Great comments from Robin Lillicrap to generate some interesting discussion on 'PNG Attitude'.

Robin, you have just just given something interesting to post next time, especially for our PNG readers: the banking system used by the banks today to create funny 'money out of thin air' and re-loan it to others to keep circulating is just like numbers on a computer.

The Bank of Papua New Guinea was established by the Act of Parliament (Central Banking Act, 1973) which defines its powers and functions. Before PNG’s independence, the central bank was a branch of the Reserve Bank of Australia.

The main function of the PNG is to issue currency and to act as the banker and financial agent to the government. It is also in charge of regulating banking and other financial services and manages the gold, foreign exchange and any other international reserves of PNG.

If I read the global scenario rightly, most reserve banking systems are the top tier of entry for each nation into the world of trade and commerce. Their role is to facilitate the participation of the host nation in interfacing the international community with all its variations in the regulation of import, export, payment and receipts etc.

In this 21st century, it is increasingly evident that the complexity and extent of indebtedness of nations points to the nature of finance as we experience it , to be similar in status to that of a failed state: unable to make its way in a responsible and orderly fashion thus depriving its people of rights and privileges enjoyed in a free and unencumbered economy.

This loss of independence binds citizens to a shrinking range of survival options as measured by the yardstick of traditional expectations ala jobs, incomes, lifestyle etc.

Closeted within the clauses of the failed Copenhagen climate change agreement were provisions to bind signatory-nations from the first-world to annual contributions of percentiles of their GDP.

Those contributions were to be allocated to many areas of 2nd and 3rd world concern … but not before the establishment of an over-arching authority to govern the new arrangements from three standpoints: Governance, Finance, and Enforcement.

It was in fact, as Herman Van Rompuey (Belgium) longed for and enthusiastically announced “2009 will be the first year of world government” a document designed to be a de facto constitution for just such an institution.

Currently, there is not one unified voice among nations to implement the climate change agenda once lauded as the “moral imperative of the age”.

As Reginald pointed out,” During the impending downturn, which I expect to start within the next few weeks, investors will discover that gold is one of the very few ways to protect their assets and preserve capital.”

Try telling the central bank that message. They’ll laugh at you! Their world is one of fractionalised money: The idea is that people deposit their money into banks, and the banks take that money and lend it to others.

The theory behind banking is that not everyone will want their money at the same time, and so lending person A’s money to person B is fine, because person A can have person C’s money when he wants his money back.

But the main flaw in this idea is that the deposits are not available for lending. Period. We’re all told that our money is in the bank, and we can get it at any time we want, but we’re not getting our money, we’re getting someone else’s money—they just lent ours out to someone else!

This leads to Fractional Reserve Banking. Banks only kept about 15% of what was deposited—the rest was lent out to others.

Depositors were given receipts for their deposits, but the bank issued out loans with 85% of the deposits, and the new borrowers of that money were given new receipts for the same money!

This resulted in the existence of twice as many receipts as there was money! The Bank, out of Fractional Reserve Magic, was able to create brand new money.

This can only go on for so long, because eventually, when people wake up and realize that their money that they deposited isn’t really safe, they all run to the bank and demand their money, which as we know from It’s A Wonderful Life, ends in mass depression and poverty.

Now I seriously doubt that B of PNG is any different to the rest. They are bit-players in the “world-Game” and any divergence from the carefully crafted script by which global reserve banking is conducted will result in swift and impartial discipline upon that independent State.

For instance, it will likely be made illegal to possess gold as a private investment. Such an ownership bypasses control of the regulation of finance by banks, you see.

Aha! The plot thickens. How dare you assert commonsense principles of conduct of society, when those with “superior” knowledge will soon take up cudgels once again to reassert the validity of assigning value to carbon and reinvigorate the temporarily abandoned New World Order.

Their agenda: to establish one global village with its enlightened masters of Governance, Finance and Enforcement benevolently redistributing the worlds wealth as they see fit.

The Central Bank must be aware that the list of countries at risk of bankruptcy is daily increasing. The acronym used to be PIGS (Portugal, Ireland, Greece and Spain). It is now PIIGSJUKUS and growing. The main contenders are currently: USA, UK, Japan, Spain, Italy, Greece, Ireland, France, Portugal, Baltic States, Eastern Europe and many more.

On a proper accounting basis all of these countries are already bankrupt, but since many nations can either print money, like the US and the UK, or increase their already high borrowings, like Greece and the Baltic States, they have technically avoided bankruptcy.

The problem is not just the current debt levels of these nations, because the deficits in all the countries are rising. Tax revenues are collapsing at the same time, while the governments' expenses for social charges are soaring.

In the US for example the federal deficit in 2009 was $1.5 trillion (10.7% of GDP) and is forecast to stay around that level for many years. The plight of the US states is bad with out of fifty states, only four are expected to have a balanced budget in 2010.