CONTRIBUTION · 22nd April 2011
As the fiscal year comes to an end for the Canadian Government, it appears we will have run about a $30 billion dollar deficit. Interestingly this year we will pay about $31 billion dollars in interest to private banks on our already existing $500 billion debt. Now obviously you’re thinking wouldn't it be great if we did not have to pay this continuous interest payment year after year digging ourselves deeper into debt and put it to use towards our ailing health care system, education, or any other under funded programs.
This scenario is not a fairy tale; in fact it is the way things were prior to 1975.
From its creation in 1935 to 1975 the Bank of Canada which is wholly owned by the people of Canada was successfully used to fund infrastructure, social programs, health and education for the benefit of all Canadians. Unfortunately, since Canada adopted Milton Friedman's theory of Monetarism in 1974, Canada has gone through the private banking sector to finance its needs causing the federal debt to increase nearly 3000%.
It is important to understand that 95% of the money in circulation was lent into existence by private banks as interest bearing debt. The remaining 5% is actual physical money printed on behalf of the Bank of Canada to provide a monetary base for the fractional reserve system we are currently using. This means that for every single physical or cash dollar deposited into a private bank it can then loan out 20 dollars, thus "creating" 19 dollars out of thin air and collect interest on each of them.
The Canadian action party (CAP) would seek to return to the proper use of the Bank of Canada, and institute statutory reserves to reduce the amount private banks can leverage. Our directive is to use the Bank of Canada to "create" money, not print additional money so that creation of money would be shared equally by the private banks and the publically owned Bank of Canada. We would do this incrementally until at least 50% of the total money supply became government created money (GCM) through the Bank of Canada.
This would be accomplished by The Bank of Canada Act section 18 sets out the banks' authority for lending to our governments at nearly 0% interest. In short, it states that the Bank of Canada may make loans to the Government of Canada or to any of the provinces who in turn may lend to their municipalities. Once the GCM starts to flow to various levels of government they in turn pay off their interest bearing private debts, therefore instantly removing the privately created money from circulation thus maintaining the same amount of money in the system. Inflation is not who creates money it is how much money is in the system.
So in short the choice is clear we can have our government borrow money from the Bank of Canada at nearly 0% interest or keep allowing money to being created by private banks with interest attached in consequence perpetuating the cycle of debt for future generations. One is for the benefit of all the citizens of Canada the other is solely for the benefit of private banks.
So for me it is an easy choice as I believe it so for all me follow Canadians.