Monday, December 03, 2001

Straight thoughts 82

December 3rd, 2001

I did not send a "Straight thought" to you for a couple of weeks, so I though I could tackle a subject that affects our families and businesses more than anything else: the money supply "robbery".

Money supply (up to now) has been a federal issue. The Government of Canada, using as a collateral the good will and assets of Canadians, and the resources of Canada, can create currency on behalf of its citizens (originally by minting coins and printing money).

Canadians and indeed people all over the world accept and use Canadian currency to simplify commerce.
That's the idea in a nutshell. Simple.

Creation of currency acquired new forms, with paper and electronic transactions, such as the issuing of bonds or the lending of money. The concept is still the same.

Or at least it was, before the government did the following:

Delegated the creation of money first to the Bank of Canada (1913), which then delegated this power to create currency (by lending money backed by assets) to a selected number of "chartered banks".
Borrowed money back from chartered banks (and agreed to pay interest on it!).
Abandoned the gold standard a little at a time, until the current situation, where chartered banks can lend money, at their discretion, without collateral assets.

Loans to individuals and businesses now represent 95% of the money that is put in circulation.

Why do I write about a federal issue? Because it deeply affects the finances of every family.

In the last twenty years government debt has become a permanent fixture, at levels so high that are hard to comprehend. As a consequence, the interest (yes, just the interest) we pay to the banks for borrowing the money the we could have created is, for the Ontario debt alone, about $860.00 per year for every man, woman and child. The average interest each Canadian pays for the federal debt is over $1200 per year. The average combined total interest paid, for a family of four, is over $8,000 per year.
This is what we pay yearly (through taxes) for the privilege we granted the banks to loan us money back for our nation's growth.
The $8.5 Billion the Ontario Government pays in interest could go a long way towards health care and education, and could replace, for example, all of the corporate tax revenues. The feds could easily scrap both the GST and the Employment Insurance taxes.

How does the current system affect the banks? Bank profits are astronomical, both during recession years and good years. Antitrust legislation was needed to prevent banks from getting even bigger. As a result, FORBES magazine reported last week that Canadian banks are on a buying spree outside Canadian borders.
Of course I am not advocating that banks should not profit for the services they provide according to the free market, with interest. What I am saying is that the privilege to create Canadian currency is ours (the people's) because of our assets, our agreement to live and work together in a nation called Canada and our agreement to use, for personal and business transactions, the Canadian dollar.

Why our MPs do not raise the issue? Just check the biggest contributors to all political parties that have a chance to form a government: Banks.

For starters, the Family Coalition Party would reform the Ontario Election Act to allow political contributions from individuals only (not unions or corporations).

The next step? We would pressure the federal government to stop borrowing from banks and reform the money system and practices. Failing that, what about issuing our own Ontario honest currency? I think that would catch their attention.