letter to weston re debt column

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Fri, 2009-10-02 23:42

siamdave

- a letter I sent to Greg Weston of the Ottawa Sun re a column I thought some might find interesting, if the thoughts or info therein open a door at least a crack ....

Greg [email protected] :

Re http://www.ottawasun.com/comment/columnists/greg_weston/2009/10/01/11221... Seeing red over debt:

You seem like a pretty level headed guy, Greg, I don't detect much bias in your writing for either political party, which is good. But why do so many people seem so unaware of what is going on with our money?

Imagine for a minute here. You suddenly need some large sum of money - say a hundred grand. You have two options - A, you can go to a bank and get it, and over the next ten years or so, pay it all back with interest - say two hundred thou. Or B, you can go and talk to your brother (or someone else you are close to, and trust), who just won a lottery or something and has millions to spare, and this bud will lend you the money, no problem, pay him back when you can, no interest. You do not intend to rip this person off - you will pay them back. So what is the obvious choice? Pay back two hundred thou over the next few years, or one hundred?

I don't know - maybe this hypothetical person isn't too bright, and their wife's brother is a banker, and she says you should give him the business or something, which might lead some of the 'not too bright' persuasion astray - but I expect most people would go the interest-free route, given they do need the money anyway, but are not rich, and would choose the least expensive option.

So you need to think - obviously comparing this loosely to our national finances - when our government has the Bank of Canada, which is, of course, the only body in our country which can issue legal tender, and is also, inter alia as it were, able to issue 'credit' in the same way a commercial bank can - you need to wonder why, when our government needs money, it goes to a commercial bank, gets that bank to create whatever money it needs, and then borrows that money at interest - rather than going to the Bank of Canada, instructing the Bof C to create exactly the same amount of money, and borrowing it there, where whatever interest it charges itself is just an accounting game and amounts to zero in the overall finances, more or less doing nothing more than going from pocket A to pocket B?

You got to wonder, I think. At least I do, and I know a few others, although our wonderings don't seem to get much media attention.

If you are thinking, 'Oh nono, when the government borrows money, there is no 'creation' involved, it is just borrowing other people's savings from the banks, which is the banks' business!' - you are wrong. As with every loan the banks issue, they just create that money out of thin air, which is where most of what we think of as 'money' comes from. Government-created money, the bills and coins we carry around, amounts to about 5% of the Cdn money supply - the rest is created through loans by banks. There's about 3 trillion of debt in Canada (gov, consumer, business), and about 50 billion of 'hard cash' money. Do the math.

And if you are thinking "Golly, everybody knows that governments creating money is just inflationary!' - wrong again. It could be, if they just cranked up the printing presses with no thought for financial stability - but insofar as most of our money is just created as debt - if you just set some limits on bank-created money to allow for the government-created money, the end result in terms of the overall money supply should be the same.

I won't get into a long essay about all this, it's a multi-faceted thing, a deeeeep rabbit hole altogether once you get into it - but I do have a longer article about similar things if your curiosity is sparked at all, or you could google around and check some things out yourself.

Global Financial Meltdown: Forces beyond our control, or the greatest scam ever?
http://www.rudemacedon.ca/greatest-sting-ever.html

Be happy to answer any questions you might have -

Dave Patterson
Hat Yai, Thailand
Green Island http://www.rudemacedon.ca/greenisland.html

Sat, 2009-10-03 00:30

Lard Tunderin Jeezus Lard Tunderin Jeezus's picture

Greg Weston is dutifully promulgating the propaganda from the Canuckistan Taxevaders Fraternity, and you're seriously hoping he'll consider the alternatives?

Good luck with that. No sarcasm intended; it's actually refreshing to see such optimism.

BTW, your link isn't working. Try this one

Sat, 2009-10-03 04:29

siamdave

Thanks for the link correction, LTJ. I don't have high optimism that Weston or anyone else will start telling some truth about banking in Canada, but you never know. I think that many of them are not evil sycophants of the capitalist berserker (many rather demonstably are, of course, the real crazies like Corcoran at the Globe or several on the NP), just brainwashed people who really think they are doing the right thing, at least partly because they have bad information, and I dare to hope that maybe one day, one of these people will have an epiphany of some sort, perhaps aided by something I send them, and turn on a light somewhere about something for some of their readers - they will no doubt be instantly placed in a mental home somewhere, if not shot outright, but who knows how many people they might wake up first? Who knows how close how many Canadians are to breaking out of the box, after these last few decades of capitalist excesses, and what small thing it might take to reach a critical mass here? We gotta keep trying, I think ...

