Credit Reform

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donOld
Credit Reform

Hello to all,

 

Born in 1953, I am a member of the only generation on Earth that was fortunate enough to experience a continuous period of economic prosperity that lasted for the two and a half decades between 1945 and 1970. During this time all boats were rising together, unemployment and inflation were negligible, interest rates were low and the future seemed bright for all. Governments played an active role in wealth distribution and market forces were held in check by a shared respect for a common good. Although major government programs like Old Age Security, Medicare and numerous welfare and disability programs were initiated, increases in taxation rates and the general cost of living were moderate. Total government debt (not deficits) remained insignificant as a percentage of GDP despite the government’s active participation in the economy.

 

This period surely was an anomaly in the history of the world. Never before had a whole generation experienced such a dramatic improvement in the quality of life on this planet. New machines and gadgets, radios and televisions, and superbly designed automobiles flooded the market. Massive public infrastructure projects were initiated …highways, bridges, airports, schools and hospitals were built. Public utilities, museums, parks and the CBC were developed. No shortage of money limited what society could achieve and most people were content, optimistic and friendly.

 

So what happened? Why now is there so little money to sustain the public good? Why did our government choose to go into debt? Why today must we worry about both inflation and unemployment? And why does it seem like our government is the last group we can count on to be concerned about protecting the public good?

 

I started asking these questions about twenty years ago and I would like to share with you on MonetaryReform.com what I have learned so far. Although I majored in economics at university I am not an economist. Nor am I a communist or an anti-Semite. I sincerely hope that my writing style makes it obvious to you that I am just an ordinary guy who's willing to share his two cents worth to make a difference in the world around him.

 

George Victor

As Oliver requested: "More please."

Can you associate the END of good times (the 70s) with events at that time, old boy?  Beyond monetarism?

donOld

George Victor wrote:

As Oliver requested: "More please."

Can you associate the END of good times (the 70s) with events at that time, old boy?  Beyond monetarism?

 

In a nutshell, here's what happened to change things for the worse...

1) During the last half of the 70s, the Canadian government reduced it's borrowing from the Bank of Canada and borrowed more from private lenders. This increased the government's borrowing costs significantly, since the Bank of Canada had been providing financing at virtually no cost.

2) During the same period, interest rates soared, to record levels by the early 80s. High interest rates sent government deficits through the roof.

3) As Canada became more and more reliant on private lenders, what money markets wanted became far more important to the government than what average Canadians wanted ...and what money markets wanted was for the public sector to get out of the way of profits.

By the mid-80's, the implementation of the 3-step program above was so successful that Canada "hit the debt wall" and became an economic "basket case" (or so we were told by Paul Martin and the business press).

The rest is history ...social programs were gutted, the foreign investment review agency disappeared, the our best public assets were privatized, NAFTA and globalization were forced upon us ...and on and on and on.

Fidel

Thanks Donold. William Krehm refers to the post-GCM(Government created money) era in Canada as the period during which  Stalinization of economic theory began. We are not supposed to ever refer to the period 1938 to 1974 as its been purged from texts and university courses on economic theory and finance. Mulroney's dictatorial change to the Bank of Canada Act in 1991 is the dead rat under the floorboards.

donOld

Fidel wrote:

Thanks Donold. William Krehm refers to the post-GCM(Government created money) era in Canada as the period during which  Stalinization of economic theory began. We are not supposed to ever refer to the period 1938 to 1974 as its been purged from texts and university courses on economic theory and finance. Mulroney's dictatorial change to the Bank of Canada Act in 1991 is the dead rat under the floorboards.

Exactly right. Mr Krehm is one of Canada's most valuable untapped human resources. I have the highest regard for his intellect, humanity, and unyielding devotion to the science of monetary reform.

I first met him and John Hotson in the early 90s at Paul Hellyers cottage in Muskoka. I was impressed immediately ...and changed forever.

George Victor

The Canadian dollar has floated for some time, something that Krugman praised in a piece he published some years ago.

The monetary changes in Canada were prefaced by changes in economic theory and practice that appeared in the 1970s, however. Do you not think that the Chicago School's effect was more than marginal in such monetary "reforms'? And finance capital was brought to the fore with credit expanded exponentially to lift economies out of stagflation of the 70s.   :)

And Paul Hellyer?   Only the brave mention that chap in relation to events political... His thing was (is) monetary reform?   I have been meaning to try to understand his role back when...What of his stuff should one read?

siamdave

- donOld - been trying to interest the rabblers/babblers in monetary reform for some time now, with no appreciable results beyond the odd 'wacky ideas!' comment, or warnings not to be spamming Rabble 'news' stories with such messages - maybe you'll have more success - it's about the most important issue of all these days, since he who controls the money controls all else, and right now it is *not* "our" government controlling things. My most recent essay here - What Happened? http://www.rudemacedon.ca/what-happened.html

(I suppose I was about the only one who noticed yesterday when the Basil people laid down the new banking laws that not a single voice was raised questioning just who controls Canadian banks? Obviously, the rules they operate under are *not* set in Canada - which would have some pretty serious implications for anyone paying attention. Anyone else out there?

George Victor

But, conversely, since Canadian banks have been praised for two years now for their regulation (thanks to Chretien), do you not find it just a bit too convenient that NEW international conventions are suddenly signs of an international plot ?  Ottawa had to use CMHC funding to buy up more than $60billion in mortgages to provide the banks with the liquidity to allow them to finance the mini-boom of house buying/building last year. That is a sign, to me, of the degree to which banks have been co-opted to maintain national fiscal goals as well as monetary.

Fidel

How could Canada's bix six banking monoply not do well? Lord knows they've been bailed out enough times since the 1980s. And then there was the big bank heist in 1991. They do well while the feds went in the hole from $18 billion federal debt in 1974 to $585 billion by 2000. harper will jack federal debt up to $620 billion by 2014-15. And what a gift for the banks it is.

