Money created as profit not debt

[CanadaRocks]

While the Canadian Action Party is currently championing the idea of money created as profit rather than debt, our country was founded with this idea, saw some of its best decades with it in place, floundered when the policy of creating money as profit was changed to creating it as debt in 1974, the concept was originally championed by Abraham Lincoln as the page listed here shows in Lincolns address found at the bottom of the page. Please help me to learn if this concept can be an answer for Canadians because if it can be, regardless of which party comes to power, we need to get them to return Canada to this policy as quickly as possible to benefit us all.

[idealisttotheend]

**witdrawn as may be incorrect, sorry that's how I thought it worked lol**

[August1991]

The BOC sets the price of money through the interest rates on their short term loans to banks. But the banks only borrow as much as they can 'sell' into the market at that price, theoretically giving the market a measure of control. Money is created based on what the market can absorb at the rate offered.

WTF?

It may be reminesent of the Churchill concept of the "worst system except for all those other ones" since the banks end up owning the money supply and controlling basically all goods and services in the economy but what can you do?

WTF?

Looking at the banking sector it is clearly uncompetitive given profit levels and the similarity between services and service rates. A possible solution would be to nationalize (or more likely create a new) federal retail bank to set the standards and pump some of those profits either into the federal treasury or back into people's pockets and act more in the national interest.

OMG!

This thread reads like Laurel and Hardy discussing brain surgery. I don't like to stymy discussion but I just had to post this comment.

[idealisttotheend]

Alright, I thought that banks had to borrow from the BOC to make those extra loans and they only kept the amount over prime as profit. Apparently this is not so, bank are simply required (in the US) to keep a percentage of any given deposit "on hand" in the States at least (I am unclear if there is such a requirement in Canada or if it was repealed in 1991). My basic arguments still hold though. The only way to determine how much money ought be out there is by how much the banks can sell, modified by the BOC overnight rate. There is no centerally planned suggestion that I can see or have read to determine what the money supply should be. Now can inflation be prevented by going to a government only system. Hate to sound like a free marketer on this one but I think it is true.

And getting the goverment into retail banking (which is clearly uncompetitive as a sector) remains a good way to get more control if we need it. The free marketers will complain that the government shouldn't be competing with them but that's okay.

As to BOC loans to governments this might actually work. I mean the limiting factor would be what the public is willing to repay and it could be restricted to health education and other 'market failure' sectors. Why governments would be paying private banks interest is unclear to me (but then so are the "benefits" of P3s but that doesn't bother anyone).

I apologize for posting on a topic I did not fully understand (and probably still don't) but I didn't want the thread to die. And perhaps you have an opinion August?

Another good resource on the topic

(I wonder if the library misses me, getting all my information from the internet, my oh my.)

[CanadaRocks]

Well, I expect that compared some I might seem dumb as a post, but I have a question.

If we could lower personal taxes for everyone without cuts to services, fund education as we'd like it to be to ensure the best quality & success rates, lower tuitions, invest in government projects, invest in social programs that work, increase rather than decrease healthcare, AND pay off the National Debt.. and if that was a system at work already in Canada prior to 1974 ...what the heck are we waiting for? Lets get it back!

Are we masochists bent on doing things the hard way?

[August1991]

I might get into this thread but first, I must add another comment.

Idealist, I checked that link. The magazine cover lists articles by Peter Newman, John McMurtry, Paul Hellyer and Sinclair Stevens! Sorry, but that list is simply too comical.

Then I dioscover this Ralston Saul quote inside:

The marketplace has been constantly evoked, over the last quarter century, as the source of freedom and democracy, as well as the only possible force to lead us back to growth.  But after two decades of having their way, the exponents of this theory have no results to show us . . . they have held and continue to hold the levers of power and they have not produced.  This is a very long trial period.

Asking Saul about the market is like asking Milton Friedman about existentialism - no, it's more like asking Brittany Spears about differential calculus.

We live in a democracy. Everyone is entitled to their opinion. People buy Saul's books. Fine. *Giggle*, Sinc Stevens! *Giggle*

[idealisttotheend]

Mr. Saul makes a hell of a lot of sense to me usually. It is easy to giggle harder to prove him wrong. As to the site, I searched high and low but that was all I could find on monetary policy, even the BOC site and Stats Can aren't very enlightning (though I can't read PDFs so I may be missing something).

Are there results to be shown, August? Yes we have 'more' but that is not necessarily due to the free market system to the exclusion of all else. In fact, most new technologies come out of defence research and defence is never free market it is almost exclusively run by governments and centrally planned bureaucracies (often to very inefficient results in the American system). It is new technologies that make us more productive.

As to the market, if it functions so well why are we working more and more if technology is making us so much more productive? Why haven't the real prices for food dropped and why are farmers going broke even though they have super productive technologies at their disposal? There are an awful lot of unanswered questions that are simply ignored by proponents of markets in general. The math does not add up, one could say.

Are we masochists bent on doing things the hard way?

If it sounds too good to be true... it must be. I think we would do well to have governments not pay interest to private lenders. However if we just print money helter skelter we would run into disaterous inflation (this seems to be confirmed by the Stockman book I am reading) and would run into problems regarding the valuation of our curreny versus others especially the American dollar. Money also respondes to supply and demand so by increasing the supply you would drive the price down. In order to do all those things you suggest I think we would need some increase in real resources not just money but then I can see how that would be debatable. In order for that to work I think we would need to completely isolate ourselves from the rest of the world economically.

I think. Unless someone else (say August ) has a different opinion.

[August1991]

However if we just print money helter skelter we would run into disaterous inflation (this seems to be confirmed by the Stockman book I am reading)

I have started that Gwyn book of yours. For the rest, please wait.

[idealisttotheend]

I think that I may have refered to Gwyn's book errounously. I think the idea that we must define ourselves by what we are not actually comes from a book called Imagined Communities I do not remember the author's name and can't find my copy but I am pretty sure that's where it came from. I apologize for this.

But I still recommend Gwyn's book highly especially vis a vie the Canadian political situation.

Sorry again, I will be more careful in the future.