Sat, 2009-10-03 08:52

George Victor

You provide some important stats on debt, dave, but how do we escape the "investor syndrome", which reallly was the driving force for the creation of all that worthless paper in the financial industry, all offering a better return on the invested dollar.

How do we escape the debt trap in an economy dependent on invested dollars to pay for it all?

Sat, 2009-10-03 10:33

Tommy_Paine

Greg Weston is dutifully promulgating the propaganda from the Canuckistan Taxevaders Fraternity, and you're seriously hoping he'll consider the alternatives?

It never hurts for them to hear footsteps comming up behind them. That kind of thing has made a few recievers in football miss a pass.

The only thing I'd point out to Siamdave is that editors, if you are writting letters to the editor, appreciate brevity, and I tend to think that columnists who get feed back probably tend to skim long letters.

Sat, 2009-10-03 10:34

siamdave

I'm not really sure what you mean by 'investor syndrome'. But the problem has been that the banks have been creating far more money than the actual physical assets of the economy could justify, thus the asset-inflation bubbles we have seen - which, of course, then inevitably crash. A basic necessity is simply to control money creation (which is, of course, in the modern economic world, debt-creation) to some reasonable level, and stop the creation of new 'credit/debt' simply for asset-inflation. Private banks are happy to do this, as they get their loans backed with collateral, and physical assets, of course, retain value when all the dust settles and the banks claim their 'collateral'. And as far as 'better returns' go - well, a lot of that is, as we have been seeing, Ponzi style stuff, where a lot of little people get sucked in, and when everything crumbles - there goes a whole lot of 'our' property being transferred upstairs. Not coincidentally. If people want to invest their already existing money in anything, that is fine, I wouldn't dream of trying to control what people do with their own already existing money - but no more huge bank loans (which are creating new money) simply for asset inflation 'investing'. A major reason we need to take control of money creation in some kind of democratic way. (which does not simply mean turning things over to the current government, which is just the administrative-government arm of the current banking cartel (and that is NOT code for 'jewish conspiracy)

As for escaping the debt trap, we need to take control of the money supply so it works for 'we the people' rather than 'they the rulers through control of our money' - a money supply controlled by 'we the people' rather than commercial banks. With new money only issued/created-as-debt for actual 'investment' in the old sense of the term - creating new physical assets like buildings or factories or national infrastructure - then this money should be under the control of a government bank of some sort, at a pretty minimal interest, maybe no interest at all, just some small service-adminstration charge. If banks want to do what they say they do now - take in deposits, and loan those out at interest - that is fine, but no more creating huge amounts of essentially uncontrolled 'debt-money', manipulating the economy so as to ensure an endless flow of wealth from 'we the people' to they the rulers.

A lot of changes would be required, which could be managed in various ways if under OUR control rather than 'theirs', but the general basic principle is clear enough - money as a tool to facilitate the daily activities of the people of the country, as they go about their daily business, the jobs and shopping - NOT as a tool by which the capitalists control everything we do, and ensure that endless flow of wealth from the people who produce it to the parasites who steal it.

The ideas about what needs to be done, and how a better system could be formulated, are not that difficult to figure - the problem is wresting control away from the current rulers, who have indoctrinated almost the entire population with the idea that 'there is no other way'.

Sat, 2009-10-03 11:07

George Victor

I once had the opportunity to speak with the late Joan Robinson, of whom Galbraith wrote so glowingly in his bio. She reminisced about the virtues of exchange controls, but saw no way of returning there - and that was 30 years ago when globalization was just working up speed. Should you not stick to "real world" scenarios?

Sat, 2009-10-03 12:44

siamdave

George Victor wrote:

I once had the opportunity to speak with the late Joan Robinson, of whom Galbraith wrote so glowingly in his bio. She reminisced about the virtues of exchange controls, but saw no way of returning there - and that was 30 years ago when globalization was just working up speed. Should you not stick to "real world" scenarios?

-- only if you've given up, and ceded the field to the new feudal masters and our Brave New World. I am not there yet. I still retain some small hope that we can fight them, and create a better world.

Sat, 2009-10-03 13:47

Tommy_Paine

In the early days of the internet, I used to engage columnists. I gave it up, because I was rather shocked at how juvenile many were, and how generally uniformed some others were, and in the end you never change anyone's mind.

Or, so I used to think. People's minds do change over time. And there's value in bearing witness, if nothing else. Letting them know they aren't fooling everyone.

That some know the emporer is naked.

Maybe I should dust off the saddle, and get the old hoss out the barn.