And they've used the savings of Canadians to finance approximately two-thirds of the thousands of foreign takeovers of Canadian corporations and valuable crown assets since 1985. We've become renters in our land run by absentee corporate landlords.

siamdave

George Victor wrote:

But, conversely, since Canadian banks have been praised for two years now for their regulation (thanks to Chretien),

- banks have been praised by their politician puppets and the MSM - most of us understand that modern politicians don't have a high credibility index about anything, and some of us at least have learned that the MSM is not necessarily an impartial or truthful purveyor of important things about what is happening in the world - Rabble's own Murray Dobbin, for example, if my words do not persuade -

http://www.rabble.ca/blogs/bloggers/alex/2010/05/canadian-good-banks-myth

Quote:

..... do you not find it just a bit too convenient that NEW international conventions are suddenly signs of an international plot ? .... 

What 'suddenly'? The banks have been highly influential for a long, long time (just coincidentally, I listened to this today -http://www.corbettreport.com/mp3/episode139_colonial_scrip.mp3 (much further interesting reading with it here http://www.corbettreport.com/index.php?ii=364&i=Documentation ) -  they have been running things in Canada for the last 30 years, although few understand this.obviously (see prior about MSM...). I find it a bit scary that they are so blatantly telling everyone here that they all take orders from central bankers in Basil - they seem confident that either noone will understand this, or what it means - and I suppose they are right ( see 'scary ...' )

Quote:

Ottawa had to use CMHC funding to buy up more than $60billion in mortgages to provide the banks with the liquidity to allow them to finance the mini-boom of house buying/building last year. That is a sign, to me, of the degree to which banks have been co-opted to maintain national fiscal goals as well as monetary.

- I don't mean to be insulting, but that is just ass-backwards - the national governments of the world have been completely co-opted to the fiscal goals of the elite banking class. And we're all paying and will continue to pay, until people start to understand this, and get rid of this monstrous disease. (which, unfortunately, I don't see much hope for - the 'progressive leaders of the pack', as we see on Rabble, seem oblivious to this in every way - and if these people are not interested and willing to take the lead, there's not much hope the 5-hr per day tv-head is ever going to wake up ...)

George Victor

George Victor wrote:

The Canadian dollar has floated for some time, something that Krugman praised in a piece he published some years ago.

The monetary changes in Canada were prefaced by changes in economic theory and practice that appeared in the 1970s, however. Do you not think that the Chicago School's effect was more than marginal in such monetary "reforms'? And finance capital was brought to the fore with credit expanded exponentially to lift economies out of stagflation of the 70s.   :)

And Paul Hellyer?   Only the brave mention that chap in relation to events political... His thing was (is) monetary reform?   I have been meaning to try to understand his role back when...What of his stuff should one read?

 

I would really like to see dO or sd respond to the 1970s freeing up of credit to restart growth in an economy suffering from stagflation.  If anything is bassackwards, sd, it is talking monetarist niceties without dealing with those ideas flowing out of the University of Chicago, and the corporate control that that bestowed on us.

siamdave

That's a bit incoherent, GV. Be a bit more specific and I'll see what I can do. I don't have any great knowledge of what happened during the late 60s and early 70s financially, a bit before my time, aside from Nixon removing the gold standard, which has a lot of libertarian types still frothing, but whatever that led to, it is not the root of the problem. The root of the problem is, as I keep saying and you keep refusing to engage, is the fact we allow private/commercial banks to create our money supply and charge interest on it - everything else follows, as I explain in detail in the essay. Anytime you wish to challenge this, I would be happy to talk about it.

As for 'freeing up credit' - that's just a typical sort of "let's hide what we're *really* doing haha' way of saying 'allowing banks to create as much money as they want leading to inflation, debt and speculation!!! we're SO freaking clever!!!' - the problem is, of course, they charge interest on all that money they create out of thin air, and that leads to problems. Freeing up heroin injections for the population would make everybody pretty happy for awhile too - but that kind of thing catches up with you and eventually extracts a pretty big price - we've been seeing the results of essentially unregulated, bank-controlled money since the great 'freeing up of (bank) credit' in the 70s in the boom-bust cycles, the several major bank bailouts since then, the inflation that has caused the average family to currently have higher debt and lower savings than 40 years ago and require two working people to support a decent life where one could do the same back then, and the massive national and provincial debts of Canada that we have paid some two trillion dollars in interest on over the last 30 years. Not a glorious history, really, when examined through a lens other than the MSM, which is, of course, owned by the same people who control the banks. And "our" government ....

 If the Bank of Canada was the entity controlling our money, issued debt-free, we would have a much saner and financially stable society, in every way (assuming 'democratic' control, of course, rather than the Bay St oligarch control we currently have ... but that's a different discussion, although certainly related).

This:
"..If anything is bassackwards, sd, it is talking monetarist niceties without dealing with those ideas flowing out of the University of Chicago, and the corporate control that that bestowed on us..."

- sorry, I don't get your point - what ideas are you talking about? Basically, Freidman and the U of Chicago did what they could to justify the 'market rules' economic policies later enshrined by various neocon/lib/NWO etc governments, starting officially with Mulroney in Canada, Reagan in the US, Thatcher in GB, etc. - given the context, you sound as if you approve of these things, as you ask me to 'deal with them' - but then you seem to say you do not approve of the corporate government these policies supported - so which is it?

More clarity in every way would help - although I well understand the great fear that those supporting these right wing policies have of clarity - shining a bright light on the money supply situation and waking the public up to this massive scam must be one of their worst nightmares. Or maybe not - I and others have been trying to do this for quite some time, and as the great lack of interest from most 'progressives' such as here on Rabble would seem to indicate, they don't actually have much to fear.

To paraphrase a famous Huxley quote, 'And they shall be told the Truth - and not give a fuck. What's on tv?'

donOld

George Victor wrote:

Do you not think that the Chicago School's effect was more than marginal in such monetary "reforms'? And finance capital was brought to the fore with credit expanded exponentially to lift economies out of stagflation of the 70s.   :)

 

GV, please don't waste your time and attention on the meaningless, pedantic debates about economic theories that university academics and the media use primarily to distract you away from the more important issues. Just follow the money flows and trust your own common sense to guide you. The truth is not that complex but the misinformation that is used to conceal it is.

