Remove our Debt based Financial System.

[Dalton]

Below is a petition to raise awareness about our debt based financial system. I hope it will give everyone some insight into the inner workings of Canada's financial system and why the debt can not be repaid.

https://www.change.org/p/thomas-mulcair-justin-trudeau-stephen-harper-remove-our-debt-based-financial-system

Edited August 23, 2015 by Dalton

[TimG]

Below is a petition to raise awarness about our debt based financial system. I hope it will give everyone some insight into the inner workings of Canadas finacial system and why the debt can not be repaid.

Debt and assets are linked because any debt held by someone is an asset for someone else. Increase debt and you increase assets - reduce debt and you reduce assets. Good debt is debt that allows people to build personal assets. Bad debt is debt that does not contribute to increasing personal assets. It is wrong to focus on debt without looking at assets. Edited August 23, 2015 by TimG

[bush_cheney2004]

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Change.org is a a for-profit corporation that collects and sells member data. Like any social media, your voluntary association and support for any cause, regardless of merit, may have negative professional and/or personal consequences.

Edited August 23, 2015 by bush_cheney2004

[Shady]

There's nothing wrong with debt in general. That and credit are necessary in any healthy economy.

[WIP]

I'm signing on because this is the way the Bank of Canada used to function in this Country! The financing of WWII, Medicare, the Trans-Canada Highway, the St. Lawrence Seaway and so many other large public works projects were financed directly by the Bank of Canada, and NOT following the US Federal Reserve system which borrows money and pays interest to large private banking institutions. There's no reason why we had to change from public banking except that somebody obviously got huge rewards for turning it all over to the banking oligarchy!

[TimG]

which borrows money and pays interest to large private banking institutions.

A comment that shows you have absolutely no clue how the system works. Short hint: you can't get something for nothing so there are obviously downsides to having the BOC buy government debt. Have you even bothered to ask yourself what those downsides are? Second hint: what assets do all of those public servant pension fund hold? Are you really arguing that paying interest to support public servant pensions funds is wrong? Edited August 23, 2015 by TimG

[WIP]

A comment that shows you have absolutely no clue how the system works. Short hint: you can't get something for nothing so there are obviously downsides to having the BOC buy government debt. Have you even bothered to ask yourself what those downsides are?

The Bank played an important role in financing Canada's war effort during World War II^[16] by printing money and buying the government's debt. After the war, the Bank's role was expanded as it was mandated to encourage economic growth in Canada. An Act of Parliament in September 1944 established the subsidiary Business Development Bank of Canada (BDC) to stimulate investment in Canadian businesses.

Second hint: what assets do all of those public servant pension fund hold? Are you really arguing that paying interest to support public servant pensions funds is wrong?

So now, you're concerned about public servants getting their pensions!

[TimG]

So now, you're concerned about public servants getting their pensions!

You completely ignored my points. The first was to remind you that countries that think that the central bank is there to provide free money often end up with hyperinflation (especially once the gold standard was dropped). Borrowing money from private lenders is a way to ensure that politicians pay a price for borrowing money and thereby restrain themselves. The second point illustrates the fallacy of your 'borrow from the evil banks' claim. Banks own some government bonds but a large percentage of them are held by pension funds which means the interest is used to fund the retirement of middle class Canadians. If the government did not issue bonds to private investors these savers would be forced into buying more risky assets. Edited August 24, 2015 by TimG

[Dalton]

Increase debt and you increase assets - reduce debt and you reduce assets. Good debt is debt that allows people to build personal assets. Bad debt is debt that does not contribute to increasing personal assets. It is wrong to focus on debt without looking at assets.

However, if the government increases debt by taking out more loans from the Bank of Canada it's also increasing monetary inflation by adding more paper 'assets' into the market, therefore decreaseing the value of the assumed value of the dollar which decreases puchasing power.

[Dalton]

There's nothing wrong with debt in general. That and credit are necessary in any healthy economy.

So I should go max out my credit cards and take out huge loans then? Or maybe take a bunch of student loans out and be in debt for the rest of my life. Seems very healthy indeed, especially when you realize that most of that money doesn't physicly exist, it's just created out of nothing.

[TimG]

However, if the government increases debt by taking out more loans from the Bank of Canada it's also increasing monetary inflation by adding more paper 'assets' into the market, therefore decreasing the value of the assumed value of the dollar which decreases puchasing power.

The government does not take out loans from the bank of canada. It issues bonds which are purchased with private savings. This ensures that government debt is not inherently inflationary.

[Dalton]

A comment that shows you have absolutely no clue how the system works. Short hint: you can't get something for nothing so there are obviously downsides to having the BOC buy government debt. Have you even bothered to ask yourself what those downsides are? Second hint: what assets do all of those public servant pension fund hold? Are you really arguing that paying interest to support public servant pensions funds is wrong?

The government takes out loans from the Bank of Canada without restriction, except for incurring debt and having compounding interest on top of it. The Bank of Canada gets bond which it can sell to pensioners. There's no downside for them.

If you think investing in paper is a good idea, rather than investing in physical assets like oil, food, water, lumber, etc. then you have a rather odd concept of value.

