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BANKS - MONEY FROM NOTHING - Continued from page 14 Moral: make sure you get a loan whose massive scale. Usury originally meant ‘lending money at _ interest rate matches your trustworthiness and We have seen that the banks' power comes exorbitant interest’, and this is what capacity to repay. If you are a longstanding from their unique ability to create credit and Congressman Gonzales meant. How right he customer with a secure income, do not allow destroy credit, to collateralise assets and dic- was. Australia has tolerated usury and has not them to persuade you that the only type of 5.1. interest rates. The impact of all this was prospered because of it. loan they can give you is a high-interest per- neatly s ised by an eminent Chancellor The next reason for variation in interest Sonal loan. A ‘ of the Exchequer in England, Mr. Richard tates is the variation in the risk to the lender. Remember: they are not giving you inde- McEenm, che anid Har “ Thus the base rate applies to loans where there pendent advice, like a solicitor might. They F ; a i is assumed to be no risk at all. The extra per- are just loan salesmen. Like any other sales- | am afraid that ordinary citizens will not centage is then like an insurance premium men, they won't show you straight to the best- llc ts hae tol zat tie emer ten and de which you pay for to insure that bank against value car in the yard; they will first try to sell create and destroy money. And they the risk of not getting their money back. This you the one giving them the biggest profit who control the credit of the nation sounds fair enough, but it results ina Catch 22 margin. Caveat emptor. direct the policy of the governments and situation: if your capacity to repay is in doubt, The rate of inflation and risk are two rea- hold in the hollow of their hands the des- you are charged extra interest to cover the risk. sonably justifiable reasons for interest rates to tiny of the people. But if you are a bad risk, the higher interest vary. However, in contemporary Australia rate will make you a worse one. interest rates have served two more purposes Paul McLean was a foundation member of the This is the source of one of the most blatant which do not sit comfortably together. Banks Australian Democrats, and was elected as a Senator for NSW in 1987. He came to prominence especially through his historic battle bank malpractices. Say you go to them fora have used high interest rates as one way of housing loan - normally one of the safest and covering the bad debts from their debauches of [i get the now infamous "Westpac Letters" before hence cheapest loans a bank offers. They _ the late 1980's, while govemments have used the parliament and public scrutiny. know that their money is safe with you, but them as an instrument of monetary policy- a [iTalent tet eatin age eta re they want to get a higher interest rate. So they means of constraining consumer expenditure and corruption in the Senate. He constantly refuse the housing loan, but instead offer you _and therefore inflation and encouraging a flow called for a Senate inquiry, and moved a bill an overdraft or a personal loan, with a lien on of funds from overseas to finance our foreign [Hae HOS al pele Commission into the your assets as collateral. You are then paying debt. Each has conveniently blamed the other At the ti sang . ; ‘ r - time of his resignation from the Senate in overdraft or personal loan interest rates on a for exorbitant interest rates. Meanwhile the Ausust 1991, he had 600 cases of bank loan which is as safe for them as the housing rates have inhibited business investment and 8 malpractice on his desk loan they refused to give you. caused financial hardship and misery on a 64¢NEXUS a. °° °»#»#4z| ___s__ ————— ee ——— ee | AUGUST-SEPTEMBER 1992