A Matter of Interest
One Signature Can Save Us!
First in a Series on the Essentials of a Participatory, Democratic Society
Attention Citizens of Canada June 18, 2020
Do big numbers scare you? If so, they should, especially when you are speaking of money! The Federal debt is hovering around $700 Billion, that’s $700,000,000,000, more or less depending on what calculation method you use, but be that as it may, that’s a large amount of money. As of this writing the COVID-19 stimuli are approaching $197 Billion, $197,000,000,000. Under the present borrowing protocol, in place since 1974, we, you and I, pay interest on the $700 billion to the tune of some $26 billion, $26,000,000,000, annually to private lenders including the banks. The new COVID-19 induced debt, interest under the present borrowing system, even at the current overnight target rate of 0.25%, would amount to $492.5 Million, $492,500,000, annually.
This is money we DO NOT have to spend! And why not? Money, loans, issued by private sources, including banks and other financial institutions is done solely for the benefit of the commercial institutions. Money issued by the Bank of Canada is done for the benefit of the people.
In 1933 Prime Minister R. B. Bennett called for a Royal Commission to study, “…the workings of the entire banking and monetary system and consider…a Central Banking Institution”. On July 3, 1934, the framework of a Central Bank of Canada received Royal Assent and on March 11, 1935, the Bank of Canada opened as a privately owned Institution, with shares sold to the public. An amendment to the Bank of Canada Act was introduced in 1938 to nationalize the Bank of Canada. All shares were bought and held in trust for the people by the elected finance Minister. Then and now, the finance Minister has final say in all policies. BUT Finance Ministers have failed to exercise that authority since 1974. A keystone of the Bank of Canada is found in the preamble, which remains unchanged today, “…to regulate credit and currency in the best interests of the economic life of the nation…and generally to promote the economic and financial welfare of the Dominion…”.
Perhaps we should ponder the following statement:
“Until the control of the issue of currency and credit is restored to government
and recognized as its most conspicuous and sacred responsibility…Once a Nation
parts with control of its credit, it matters not who makes the Nation’s laws”.
William Lyon Mackenzie King, Canada’s Prime Minister, 1934-1948.
Do you wonder why, when we live in this marvellously wealthy country with resources which any country would envy, we have so much poverty, homelessness and dangerously rising personal debt? It seems presently that our Government has no end of money to supplement our needs during this emergency. And yes, given the expanse of the pandemic our needs must be supplemented. Some of this supplement, these fiscal stimuli, may be repayable. BUT the interest, the approximately $500 Million, $500,000,000 does NOT! Why not? Because the Bank of Canada, if directed by the Finance Minister, can create currency interest or near-interest free. One signature can save us all! When a loan is given to a government, whether federal, provincial or municipal, using the authority of the Bank of Canada to make that loan…no interest need be attached.
Direct payments to individuals are considered similar to income and therefore may affect one’s income tax.
Consider this: up to 1974 Canada fought two world wars, went through a major depression, constructed major infrastructures such as the St. Lawrence Seaway, Trans-Canada Highway, International airports, Canadian National Railway, and brought in social welfare programs such as Family Allowance, Old Age Security pensions, Canada Pension Plan, Universal Health Care and accumulated a debt of only $21.6 Billion. That is $125.5 Billion in terms of today’s, 2020, dollars. It should be noted that most of these accomplishments were achieved by creating money at no effective interest during the 1938 to 1974 use of the Bank of Canada.
In 1974 the federal government stopped using the Bank of Canada for its primary purpose and started borrowing from private institutions with interest premiums. From 1974 to 2020, a 37 year period, our debt is over $700 Billion and counting. In today’s 2020 dollars the period 1974 to 2020 accounts for over 85% of the total federal debt. In 1991-92 we paid over $41 Billion in interest, and in 2011 we paid over $37 Billion in interest, and Canada currently, with lower interest rates, pays over $26 Billion per year of our money to service this debt. This accumulated expenditure from 1974 to the present of over $1 Trillion dollars, $1,000,000,000,000, in interest paid to private institutions is largely due to ignoring the primary role of the Bank of Canada – the creation of currency for the best interests of the nation. It did NOT have to be! It must NOT continue!
Linda McQuaig, Contributing Columnist, The Star, Writes in her article of June 3, 2020:
“…For years, we’ve submitted to the economic orthodoxy dictated by Bay Street: that governments must deliver balanced budgets and low spending or economic disaster will follow — as surely as gravity will bring a heavy object plunging to the ground.
Then along came the pandemic. Suddenly the Bank of Canada is creating vast amounts of money, which the federal government is distributing to Canadians across the country.
Nobody told us we could do that! In fact, it’s just what’s needed. To prevent an economic collapse, our central bank is buying $5 billion a week in government bonds, which is effectively creating money out of thin air.
Private banks do this all the time; they effectively create money whenever they issue a loan. It’s one of the reasons banking is such a lucrative business. Now, the Bank of Canada is creating enormous sums of money to help pay for the federal government’s huge increase in spending during the pandemic. Bay Street financial interests are grudgingly accepting this, given the emergency, but they want it to stop as soon as possible.
But wait! Not so fast! Now that we see how it can be done, one is tempted to ask: could this be a way to pay for increased government spending on future things we truly need — like building hospitals and public transit and investing in renewable energy?
This is the sort of dangerous thinking that a phalanx of powerful interests — from the Fraser Institute to the financial press — are keen to crush, realizing it could spread more easily than coronavirus at a crowded, maskless beach party.
Linda McQuaig’s article can be found at: https://www.thestar.com/opinion/contributors/2020/06/03/radical-economic-policies-are-working-and-show-a-future-path.html
Admittedly, all these numbers, percentages and comparisons can be confusing, daunting and mindboggling, but they needn’t be. The bottom line, the intent in bringing them forward is a call to action. Lobby your councillor, your MPP and your MP, send letters to councils, provincial and federal cabinets, the senate and the minister of finance requesting a return to the Bank of Canada as it was envisioned in 1938 for the benefit of Canadians.
More importantly, distribute this article throughout your network. Have conversations with your neighbors, community associates, friends and family, and politicians of all levels of government to create a more engaged society.
Annotation: There are many external forces and groups working globally to undermine democracy and the sovereignty of nations. Their goal is the control of the global economy and manipulation of capitalist interests. You may explore their mandates and influence at your leisure. Some of these groups are: the Bilderberg Group, the Military Industrial Complex, the Council on Foreign Relations, the Basel Group, the International Monetary Fund, Bank of International Settlements and the Fraser Institute to name only a few.
To learn more about this and other factors threatening our economy and democracy and to find enlightening articles and book titles go to the Citizens Democracy Forum website: www.citizensdemocracyforum.org.
John Carley Clinton Halladay
Lead Communications Coordinator
Citizens Democracy Forum Citizens Democracy Forum