[TimG]

The government takes out loans from the Bank of Canada without restriction

Prove it. How much of government debt was sold directly to the BOC because the government wanted it? I think you will find the amount is exactly zero.

[Bonam]

Banks own some government bonds but a large percentage of them are held by pension funds which means the interest is used to fund the retirement of middle class Canadians. If the government did not issue bonds to private investors these savers would be forced into buying more risky assets.

Aren't they anyway? What's the interest rate been like on government bonds for the last 10 years or so? Hasn't even kept up with inflation.

[WIP]

You completely ignored my points. The first was to remind you that countries that think that the central bank is there to provide free money often end up with hyperinflation (especially once the gold standard was dropped). Borrowing money from private lenders is a way to ensure that politicians pay a price for borrowing money and thereby restrain themselves.

I'll just go ahead and assume your working in banking somewhere, because who else would make a case for spending billions of dollars per year to pay the collateral interest to banks, rather than create the money themselves...like they were doing previously! When the banks write up new loans and only have to hold 3% collateral to secure those new loans, that's money creation! Fractional reserve banking allows the chartered banks to create money, so why not the government itself...except for the obvious reason that bankers don't get a hand on the billions that can be made by public banking.

But, I'm not much of a public banking advocate anyway, because the point you deliberately overlook again and again, is that money creation is not inflationary as long as new economic growth expands the economy enough to absorb that new money....that's where I see the problem today, even for the US system that owns the world. But, as long as we are going to be creating money, why not do it directly, instead of paying an intermediary who will collect compound interest forever and ever on the loans to government?

[TimG]

When the banks write up new loans and only have to hold 3% collateral to secure those new loans, that's money creation!

You do not understand how fractional banking works. When banks issue a loan the create an ASSET (the loan) and a LIABILITY (the money created). Banks are liable for the money created even if the loan is not paid bank. This, at a minimum, means they have to pay interest on the new money at prevailing rates until the loan is paid back (or forever if the loan is not paid back). This means that no matter how much money banks "create" they can only make money on the differential between what they have to pay in interest and the interest they collect.

But, I'm not much of a public banking advocate anyway, because the point you deliberately overlook again and again, is that money creation is not inflationary as long as new economic growth expands the economy enough to absorb that new money

And in the current system the BOC has one mandate - to manage the money supply and make sure it does not get to big. That means it cannot start providing loans based on the whims of politicians. If politicians think they need money they should go to the money markets like everyone else.

[WIP]

You do not understand how fractional banking works. When banks issue a loan the create an ASSET (the loan) and a LIABILITY (the money created).

Thank you captain obvious! I already said that. The point is it's money that did not exist prior to writing up a new loan, therefore, with a 3% asset requirement, private banks are creating most of the new money in circulation. And the system of increasing money supply and increasing total debts works as long as economies grow enough to absorb the new money and pay off debts over time. That's why there's so much panic and shifting measures for GDP right now. If investors lose confidence that they will get full value on their loans, the whole system can collapse. So, all of the financial wheeling and dealing is ultimately a confidence game.

Banks are liable for the money created even if the loan is not paid bank.

No they're not! Haven't you heard of scams like "Mortgage-backed Securities?" Most of us discovered how the big banks were finding creative means to increase earnings and eliminate their risks when the US housing market collapsed in 08. And most of the mortgages that were written up with "Liar Loans" and handed out like candy to buyers without references or credit checks, were subdivided and bundled in tranches of mortgage-backed securities...so they were effectively resold to third parties as assets...and fraudulent assets at that! Since even the highest thirds of the tranches...the so called "safe" investments were risky mortgages sold in inflated real estate markets to buyers that assumed the losses. Ultimately, as all of the banks were over-extended and at risk of failure, the US taxpayer assumed the liability as the Bush/Obama administrations quantatively eased their way towards creating billions of dollars in new money and putting in major banks reserve accounts as collateral, so they could appear fully solvent. And, some time in the near future, they're going to do it all over again!

And in the current system the BOC has one mandate - to manage the money supply and make sure it does not get to big. That means it cannot start providing loans based on the whims of politicians. If politicians think they need money they should go to the money markets like everyone else.

And have the Canadian taxpayer pay banks the compound interest on the loans. That's why this whole system can't be disguised as anything other than a scam that is designed to directly put money in the hands of bankers.

The events of the past more than 30 years have shown banks and the financial manipulators gaining more and more control of real assets as everyone else gets poorer! As in the US example noticed after the 08 crash: manufacturing formerly represented 30% of the US Economy and banking/finance/insurance was about 15%. By 08, the sides had flipped and manufacturing was down to 16% of total GDP with the financial gamers taking a third of economy. The main scam of fiat money is for banks to exchange virtual imaginary assets (paper currencies) for real assets. That's how they end up owning everything worth having eventually in a capitalist system.

[ToadBrother]

Below is a petition to raise awareness about our debt based financial system. I hope it will give everyone some insight into the inner workings of Canada's financial system and why the debt can not be repaid.

https://www.change.org/p/thomas-mulcair-justin-trudeau-stephen-harper-remove-our-debt-based-financial-system

And how is it that you propose to implement any significant enterprise without debt?