by David Keane,
PO Box 582,
Gosnells
WA 6110
Ph (08) 9398 3347
July/2007
Dear Senator,
For the sake of the future of our country, I ask you to please read my attached
article "The Australian Economy at the Crossroads" and the one-page summary.
You may not be aware of how serious the situation is.
I submit to you that half of the current senate plus those politicians who will
be elected in the 2007 federal election will most likely be forced within the
next 3 years to face the worst economic crisis in Australia's history.
The nine-step solution I offer to you in my article is one good way out of the
crisis.
The graphs in my article show a skyrocketing growth in Australia's total economic
liabilities (the sum of foreign debt, foreign equity, and domestic credit). While
it may be true that the federal government has paid off the federal component of
the country's debts, nevertheless (when we include private debt) Australia is
running on a debt-driven economy. In effect, the government has lost control of
the national economy. It is frightening to estimate where Australia's total
liabilities will be in a few year's time if economic management continues in the
same direction.
How will MPs respond to the worldwide crisis that is in the short term probable
and in the long term inevitable?
May I suggest that MPs like you could
(a) Acknowledge the imminent crisis before the debt bubble bursts around us,
(b) Admit the failure of economic policies (by both sides of politics) in recent
decades to provide a sustainable future for our children,
(c) Develop the principles of economic, environmental and social sustainability.
Your adoption of my proposed 9-step solution would require courage and discipline,
but the alternative of ignoring the warning signs could prove disastrous for
Australia's future.
Our responsibility to provide an enduring and just future for our children should
encourage you to give these matters your most serious consideration.
I would be grateful for your considered response.
Yours truly,
David Keane
KEY ISSUES
THE AUSTRALIAN ECONOMY AT THE CROSSROADS
Article by David Keane
§ The dangerously escalating level of indebtedness within Australia.
§ The imminence of a deep global economic recession, and its likely adverse
impact on Australia.
§ Whether MPs have policies available for Australia to cope with such an
event.
BACKGROUND 1. Imminence of a Global Economic 'Tipping Point':
The Bank for International Settlements, the world's most prestigious financial
body, has warned that a dangerous credit bubble leaves the global economy
vulnerable to a deflationary event comparable to the 1930s Great Depression. 2. Australia's debt vulnerability: The Reserve Bank's data on foreign equity,
foreign debt, domestic credit etc are analysed in David Keane's paper "The
Australian Economy at the Crossroads". One very important aspect is summarized
in the graph below, that Australia's total liabilities are skyrocketing at an
uncontrolled rate, and must - sooner or later - cause great suffering for our
children.
Graph of Total Liabilities (Foreign Debt + Foreign Equity + Domestic Credit)
as a percentage of GDP, plotted against time
CURRENT POSITION
Nine steps of transition to a sustainable economy (are explained in David Keane's
paper):
1 Admit gross deficiencies in recent government economic policies (on both sides
of parliament)
2 Restore an efficient public sector, especially active in infrastructure
investment
3 Place full control of the money supply under an Australian government banking
authority
4 Cease the practice of government borrowing at high interest rates,
and instead ensure that governments are issued interest-free loans
5 Arrange for the money presently advanced as bank loans to be created exclusively
by the Australian government banking authority
6 Devise a strategy for reversing the growth in foreign debt and foreign equity
7 Develop policy for a national people's bank, responsible to the government of
the day
8 Promote openness of economic information
9 Promote a tax reform debate, involving participation of civil society and state
governments
RECOMMENDATIONS
Ø Acknowledge the imminent economic crisis and make preparations.
Ø Read and consider David Keane's nine-step proposed solution in his paper.
