From The People’s Bank to the Banker’s Bank

Last week Australia’s central bank (Reserve Bank of Australia, RBA) raised interest rates. Again. Political economists have been talking for decades about the RBA’s tendency to redistribute wealth from the bottom upwards. But now it seems most people understand that the latest interest rate rises requires ordinary people to hand over more of their cash to their bank, to get it out of circulation and bring down inflation. Asking whether superannuation or taxes could also be used for the purpose of reducing interest rates, the ABC pointed out that interest rates were not always the way inflation was managed. They published an article asking ‘Would you rather hand over an extra $300 a month to your bank or the federal government?’ – suggesting that this might even be an option. Rightly, the ABC points to the place of government in setting up this structure. But history shows that for all that government is nominally in charge. Well. You might have noticed that banks are fairly powerful.…