The single most important fact that needs to be shouted from the rooftops over and over again until people finally understand it is...
Once interest-free, public investment capital is established to replace private investment capital, there is absolutely no good reason on Earth to charge interest on credit to anyone.

As a birthright, each and every human being should have equal access to an interest-free line of credit to help them get started in life. Society would be much healthier, happier and far more productive, if everyone had an equal opportunity to discover and develop their natural talents and interests, and achieve their full human potential, without a burden of debt.

This is the key to solving all of society's other problems ...and as J K Galbraith noted, it "is so simple that the mind is repelled".

For a more complete explanation, please see www.monetaryreform.com/MR/betterWay.htm

donOld

siamdave wrote:

- donOld - been trying to interest the rabblers/babblers in monetary reform for some time now, with no appreciable results beyond the odd 'wacky ideas!' comment, or warnings not to be spamming Rabble 'news' stories with such messages - maybe you'll have more success - it's about the most important issue of all these days, since he who controls the money controls all else, and right now it is *not* "our" government controlling things. My most recent essay here - What Happened?

Marvellous information on your link SD. Well written and concise. I will continue exploring it as time permits.

Curious about your failed attempts to rouse the rabblers. I totally agree that it is the single most important issue facing humanity and the key to solving all of our other problems.

As of now, 93 views of this post but only 3 people are commenting. This pretty well sums up the problem you speak of. Are the rest of you viewing this thread simply not interested enough in this issue to comment? Or is the issue too complicated or confusing for you to form an opinion about it? Please, at least give us a comment about why you're not commenting.

George Victor

donOld wrote:

George Victor wrote:

Do you not think that the Chicago School's effect was more than marginal in such monetary "reforms'? And finance capital was brought to the fore with credit expanded exponentially to lift economies out of stagflation of the 70s.   :)

 

GV, please don't waste your time and attention on the meaningless, pedantic debates about economic theories that university academics and the media use primarily to distract you away from the more important issues. Just follow the money flows and trust your own common sense to guide you. The truth is not that complex but the misinformation that is used to conceal it is.

The single most important fact that needs to be shouted from the rooftops over and over again until people finally understand it is...
Once interest-free, public investment capital is established to replace private investment capital, there is absolutely no good reason on Earth to charge interest on credit to anyone.

As a birthright, each and every human being should have equal access to an interest-free line of credit to help them get started in life. Society would be much healthier, happier and far more productive, if everyone had an equal opportunity to discover and develop their natural talents and interests, and achieve their full human potential, without a burden of debt.

This is the key to solving all of society's other problems ...and as J K Galbraith noted, it "is so simple that the mind is repelled".

For a more complete explanation, please see www.monetaryreform.com/MR/betterWay.htm

 

You ask someone to ignore the transformation of the 70s when credit was extended to everyone - finally, to house buyers without jobs - resulting in the pickle we're in.

You ignore Robert Reich's Supercapitalism, that explains the transition - including the mass movement of common people into investment vehicles for their old age - the loss of jobs to the "emerging" nations through globalization, the market demand that corporations meet their expected profits or face the loss of major investment/pension funds, etc.  You have to be kidding!

 

The Globe and Mail published my letter about credit on April 19 this year:

 " Margaret Wente lists imprudence, misfortune, shifting cultural habits and the drain of "supporting their kids to age 28", as reasons for her friends facing retirement without salmon teriyaki (Coming soon: the great retirement shock, April 17).  Margaret listened to the wisdom of Grandma, who warned that Hell awaited the spendthrift.   However, until the mid-point of the 20th Century, you had to put up Grandma as collateral to have any hope of a loan. The attractive offers of near-limitless credit have come in every post, for some time now. Credit became the (temporary) salvation of an economy running out of steam just about the time Grandma packed it in, actually. One wonders whether her counsel now, given her wider-ranging vantage point up above, would include the architects of our future monetary salvation? " 

 

I am beginning to understand how the Johnny one-note develops...by ignoring everything else.

donOld

George Victor wrote:

You ask someone to ignore the transformation of the 70s when credit was extended to everyone - finally, to house buyers without jobs - resulting in the pickle we're in.

You ignore Robert Reich's Supercapitalism, that explains the transition - including the mass movement of common people into investment vehicles for their old age - the loss of jobs to the "emerging" nations through globalization, the market demand that corporations meet their expected profits or face the loss of major investment/pension funds, etc.  You have to be kidding!

 

Sorry GV if my last post to you was confusing. I was not asking you to ignore anything. I was simply trying to encourage you to trust your own common sense and to "follow the money" in everything you read. Ask yourself who wins, who loses, and who ultimately pays for all of the gains and losses. I believe that it is the consumer.

The primary goal of Capitalism is to generate a perpetually expanding income from capital investments. A perpetually growing volume of profits & capital gains, however, requires a perpetually growing volume of debt. Profit and debt are actually opposite sides of the same coin. Profit makes debt essential, debt makes profit possible.

All of the profits and costs of business, including debt servicing costs, are passed to consumers through prices. All of the costs of government, including debt servicing costs, are passed to consumers through taxes (any taxes that businesses pay were already taken from consumers through prices).

As the total volume of profit & debt in the economy increases, so does the total volume of interest payments. Consumers must be willing and able to carry the entire burden of debt servicing costs in the economy or else the economy will fail.

As debt servicing costs consume more and more of total personal disposable income, consumers become maxed-out and the economy weakens. Once the total burden of interest costs reaches about 50% of wages, consumer debt exhaustion occurs and a recession begins.

