[johnr]

<strong>Written By:</strong> johnr
<strong>Date:</strong> 2005-09-15 12:11:00
<a href="/article/171128751-using-our-public-bank-to-finance-public-debt">Article Link</a>

<B>Since the mid seventies, government practice has been to borrow almost exclusively from the market which has led to a huge public debt.</B> The interest on this debt for all levels of government amounts to $65-billion a year - an amount so large it is almost meaningless. Put in perspective, it is 6,500 times bigger than the $100-million scandal - and it is repeated every year. <B>This is the real reason why there is not enough money for hospitals or any other public infrastructure.</B> <BR><BR><B>From Confederation to 1977 (110 years), federal debt reached $29.6-billion, and this included debt of two world wars. In just 20 years, from 1977 to 1997, federal debt climbed to $588-billion - 94% of which was due to interest, not services. Provincial and local government debts rose to over $300-billion. <BR></B><BR>COMER encourages Canadians to lobby their government to use the Bank of Canada for financing public infrastructure - as it used to do. The government's standard response is that it would cause inflation, but fails to explain why borrowing from chartered banks at commercial rates is not inflationary while borrowing from the Bank of Canada at a nominal rate (to cover administration costs) is. <BR><BR>We hope that the Alliance of Seniors will consider lending its weight to bring some sanity to an otherwise insane practice of government namely, borrowing privately instead of using our public bank to finance public debt. We will be pleased to provide information, and since there are COMER chapters in several parts of the country it might be possible to arrange for someone to speak to meetings in those areas where there are chapters. Richard Priestman, President Committee on Monetary and Economic Reform Kingston, Ontario CC: William Krehm, President, <A HREF="http://www.comer.org">COMER National.</A> </P>

[whelan costen]

Excellent explanation, I wish more people could read this post! As soon as people start to realize this isn't some kind of new math, and they see it is common sense, they'll start asking why the gov isn't using it? If we are still free to ask by the time people figure it out?!

---
If I stand for my country today...will my country be here to stand for me tomorrow?

[matt]

I just emailed this letter to my MP Lee Richardson (Conservative, Calgary Centre) in response to previously posted articles on Vive, as well as this particular post. I hope he spends some time considering it, rather than just erasing it immediately.

Dear Mr. Richardson

I'm writing to you today as a voter and patriot concerned about the state of our country. A recent study released in New York stated that, despite Canada's record economic growth over the past decade, poverty has inexplicably increased. The Canadian section of the study was written by an economist from the Canadian Centre for Policy Alternatives (CCPA). The economist wrote that the Canadian government has regularly cut taxes for the rich while reducing public expenditures for the poor (health care, UI etc). The study further revealed that social spending as a percentage of GDP has actually fallen to around 11% from 16% approximately 12 years ago - a level that is far below historical averages. These cuts were believed to be necessary in order to bring Canada's spiralling national debts under control. After all, as Shelia Copps said "we can't just print money."
With that in mind, please think about the Great Depression, and how Canada miraculously pulled itself out of that quagmire, financed the Second World War, and all the subsequent infrastructure projects that followed. How could a country with rampant unemployment, in the grip of the worst depression the world has ever known, suddenly find seemingly unlimited amounts of money to solve the problem? Article 18 of the Bank of Canada Act holds the answer. Rather than borrow money from private banks as successive governments since Trudeau have been doing, the Bank of Canada can supply a great portion, or even ALL money requirements of EVERY level of government at well below market rates (far below 1% interest per annum). The Bank of Canada was what saved this country from economic ruin, and was instrumental in our country's prosperity until our government fell under the spell of flawed Friedmanite neo-classical economics. Since then, our national debt has ballooned from mere 10s of billions of dollars to in excess of $500 billion dollars, over 90% of which is just interest, being collected by private banking institutions, to the detriment of every single Canadian citizen.
All that needs to be done to correct this gross mismanagement of Canadian resources is to have the Finance Minister direct the Chairman of the Bank of Canada to repatriate foreign and domestic debt held by private banking institutions to the Bank of Canada, which would free up 10s of billions of dollars of interest payments each and every year which could be used to pay for increased social services (saving public, non profit health care), an increase in military spending as well as a tax cut for ordinary, working Canadians.
I'm begging you, Mr. Richardson, as my MP, to make this an issue in the Conservative Party of Canada's next election platform. To use the Bank of Canada to finance Canadian debts, and bring about a new era of prosperity to this country and its people.
I would be happy to correspond more on this subject if you are as concerned about the state of our home as I am.

