people can't have that; it's ours because we made shrewd investments: casinos, tab, wood chipping etc.) and
(b) if an asset in respect of which unrealised gains were included
in the net profit for a previous year or years is realised during
the year—add to the amount remaining after applying
paragraph (a) the total amount of those unrealised gains. (if ??? haven't spent it by now - ??? deserve to lose it)
I hope this helps.
Signed: The New Prime Minister of Australia Kevin Michael Rudd

nobody said...

A link to the Reserve Bank!

How tremendously helpful. My eyes glazed over half way through, but that's the idea, isn't it? We can all rest assured they will never misrepresent themselves.

And it's nice of them to kick back some of the loot.

Everybody here has seen The Money Masters over at googlevideo, I take it?

Otherwise, Tony, Jo, Flo, what a golden age. And did you see Chief Justice Spigelman's masterful Australia Day speech on the true nature of the Rum Rebellion? He covered every single aspect of the then governance of the colonies, except for the banks and who controlled the money supply. As everyone knows, this plays no part in anything. It's a force of nature under nobody's control. Er, not me. Some other nobody.

Am I sure that nobody is my real name? No I am not. Such certainties escape me.

nobody said...

New movie showing at the cinema!
http://www.cinemaofnobody.blogspot.com/

kikz05 said...

our gang has gone as far as actually stating on their website, that.. well, yes... we are part of the federal government of the US, but a special separate part. or somesuch... nice of "kev" to drop by and be so helpful.

nobody said...

Yeah,

Between Aaron Russo's thing and The Money Masters people are starting to wake up. With the anonymity gig blown, stories are going to have to be thought up. I expect they're not intended for the people who've seen those docos but rather for their friends who've merely been told of them, and are vaguely looking for reassurance. "John says the Fed is the scam of the century and makes the mafia look like amateurs. Why don't I click on their website and see what these so-called criminals have to say about their own activities?" Ha ha ha.

"Oh thank God, everythings fine. Now I can go back to sleep"

waht said...

You need to watch this video about the reserve bank. It will answer all your questions.

http://glassjore.com/knifefork/links/redirect?id=933