For a more detailed look at this, please see www.monetaryreform.com/MR/profitDebt3.htm

George Victor

My friend, it would be wonderful to see the end of the debt burden.  I'm just pointing to how we got to this point of being deeper in debt. The masses were conscripted - enticed - by the iniquitous use of extended credit.  Let's start to undo the rule of finance capital by charging for its movement around the globe, a Tobin tax,  and making credit harder to get through the usurious rates in credit cards. Let's ban the bastards. But let's have a fallback plan to support continued production without that kind of stimulus to consumption.

 

siamdave

George Victor wrote:

My friend, it would be wonderful to see the end of the debt burden.  I'm just pointing to how we got to this point of being deeper in debt. The masses were conscripted - enticed - by the iniquitous use of extended credit.  Let's start to undo the rule of finance capital by charging for its movement around the globe, a Tobin tax,  and making credit harder to get through the usurious rates in credit cards. Let's ban the bastards. But let's have a fallback plan to support continued production without that kind of stimulus to consumption.

 

- still curious, GV, if you have any thoughts on the connection between the 'debt burden' and the fact that we allow private banks to create all of our money at interest - as we have been doing since the 70s ???

George Victor

Sd, I have been curious, throughout, how you plan to bring about the reforms you propose...which would be lovely.  

Aren't there some political assumptions associated with such changes?   Personally, I can't discuss issues without the "how to" of it in the back of my mind.  :)

siamdave

The normal procedure for things is first recognizing there's a problem, and then figuring out what to do about it. Since I don't know maybe ~99% of Cdns don't seem to understand what the problem is yet, it's a bit premature to be talking about solutions. But once the recognition that there is a problem, and a rather serious one at that, starts to wend its way through the body politic, the solution will likely be along the lines of Democracy. Which will then lead to the understanding of the next problem - we don't actually have a 'democracy', so we'll have to do something about that  .... anyway, one step at a time.

Glad to hear you say my reforms would be lovely - again, one small step at a time. Now if you can just manage to say out loud something like '...yea, letting banks create all of our money and charge interest on it really is, like, a really stupid freaking idea...' - or something along those lines - one more small step.

(actually, I do spend a certain amount of time exploring such things as 'what to do about it?' in the essay, which I understand you have some religious thing about refusing to read it or something - but there it is. two steps forward, one step back, tangents to the right of me, tangents to the left, and good stuff on tv as well - what is one to do? enlightenment is such an erratic process ...)

George Victor

If  "it's a bit premature to be talking about solutions," and in your mind, we will have to achieve democracy first - and I get reamed out for my elitist position - you have just confirmed for me that life is too short to try this path to some sort of Socratic salvation. Sorry.

siamdave

George Victor wrote:

If  "it's a bit premature to be talking about solutions," and in your mind, we will have to achieve democracy first - and I get reamed out for my elitist position - you have just confirmed for me that life is too short to try this path to some sort of Socratic salvation. Sorry.

I guess that's a bigggg step back. Not to worry, though, the light is always there when you choose to see it.

George Victor

I'll see it when you turn it on!

siamdave

"The Truth knocks on the door, and you say 'Go away! I'm very busy looking for the Truth!' - I've wondered who that person was - now I see ..... I must go and ponder this mystery further - something to do with television, I suspect, and the inability of the television generation to distinguish the fantasy television Ministry of Truth world from reality ....

George Victor

"Some circumstantial evidence is very strong, as when you find a trout in the milk." (from Thoreau's A Week on the Concord and Merrimack Rivers (Wednesday).  (Like Thoreau, I'm TV-less).

Fidel

siamdave wrote:
'letting banks create all of our money and charge interest on it really is, like, a really stupid freaking idea...'

Yes I agree that it isn't very smart of our governments. But it's part of what Linda McQuaig refers to as the cult of impotence. They want Canadians to believe that there is something greater and more important than elected government, which is the power of global money markets. No one elects money changers though.  It's all a charade to make people believe that democratically elected  governments are powerless in the face of financial capital and money speculation. Afterall, markets are powerful enough to punish whole nations if they should get out of line. The impotence is not real though - it's of the self-imposed variety.

McQuaig goes on to say that even conservative economists like Pierre Fortin realize that since the end of Bretton Woods agreement in the 1970s, some room for maneuvering on money policies was given up by western world governments while, at the same time, new items on the policy menu were made available to them. Our people in Ottawa choose not to use those policy options. Canada could have fuller employment policies if we wanted them. IOWs, our elected stooges don't really have to kow-tow to Bay Street bond salesmen. But they choose to do just that. It's part of creating a false aura of political impotence for everyone to see. They are shameless about this perceived impotence, because it's what they want to project onto the public who must be made to learn that we, too,  are impotent to do anything about it in kind. They want us to believe that populist policies are out of reach and unavailable to the real and powerless majority of Canadians.

siamdave

George Victor wrote:

"Some circumstantial evidence is very strong, as when you find a trout in the milk." (from Thoreau's A Week on the Concord and Merrimack Rivers (Wednesday).  (Like Thoreau, I'm TV-less).

- that's pretty much my argument in metaphor about what happened in the 70s - there are no confessions, but one would hardly expect any from the usurpers who still run things - but if you understand what goes on with the money creation process, the rest is pretty undeniable, as I suss out in the essay you cannot seem to find time or inclination to at least go over quickly. Can you offer any thoughts at all as to why you apparently support the policy of allowing private banks to create all of our money as interest-bearing debt? If you really don't watch tv, your apparently slavish following of the economic status quo is a bit hard to understand, as the tv is the central method in the modern world of keeping people from thinking much about things like this and just believing whatever nonsense they are told - most people these days who don't watch tv are either hospitalized and doped up or have at least one foot outside of the box like thinking people tend to do - you seem to be lucid enough to preclude any assumption you are hospitalized, and yet you cannot see this elephant in the living room called 'give me the power to create a nation's money and I care not who makes her laws!' ??? puzzling.

Fidel

Okay shazam! GCM is now the way in Canada. And there is a lot we could do with GCM. Fine, we're on the road to sovereign control of our national destiny. But wait!

