I challenge any reader to make real sense out of your 3 000-word filler on monetary policy (Business Report, December 12) other than that central banks are keen to protect whatever economic credibility they have left.

The problem with Keynesian “economists” is that they believe they can change a 400-year-old economic paradigm from within the paradigm itself, which is impossible.

One needs to separate the trees from the woods and that’s where Austrian free market economics comes in, as far as I understand it.

The Austrian School has simple ground rules, one of which is: if you want to understand how a successful economy works, find one that is working and study that.

The economies of the West are demonstrably not working, so studying them can only yield bumf like Bloomberg’s Torres and Kennedy quoting the entire counterfeiting contingent from “helicopter” Ben Bernanke to the one exception, Bundesbank president Jens Weidmann, who at least has the courage to point out that a “bond buying strategy” is tantamount to printing money to finance (bail out) governments.

And, he says, it is illegal, not that that matters to unregulated international privately owned, profit-driven central banks.

Let’s cut to the chase: are there any successful economies we can at least have a quick look at?

I’ll leave out the US state of North Dakota, solvent for over 90 years and with 600 000 people wondering what to do with a billion-dollar surplus today. That’s too easy. After all, it’s the only state in the US that’s solvent and what’s so special about that?

Rather let’s look at a recovering casualty of the debt-based counterfeit money way of running things: Iceland.

“We bailed out the people and jailed the bankers,” its prime minister summarised after the country began cleaning up the debt mess.

Very simply, Iceland declared all of the debt run up by private banks as usurious and therefore illegal, wrote it off – and yes, jailed the bankers – and started afresh.

Free market economics can be deceptively simple: accessible supply and correctly interpreted demand lubricated with a medium that makes distribution from suppliers to consumers as easy as possible.

And the best medium discovered so far is asset-backed money. That and keeping your income slightly more than your outgo.

Nothing wrong with a little debt to help one along, but when entire nations are bankrupted by a system that punishes only the people of those nations – not their rulers – people who suffer the consequent austerity now accepted as worse than the Great Depression, then the people should really throw in the towel.

Like Iceland.

The key?

A government-owned central bank.

Iceland copied North Dakota’s model, a non-profit state bank that borrows money at a certain interest rate and lends it out at a rate slightly higher to cover expenses. No “bank charges”. Need I go further?

It’s not your fault that banks actually charge you to lend them your money today! They have been allowed in law to charge you to deposit it, count it, keep it for you, spend it, whatever – it costs you to have a bank handle your money to the point where if you do borrow, you’d better be very careful or the penalty charges will kill you.

In Europe and the US, that’s what’s happening at only one level.

It’s called the ‘bust’ period between economic ‘boom’ times – but does anyone recall any boom time between the Great Depression in the 1920s and now other than the credit-driven 1950s and 1960s?And what the hell is “quantitative easing” anyway?

You can’t eat euphemisms...

Tom Dennen