Thank you very much for your time.

I realize that that email was essentially a re-hash of previously posted material on this site, and that my ignorance of economics probably shone through like a beacon, but hopefully he'll take note that at least one of his constituents cares - maybe he'll do something positive for everyone?

[Patm]

Actually Matt, what I've found is that people think macro-economics are a lot more complicated than they really are. This is not really an accident, alchemists spend a long time in school learning neo-classical economics - the science of making the rich much richer - and don't like it when people see through all their meddling into economics to make debt-based money systems function. Alchemists should be kicked out and a stable monetary policy put in place.

Oh I'm sorry, did I say alchemists instead of economists? That should have said Alchemist... err, Alchemist... Hmm, my spell checker keeps replacing economist with alchemist - must be trying to tell me something.

[whelan costen]

Matt, I'm impressed with your initiative, it'll be interesting to see if he replies. Most people won't even read the material let alone try to understand it, here's hoping.

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If I stand for my country today...will my country be here to stand for me tomorrow?

[matt]

I'll certainly post his reply if/when it comes. Here's hoping!

[RPW]

<a href="http://www.rudemacedon.ca/fhtt/debtscam.html">http://www.rudemacedon.ca/fhtt/debtscam.html</a><br />
The interest on the National Debt comes to about one thousand billion over the last 25 years. Not bad for actual spending of only about 100 billion.................<p>---<br>RickW

[hoopoe]

Good point about the inflation question here as to why there is no concern when the government borrows the same amount at market interest rates. Nice to see someone besides CAP talking about this.

[mk]

Plus, even if prices are nominally constant (i.e. nominal inflation low), but more and more people over-consume by using credit financing, is that not a form of inflation?

It seems odd (or instructive) that during the period where we myopically focused on inflation rates, levels of government, business and household debt have increased wildly.

Does that not suggest that this whole low-inflation thing has been a big farce, that we've squeezed a balloon on one side only to have it bulge out on the other? If we fold the current debt levels into the original prices--somehow take the net present value of all that debt at the time it was issued and say *that* was the real "price" you paid, how would that make the inflation rate look? That would give a sense of the "cash price lifestyle" and gauge the honest standard of living in our nation and others like it. Leading to an honest assessment of how far beyond our collective means we've been living.

It's almost like we didn't eliminate inflation at all, we just assigned the privilege to profit from it to it to a select group. Wonderful times indeed, since real, traditional, growth-based inflation *used to* naturally dilute those very same people's net worth relative to others, now it has allowed that net worth to skyrocket.

I'm no trained economist--does any of that make sense?

[Ed Deak]

We're in a major inflationary period, caused by the deregulation of the banks and their subsequent orgy of money creation for debt and investment.

Fiat money is worthless unless it can be converted into resources. This is the major reason for the campaign of globalization. It is nothing more than colonization with the perceived power of imaginary money that doesn't even exist as paper, only as fleeting figures on computer screens, yet have the power to destitute and kill millions every year, while making a few rich.

What we have now is the power of banks in certain countries to create imaginary capital to take over the resources of others who alrady own those resources, but have no permission to use and enjoy the benefits of their own properties..

Plus, of course, the control of the money markets, which is then used to literally control the weights and dimensions of trade goods through the artificial fluctuation of monetary values.

The biggest and best racket in history.

If the monies created for investment and debt were to be put on the open market, a loaf of bread would cost $100. or more, overnight.

Ed Deak, Big Lake, BC.

[Hugh Jenney]

This is the biggest liberal and conservative scam ever perpetrated upon the Canadian people. The same thing is going on in the US but at least Thomas Jefferson warned them. The Trudeau Liberals sneaked this through Parliament. $65 billion paid every year in unnecessary interest payments on public debt is a crime. That and the lowering of taxes on the rich make us all economic slaves.