We would still have foreign control of our national energy policy. Don't forget that the Liberals sold our environment to Exxon-Imperial and friends with NAFTA and even before that. That's a lot of hard currency generation in the hands of corporate America and marauding multinationals. We would still have to pay the bills for what we import. And we don't export very much in the way of innovation and high technology products and services.

Even with GCM in the hands of democratically elected government, we would still have multinationals bleeding the country from the other end of things. Canada's economy reverted back to hewer and drawer status as of 2005. We could really use our natural wealth to pay for the transition to a greener more sustainable high technology economy of the future. I think energy nationalism is also key to sustainable economic policies in Canada. We owe it to the rest of the world to help curb corporate America of its voracious appetite for cheap Canadian energy. There will be costs for transitioning to a sustainable economy of the future, and we need responsible government to work toward those goals. It's why I vote NDP.

Fidel

[url=http://www.globalresearch.ca/index.php?context=va&aid=21091]Trapped in the Spiral of Basel III. Tightening the Noose on Credit Spells Disaster[/url] Punishing Your Local Bank for Wall Street’s Misdeeds (U.S.) 

NAZI-friendly central bankers clique still running the show

siamdave

There doesn't really seem to be much point in trying to talk to you, You say I have ignored the process of how we wound up in this pickle - once again might I remind you of the essay - which is entitled "What happened?' - and as the title suggests, it describes in some detail how I believe we wound up in this 'pickle' - you seem like an intelligent person, as I said, but this kind of thing puzzles me greatly. If you have even scanned the piece and disagree with my ideas, say so - but it is simply nonsensical to say I ignore the process that got us where we are.

You say 'you' have described the process - perhaps you think I need to regurgitate these things and that would indicate I 'understand' the situation - but I think your analysis is superficial - it's like you have read the capitalist text books, newpapers, etc and believed them - but they leave out a lot of the very most important stuff, which I try to flesh out a bit in the essay - as Einstein noted, and applies here, you cannot solve problems with the faulty reasoning (or simply intentionally false excuses masquerading as economics, which the Chicago 'school' generally is, lies justifying capitalism ...) that created those problems in the first place. Specifically, the capitalst economists try to make the story that everything is some kind of natural phenomenom that nobody could prevent, like a tornado or something (the 'natural business cycle') - I don't believe that crap for a second. At every step of the way, decisions were made that empowered certain people, hid certain information, and created a system that favored the few at the expense of the many. Other decisions could have been made - there is no 'natural disaster' aspect to this at all - as the economy implodes around us, certain people are stealing massive amounts of wealth, and impoverishing the rest of us - and other decisions could be made, other things done, that would stop the tsunami instead of encouraging it. But as long as we have tsunami-drivers doing as they will to a huge crowd of ignorant (dictionary meaning, as in possessing no useful knowledge), passive sheep - nothing is going to change. I am trying to tell the sheep to open their f***ing eyes and brains before it is too late. It's a bit like being a lemming in the middle of the herd talking about cliffs. But I try.

I don't quite get your point in referring to Japan and Globe articles - these are people who are doing their best to stay afloat in their own mess - I understand well what is happening, but there's nothing I can do about it from where I am sitting at the moment - aside from trying to wake people up to the great money creation scam, which is the first step, after which we would decide what to do, when people are ready to do something. There are things that could be done about this (again, in the essay...), but of course the current rulers will fight like helll to retain their privilege and power if 'we' wake up and start to challenge them, so nothing is certain - except that it is certain nothing is going to change if people don't start to understand what is happening and start demanding change. Rearranging the deck chairs - that is, doing anything that does not challenge and change the banks' money-creation-as-debt monopoly - is simply doing what politicians often do, lots of smoke and mirrors whilst changing nothing they don't really want to change. I have another essay coming soon for you not to read and not to get enlightened with further.

Fidel

George Victor wrote:
Firm by firm we are destroying our export market (as the Canadian dollar rises) ' he said.'Companies invest all this money to establish a presence in export markets and then they get driven out.' Personally, I don't believe we are going to see Fidel's NDP government until the party begins to speak truth to industry on this one. Reforms COULD follow.

I think the whole export driven resource based economy is unsustainable. The NDP can't suggest that they want to fix what's been designed to fail. And the NDP could not possibly re-design/restructure the economy inside of one four-year term. Lower interest rates would go some way to kick-starting the economy I suppose. But overall the Canadian economy is a dinosaur.

If Sweden's experience is anything to go by, then we'll have to wait for all the natural wealth to be siphoned off and we're left freezing in the dark. People won't realize that we'ev had bad federal governments for decades in a row until the music stops. Only then will Canadians wonder how successive Liberal and Conservative governments managed to achieve so little with so much natural wealth at their disposal.

George Victor

Edited

thanks

The information about money creation including the monetaryreform.com website and links are very helpful.

I agree that acknowledging the basic problem of private money creation is one of the most important initial steps.

The website was helpful in dealing with related problems of interest and profit, and in outlining an alternative to money that is based in time.

Credits valuing human effort in time could take the place of money.  I need to read more of the site to see how the environment is recompensed.

Presumably domestic credit supports would enable pensioners to have their needs met, as well as providing for other social services.

I don't see why a different system couldn't be enacted fairly quickly. 

Initially government could use its own money-creating powers to reclaim the nation's assets.  Then it could transition to time-based credit.

 

 

donOld

thanks wrote:

The information about money creation including the monetaryreform.com website and links are very helpful.

I agree that acknowledging the basic problem of private money creation is one of the most important initial steps.

The website was helpful in dealing with related problems of interest and profit, and in outlining an alternative to money that is based in time.

Thank-you thanks, I was beginning to lose hope that I would ever receive a post that acknowledges having read anything on the site.

thanks wrote:

Credits valuing human effort in time could take the place of money.  I need to read more of the site to see how the environment is recompensed.

This is mentioned in the first footnote on the "A Better Way" page. Also on the "Living A Better Way" page you'll find this...

