The light's not shining

Let me be clear: we are at a point of the utmost significance to Australia, the entire global community and even the survival of life on Planet Earth. In recent months, we have suffered many natural disasters: floods and cyclones, earthquakes and a terrible tsunami; but manmade, self-inflicted disasters promise to outdo and outlast them all.

One writer says we are only "Seven meals to anarchy".

Recently, we have seen a revolutionary epidemic spread across the Middle East. It is not only poverty and/or hunger that have provoked the epidemic; but hunger, arising from physical shortage of food or money to pay for it, is already widespread and will almost certainly increase greatly on both a short-term and long-term basis.

More than forty million Americans rely on Food Stamps for their regular sustenance. As prices rise, the real value of the stamps diminishes. As the adequacy of food in men's stomachs is reduced, the anger in their hearts provokes them to violence. Not only are the less developed economies provoked to anger. The richest of us can become angry if we have no food – or not enough.

This is of special interest to the Australian community as a producer, supplier and consumer. We might need to bring more marginal land into agricultural production so that, exposed as we are strategically, we do not over the next few years find that too many people, in Australia or among our neighbours, are now only "seven meals away from anarchy."

The NSW elections are unlikely to provoke much serious debate on food prices; nor will much be said about speculation which has become so rife over recent decades and produced so many billionaires on the one hand and so many that the rich too often see as bums on the other.

Keynes warned of the grave dangers of speculation going beyond a small margin of the free-market economy; but speculation has been and still is at the heart of the financial system. It is indulged in by respectable "investors" many of whom have actively and greedily helped to devise a wealth of clever devices to feed their addiction. Derivatives, hedge funds and tricky insurance "swaps" attracted massive funds that should have been deployed more productively in the real economy. Their disposal is still largely undetermined.

No attempt has been made to control trade in currencies effectively since 1971 and more especially in the last ten to twenty years. Speculative trading in currencies runs into billions or trillions of dollars a day.

The value of the Australian dollar is determined not by our trade balances or the flow of real, long-term, fixed investment capital into or out of our economy. Rather is it determined by such things as the level of our interest rates and the profitability of the carry trade. As part of the hyperactive casino economy, it takes speculative advantage of arbitrage opportunities – with the risks that attend them.

No attempt has been made to control this massive speculation. Our global financial system has consequently been corrupted from the well-regulated system agreed under the Bretton Woods Articles of 1944 into a global gambling parlour of unprecedented dimensions.

This has direct consequences for the Australian economy. Our banks and other financial institutions are active in carry trades and, through those trades, appear to get much of their wholesale funding to lend, for example, in the Australian housing market. They have skilfully prepared the way for what could be one of the most monumental busts in Australian history.

Important as they are to millions of "ordinary" Australians, these issues will not be discussed, at least in the terms I have described, in the NSW elections. The outcome of those elections will be determined in other ways, applying different criteria.