It has been asked what possible effect it may have on the Canadian economy and on our currency, should the Bank of Canada be reinstated as the primary source of financing for our Government. Would our currency crash in value? Would some cartel of Chartered Banks hamper our economic recovery from the past 40 years of irresponsible spend-spend-spend-tax-tax-tax government? Is it possible that such an action could be allowed to destroy the entire economy of Canada? It is considered highly doubtful that anything of this kind would come about. Our entire economic system is based on mild inflationary practices, elsewise the economy would have bitten the proverbial dust some half-century ago or more. The reasoning for this forms the remainder of this piece. Most people do not understand the process of the creation of money. To a Bank, that process is very simple: the entry into a ledger of a series of figures indicating the creation of a set figure in credit money. This credit money is spent into circulation just as if it were notes and coins, thus fuelling the economy in some manner. Later, it is repaid to the creating bank and struck off the books, the interest payments remaining as a profit to the bank. In this way the process is short-term inflationary, long-term deflationary. What happened in the Great Depression is that the banks called in a huge number of notes for which the necessary currency in any form did not exist. The result was a crash. The banks, however, are restricted in the amount of credit money they are allowed to create, this limit being found in the Bank Act as modified by Parliament from time to time. The current problems in Canada divide neatly into TWO massive predicaments. These are: 1. The sheer amount of bank credit invested annually in the purchase of Government securities which bear interest payment, thus increasing the Public Debt to a proportion which already has proven to be unmanageable and a huge burden to the country, and 2. The ongoing process of DEINDUSTRIALISATION of Canada, no matter by what name. You might call it enhanced trade or a post-industrial society or whatever buzz-word is popular currently, but the fact is that a country which must export a ton of pelletised iron in order to buy half a dozen pairs of running-shoes is a country which (a) cannot put shoes on the feet of its own population and (b) will very soon run out of iron to export. Now let us look at money created by a National Central Bank. There are TWO good examples, both from the Second World War, TWO countries using credit-money created by the National Central Bank in order to fight that war. The Banks were the Reichsbank in Nazi Germany and the Bank of Canada in Canada. Both produced large amounts of credit money for the war effort. In 1942, going by figures from the Swiss banking union, Nazi Germany suffered less than 3% inflation. Inflation in Nazi Germany did not start getting out of hand until it was obvious that they were losing the war. In total, thanks mostly to rigid price controls and a top-down rigidly-controlled economy operating within a heavily-industrialised State, German inflation was substantially less than Canadas. This was followed, of course, by the complete collapse of the Reichsmark as the Nazi State and all of its mechanisms collapsed. Occupation authorities then pegged the Reichsmark at 10 cents US, just over a quarter of its official rate only a short time previously, and this cheap money, combined with Marshall Plan aid, was used to rebuild the German economy until the Bundesbank could begin issuing its own money around 1948. Canadas inflation during the Second World War, fuelled by the Bank of Canada, was about 30% for the entire period of the War, but the accomplishments also must be investigated. Canada BECAME a heavily-industrialised state during the course of that war, actually outproducing Nazi Germany (with almost 6 times the population and a heavy industrial base) in several types of war materiel. Literally dozens of complete factories had to be built, nearly a million workers trained.... and only then turned loose to produce the mechanisms of war. Radar, only a handful of years previously a science-fiction tale, was mass-produced in Canada. Canada produced so much small-arms ammunition that the military still was issuing it for target practice two decades later. FOLLOWING the war, Bank of Canada aid was used once again to enable the transition to an economy of Peace.... and the most rapid decades of economic development in our history. That this did NOT result in massive economic crisis is evidenced by the fact that Canada still manufactured coinage of 80% Silver until 1967. PRICES in Canada only started to rise rapidly concurrent with the removal of precious-metal coinage from circulation combined with massive increases in NONPRODUCTIVE Government expenditure and waste. Finally the country began borrowing from the private Banks, at current rates of interest, rolling over the debt and even borrowing to pay the interest, to create the unclimbable mountain of Debt which faces us today. Considering that the private banks are LIMITED by their reserves in the amount of credit-money which they are allowed to create – and considering the massive work to be done to get this country economically VIABLE again – the private banks should regard the bank of Canadas picking-up of the NONPRODUCTIVE Public Debt as an OPPORTUNITY for them to invest in the hugely-profitable REINDUSTRIALISATION OF CANADA. The following LOWERING and finally the REVOKING of the Federal Income Tax made possible by the Bank of Canadas assumption of the Public Debt will afford further OPPORTUNITIES FOR PROFIT to the PRIVATE BANKS, opportunities which they are prevented from accessing currently due to their holdings of non-productive, tax-based Public Debt. In short, NO, I do NOT think that there would be a sharp drop in the value of the Canadian Dollar resulting from such a program. Our Banks are MUCH TOO SMART to allow that to happen. More information on the Registered Canadian Action Party here: canadianactionparty.org Twitter:@actionparty Youtube: https://youtube/channel/UCII1zHL9e4oqOosv_V0CM3A CAP Discussion Group: https://facebook/groups/588565277882894/ Become a member of the Canadian Action Party or make a TAX REFUNDABLE donation: canadianactionparty.org/#!join-now/c22ri
Posted on: Tue, 08 Jul 2014 06:01:25 +0000
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