"One of the main marketing differences in the Better Way is the increased importance of quality. All high-value items, like houses and cars, are sold with an estimated annual depreciation rate. The depreciation rate is based upon the expected lifetime of the product under normal circumstances. A house, for example, designed and built to last for 100 years would have an annual depreciation rate of 1%. An automobile designed and built to last for 20 years would have an annual depreciation rate of 5%. Consumers are expected to pay back the credits to the public banks at the depreciation rate. If a house with an annual depreciation rate of 1% sold for $300,000 then the consumer would pay only $3,000 per year, or $250 per month in payments. The higher the quality and durability of an item, the lower the payments!  Now that's a switch. Since businesses are no longer dependent on profits, planned obsolescence is now unnecessary and natural resources need no longer be wasted."

thanks wrote:

Presumably domestic credit supports would enable pensioners to have their needs met, as well as providing for other social services.

I don't see why a different system couldn't be enacted fairly quickly. 

Initially government could use its own money-creating powers to reclaim the nation's assets.  Then it could transition to time-based credit.

Yes, we are fortunate in Canada to have ample human and natural resources to achieve anything we desire as a nation. Unfortunately the idea of a strong, independent Canada was abandoned by our leaders in the 70s. However, despite all the media brainwashing that they have inflicted upon us, most Canadians still know in their hearts that Canada can be much more than this.

donOld

siamdave wrote:

- still curious, GV, if you have any thoughts on the connection between the 'debt burden' and the fact that we allow private banks to create all of our money at interest - as we have been doing since the 70s ???

SD the private banks have been creating all of our money at interest for centuries, not just since the 70s. In the early 70s, the Bank of Canada was only supplying about 4% of the total credit needs of the nation. By the 1990s, that percentage had dropped to under 2%, but the private banks have always maintained a firm control of our money supply. What is so significant about the 70s and 80s is that it was the period that the bankers began their coup d'etat of government finances. Here's a quick summary of the key events that led to their takeover:

1971: needing more money for the Vietnam war, Nixon takes US off the gold standard, destabilizing global currency exchange rates

1973/74: the stock market crashes and the Arab oil embargo causes hyper-inflation, financial institutions (banks, pension & retirement funds, insurance companies, etc.) lose billions. Prime lending rates begin rising into double-digits. In 1974 the Bank of Canada was financing 20.7% of the government of Canada's debt requirements (virtually interest-free to taxpayers). The federal government had a revenue surplus of $635 million and total interest paid on the federal debt was just under $3 billion.

1979: Iranian revolution leads to energy crisis and price of oil again rises

1979/81: Prime lending rates rise from 12.9% to 19.29% causing another recession

1981-85: The amount of government debt held by the Bank of Canada was reduced from 18.3% to 7.9%. The federal government ran a deficit of over $111 billion and wasted $93.6 billion of taxpayers' money on totally unnecessary interest payments.

1986-95: The amount of government debt held by the Bank of Canada was further reduced to 5.1%. The federal government ran a deficit of over $301 billion and wasted $371.4 billion of taxpayers' money on totally unnecessary interest payments.

Interest remained high until 1991. In the 15 years between 1981 and 1995, the federal government ran a deficit of $412.4 billion and wasted $465 billion of taxpayers' money on totally unnecessary interest payments. This was nothing more than welfare for the rich.

siamdave

donOld wrote:

siamdave wrote:

- still curious, GV, if you have any thoughts on the connection between the 'debt burden' and the fact that we allow private banks to create all of our money at interest - as we have been doing since the 70s ???

SD the private banks have been creating all of our money at interest for centuries, not just since the 70s. In the early 70s, the Bank of Canada was only supplying about 4% of the total credit needs of the nation. By the 1990s, that percentage had dropped to under 2%, but the private banks have always maintained a firm control of our money supply. What is so significant about the 70s and 80s is that it was the period that the bankers began their coup d'etat of government finances. Here's a quick summary of the key events that led to their takeover:

- if you'r read some of the essay I noted at the first you might have seen that I understand these things. You can't caveat everything in short discussion comments, but my question did refer to 'all' of our money, which would certainly seem to imply that I understand that before they started doing that in the 70s, the gov was creating at least some through the Bank of Canada, the 'hard cash' plus creating gov 'debt', which, of course, is somewhat different than allowing banks to create money and borrowing it from them. It's pretty hard getting any kind of exact figure, but James Robertson figures the Bank of England was creating as much as 30% of the money in GB before the banks took over completely in the 70s, and I expect the ratio would be comparable in Canada at some point in time between the 30s and 70s.

George Victor

donOld wrote:

siamdave wrote:

- still curious, GV, if you have any thoughts on the connection between the 'debt burden' and the fact that we allow private banks to create all of our money at interest - as we have been doing since the 70s ???

SD the private banks have been creating all of our money at interest for centuries, not just since the 70s. In the early 70s, the Bank of Canada was only supplying about 4% of the total credit needs of the nation. By the 1990s, that percentage had dropped to under 2%, but the private banks have always maintained a firm control of our money supply. What is so significant about the 70s and 80s is that it was the period that the bankers began their coup d'etat of government finances. Here's a quick summary of the key events that led to their takeover:

1971: needing more money for the Vietnam war, Nixon takes US off the gold standard, destabilizing global currency exchange rates

1973/74: the stock market crashes and the Arab oil embargo causes hyper-inflation, financial institutions (banks, pension & retirement funds, insurance companies, etc.) lose billions. Prime lending rates begin rising into double-digits. In 1974 the Bank of Canada was financing 20.7% of the government of Canada's debt requirements (virtually interest-free to taxpayers). The federal government had a revenue surplus of $635 million and total interest paid on the federal debt was just under $3 billion.

1979: Iranian revolution leads to energy crisis and price of oil again rises

1979/81: Prime lending rates rise from 12.9% to 19.29% causing another recession

1981-85: The amount of government debt held by the Bank of Canada was reduced from 18.3% to 7.9%. The federal government ran a deficit of over $111 billion and wasted $93.6 billion of taxpayers' money on totally unnecessary interest payments.

1986-95: The amount of government debt held by the Bank of Canada was further reduced to 5.1%. The federal government ran a deficit of over $301 billion and wasted $371.4 billion of taxpayers' money on totally unnecessary interest payments.

Interest remained high until 1991. In the 15 years between 1981 and 1995, the federal government ran a deficit of $412.4 billion and wasted $465 billion of taxpayers' money on totally unnecessary interest payments. This was nothing more than welfare for the rich.

 

Thanks for this, donOld.  Nothing like hard data beside the dates to confirm just WHY we should act on reform...even if the HOW is quite up in the air.  Easing government out of the credit picture occurred alongside the easing of consumer credit, by which economists on the right (Chicage School) sought to overcome the stagflation of the 1970s, as well as improve corporate profitability.   Many of those who had to renew their mortgages over the following decade lost them. The continued movement to ease government out of the economic picture continues on all fronts.  And as municipalities lose their capacity to provide services in this vicious downward cycle we will see more an more corporations establish themselves on the market to provide the firm "income" in those portfolios that the more speculative equities cannot. 

And we've witnessed for two years now just what handing the reins over to finance capital can do to us.

If you chaps can put forward a saleable platform from political economy (non-threatening or speculative) that the average consumer will buy into, prepare to ascend the throne.  :)

 

Catchfire Catchfire's picture

Hi donOld, welcome to babble. I've moved this thread to humanities and science.

George Victor

I do hope donOld understands that this shift is a mark of acceptance into the fold. 

 

donOld

siamdave wrote:

James Robertson figures the Bank of England was creating as much as 30% of the money in GB before the banks took over completely in the 70s,

Do you have a link to the James Robertson figures? I suspect that he meant 30% of only the government of England's credit requirements (not the entire national credit supply).

siamdave wrote:

and I expect the ratio would be comparable in Canada at some point in time between the 30s and 70s.

Here's a link (to a pdf) showing the percentage of the federal government debt held by the Bank of Canada, from 1935 to 1993.

http://www.monetaryreform.com/BoC.pdf

Since 1997, the percentage of the federal government debt held by the Bank of Canada has been rising, to 13.5% in 2007.

http://www.monetaryreform.com/BoC_update.pdf

siamdave

I'll see if I can find something (he has a lot of stuff I have read, without making notes - http://www.jamesrobertson.com/index.htm ), but I think he was actually referring to the ratio of 'hard' money - cash and coins - to bank-created debt money (in GB). Currently, of course, in Canada, we have ~$55 billion in 'cash', and somewhere around a trillion in bank created money (the Cdn money supply is ~a trillion, depending which of the various things you add up - if it ain't cash, it's debt ... - although I still haven't got all this sorted, as there is about three trillion at least in major 'debt' out there (a trillion government 1.5 trillion consumer, something over a trillion business - so some things are not adding up here, but it does not really change the basic argument, that most of our money supply is created by banks as debt, which is bad news in many ways ...). As far as I can figure, the further back we go in time - 1980, 70, 60 - there would be considerably less bank-debt money, and with still fairly high amounts of 'hard cash' money, that percent does not seem unreasonable. As electronic banking and credit cards became more popular over the last 40 years, and the unleashed banks created more and more debt (Nixon's cancelling the gold standard seems to get into play around here somewhere, with freeing the banks up ...), the gov kind of slowed down with its own creation of hard cash, until we have what we have now, with ~95% of our money supply existing as bank-created debt. With all of the problems ensuing.

- about the charts yoiu sent, they puzzle me - what do you understand by 'resident' and 'non-resident' - normally that would mean private citizens, of course - but if they are telling me that private Canadian citizens hold 60% of the national debt, I am going to want more information - that is not my understanding at all, with CSBs the main avenue 'private citizens' 'invest' in the gov, and there's only ~15 billion worth of those outstanding (http://www.financialpost.com/Record+Canada+Savings+Bonds+joke/2067841/st... ). If they are trying to say that things like mutual funds and pension funds hold ~60% of government debt, again, I'd like some confirmation - my understanding is that when the gov needs money, banks take IOUs in the form of treasury bills, and create money they deposit in government accounts. If it's private investment funds buying the treasury bills - well, that would be interesting. Would NOT change the idea that private banks should create our money, but it would need to be added into the situation assessment ... .

donOld

siamdave wrote:

about the charts yoiu sent, they puzzle me - what do you understand by 'resident' and 'non-resident'

In the Bank of Canada's "Banking & Financial Statistics", Residents of Canada includes the Bank of Canada, government of Canada accounts (held at the BoC and by the CPP) and the General Public.

The General Public includes financial institutions (chartered banks, trust & mortgage loan companies, investment dealers & funds, credit unions & caisses populaires, life & other insurance companies, non-depository credit intermediaries, trusteed pension funds), Non-financial corporations, governments (provincial, municipal), Canada savings bonds (& other retail instruments), and all other holdings

Non-residents (which is also included in the figures for the general public) is simply one lump sum that includes all government of Canada debt held by anyone residing outside of the country.

The figures in my links simply move the total amount held by the chartered banks into a separate category. Doing so leaves about 50% of the total government of Canada debt in the residents of Canada column.

Here's a link to the BoC publication http://www.bankofcanada.ca/en/bfsgen.html

donOld

Here's a more detailed summary of the federal government's debt distribution for 2006.

http://www.monetaryreform.com/BoC_detail.pdf

siamdave

donOld wrote:

Here's a more detailed summary of the federal government's debt distribution for 2006.

http://www.monetaryreform.com/BoC_detail.pdf

- thanks - I've been wondering about this - it adds a bit of necessary perspective to what I am working on, whilst not changing the general theme - do you have any idea how much more or less liquid, investible wealth is kicking around in Canada, in terms of these major investment funds (mutual, pensions), or where to get an overview? Have you done any thinking on the implications when, for instance, a major money fund has big investments in the stock market, and the stock market crashes? All that money simply 'disappears'? But not really - if you give me a thousand dollars for a car, and that car turns out to be junk - you have lost 1000 bucks - but I still have the money - so with stocks - somebody got the big money in the first place, even if the pension fund stocks are now worth half of what they were bought for .... I'm just trying to work out a broad sort of picture of money creation, wealth, circulation, etc .... this plays into the big picture, for of course the wealth people take that cash and buy property, which of course does not appear then on the money supply records -

donOld

siamdave wrote:

- do you have any idea how much more or less liquid, investible wealth is kicking around in Canada, in terms of these major investment funds (mutual, pensions), or where to get an overview?

Try Statistics Canada's National Balance Sheet Accounts, table 17 for pension plans, table 20 for mutual funds, etc. Here's the link: http://www.statcan.gc.ca/pub/13-022-x/2010002/tab-eng.htm

Quote:
Have you done any thinking on the implications when, for instance, a major money fund has big investments in the stock market, and the stock market crashes? All that money simply 'disappears'? But not really - if you give me a thousand dollars for a car, and that car turns out to be junk - you have lost 1000 bucks - but I still have the money - so with stocks - somebody got the big money in the first place, even if the pension fund stocks are now worth half of what they were bought for .... I'm just trying to work out a broad sort of picture of money creation, wealth, circulation, etc .... this plays into the big picture, for of course the wealth people take that cash and buy property, which of course does not appear then on the money supply records -

It's exactly the same with investments as in your car example. The last guy to "buy high" (the sucker) gets burned as his disposal value drops. The last guy to "sell high" (the stinger) gets to spend/re-invest the profits that he took from the sucker. In a big market crash, a lot of suckers get burned and a large percentage of the total "market value" (which is really just a prediction of current value, if you were to sell today) of the investment pool simply disappears. The stingers still have the profits that they took from the suckers, they just removed that value from the market value of the pool. Once they believe that market prices have bottomed out, they start bidding up market values again.

See "Capitalism Doesn't Want To Fix This" here: http://www.monetaryreform.com/MR/profitDebt3.htm

thanks

"The General Public includes financial institutions (chartered banks, trust & mortgage loan companies, investment dealers & funds, credit unions & caisses populaires, life & other insurance companies, non-depository credit intermediaries, trusteed pension funds), Non-financial corporations, governments (provincial, municipal), Canada savings bonds (& other retail instruments), and all other holdings"

does not make sense.

neither does the use of the dollar sign in depreciation if time is the credit.

George Victor

The economic structure outlined in "There is a Better Way" (the portion that would open up for me on my old dial-up system...perhaps 95 per cent of the total) is one very compelling goal, donOld.  One could wish that it did not smack of other-worldly creation.  A very rational structure for a very irrational planet.

Your data on Canadian debt is wonderful.  What a marvelous resource you are!   Thanks.

donOld

thanks wrote:

"The General Public includes financial institutions (chartered banks, trust & mortgage loan companies, investment dealers & funds, credit unions & caisses populaires, life & other insurance companies, non-depository credit intermediaries, trusteed pension funds), Non-financial corporations, governments (provincial, municipal), Canada savings bonds (& other retail instruments), and all other holdings"

does not make sense.

That's just the way the Bank of Canada classifies things. It helps them obscure independent analysis.

thanks wrote:

neither does the use of the dollar sign in depreciation if time is the credit.

In that example I intentionally left house prices in dollars so that readers could easily appreciate the huge difference that eliminating interest would make in their monthly mortgage payments.

siamdave

donOld wrote:

siamdave wrote:

- do you have any idea how much more or less liquid, investible wealth is kicking around in Canada, in terms of these major investment funds (mutual, pensions), or where to get an overview?

Try Statistics Canada's National Balance Sheet Accounts, table 17 for pension plans, table 20 for mutual funds, etc. Here's the link: http://www.statcan.gc.ca/pub/13-022-x/2010002/tab-eng.htm

Quote:
Have you done any thinking on the implications when, for instance, a major money fund has big in

..........

See "Capitalism Doesn't Want To Fix This" here: http://www.monetaryreform.com/MR/profitDebt3.htm

- thanks again, lots of info there - been awhile since I had a new light turned on in this corner - take me a bit of thinking, but I'll get back to you soon - I think we're going in more or less the same direction, but I have some different ideas about what our new economics might best be like, but you have some good ideas on your site that are certainly adding to my thinking - given as it's all pretty theoretical anyway, I don't see any stopping the lemming herd in this particular time, unfortunately, you see the great interest in this thread from the more progressive and thinking members of our society .... here now, if we put a few more red chairs here, and move the green ones over here, that should help - then we can schedule another meeting in a few weeks to figure out some more great ways not to do anything ...

 

donOld

George Victor wrote:

The economic structure outlined in "There is a Better Way" (the portion that would open up for me on my old dial-up system...perhaps 95 per cent of the total) is one very compelling goal, donOld.  One could wish that it did not smack of other-worldly creation.  A very rational structure for a very irrational planet.

Your data on Canadian debt is wonderful.  What a marvelous resource you are!   Thanks.

Thanks for the kind words GV. I've been at this stuff for quite a while and have an enormous amount of interesting, important data to share on this blog. I'm sorry about the slow loading. I'm working on a dial-up version of my website that is mostly just text. I'll let you know when it's uploaded.

donOld

siamdave wrote:

- thanks again, lots of info there - been awhile since I had a new light turned on in this corner - take me a bit of thinking, but I'll get back to you soon - I think we're going in more or less the same direction, but I have some different ideas about what our new economics might best be like, but you have some good ideas on your site that are certainly adding to my thinking

thanks SD, maybe we should call ourselves "economic electricians" ...it has a nice ring to itSmile

Quote:

 .... here now, if we put a few more red chairs here, and move the green ones over here, that should help - then we can schedule another meeting in a few weeks to figure out some more great ways not to do anything ...

now that there is funny!

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