Money Reform for Canada

Remiel · February 21, 2007

Of all the parties loaning money to the Government of Canada, do you think we should absolutely pay back all debt owned to a particular one of them, Riverwind? I'm thinking of all of them, I'd certainly leave persons and unincorporated businesses, life insurance and pension funds, quasi-banks and all level of government alone, which add up to a fair chunk of the domestic portion, and look into eliminating the rest. Foreign-owned debt should go, as soon as possible.

Albert Opstad Edmonton · February 21, 2007

Secondly, the BOC buying back all of the existing debt would significantly increase the money supply - this would lead to inflation. To counter act the inflation created by absorbing government debt the BOC would have to raise real interest rates. This means that interest rates on private loans and mortgages would go up significantly.

Riverwind · February 21, 2007

Of all the parties loaning money to the Government of Canada, do you think we should absolutely pay back all debt owned to a particular one of them, Riverwind?

The bond market is a free market so it is not possible to pick and choose who owns it. All the government can do is buy existing bonds from willing sellers. That said, a portion of our debt is denominated in foreign currency - that should be paid back as soon as possible.

If we eliminated all government debt we would have to rewrite all of the laws on pensions and insurance. Right now these funds must be invested in government bonds to protect the people who are supposed to benefit from them. Without government bonds we would likely find ourselves in a situation where insurance and pension funds would have to be guaranteed by the government much like bank deposits are guaranteed. That, of course, comes with a different set of problems.

Remiel · February 21, 2007

Oh, I think I get why we can't and shouldn't eliminate all of the debt, but I certainly want to " trim the fat " as quickly as possible.

Looking at Table IV, Parts A and B, I see:

1976 - $42,042,000,000

2003 - $433,240,000,000

(Group, 1976, 2003)

Person and unincorporated businesses: 42.65%, 5.10%

Non-financial corporations: 0.94%, 1.80%

Bank of Canada: 19.60%, 9.31%

Chartered Banks: 20.61%, 15.54%

Quasi-Banks: 1.70%, 0.83%

Life Insurance Companies And Pension Funds: 3.42%, 23.30%

Public And Other Financial Institutions: 5.41%, 19.63%

All Levels of Government: 1.74%, 8.80%

Foreign: 3.93%, 15.69%

For all the talk about how the debt started ballooning in the Trudeau years, I never seem to see someone discuss who holds that debt between now and then. It's pretty clear that there has been a massive shift in the creditors of the Government of Canada. But, how exactly has that shift benefitted or harmed the economy? Less money is owned to individuals, but the share of Pension Funds has leaped massively, and we've been saying that that debt is a " good thing " .

Riverwind · February 21, 2007

Oh, I think I get why we can't and shouldn't eliminate all of the debt, but I certainly want to " trim the fat " as quickly as possible.

To be clear: there is a big difference between using surplus tax revenue to pay off the debt and using the BOC to create money to pay off the debt. Both approaches would reduce the amount of interest that the government pays but using the BOC to do it would have many nasty side effects which I have described above.

I also agree that using surplus tax revenue to reduce debt is a good thing, however, I don't see the need to eliminate debt entirely as long as the interest payments on the debt are decreasing over time.

PolyNewbie · February 21, 2007

Riverwind:To be clear: there is a big difference between using surplus tax revenue to pay off the debt and using the BOC to create money to pay off the debt. Both approaches would reduce the amount of interest that the government pays but using the BOC to do it would have many nasty side effects which I have described above.

You can't use tax surplus to pay off the debt with our existing monetary system. Its impossible. The BOC could pay the debt and then tax us for those payments interest free.

Albert Opstad Edmonton · February 21, 2007

Riverwind:To be clear: there is a big difference between using surplus tax revenue to pay off the debt and using the BOC to create money to pay off the debt. Both approaches would reduce the amount of interest that the government pays but using the BOC to do it would have many nasty side effects which I have described above.

You can't use tax surplus to pay off the debt with our existing monetary system. Its impossible. The BOC could pay the debt and then tax us for those payments interest free.

I have perused all of the prior posts up to and including this one of Feb 21 2007, 01:39 PM, but my problem is that I'm not yet good at operating here, so, as yet, if you, or anyone else, would like me to answer, the best is to send me an email at: <[email protected]>. Thank you. Just as information I copied the profile of one of the BoC Governors from this website: www.mapleleafweb.com. As you can see there was some conflict between the GoC and the BoC at that time. It would appear that the BoC wanted zero inflation but the GoC rightly opposed that. I'll try to say some more as soon as I can.

James Coyne

Governor of the Bank of Canada from 1955 to 1961

Previous Experience

* In 1938, after attending Oxford University as a Rhodes Scholar, Mr. Coyne joined the BOC research department

* In 1944, rejoined the department after serving in World War II

* Served as Deputy Governor of the BOC from 1950 to 1954

Record as BOC Governor

* Pursued a monetary policy designed to lower inflation despite opposition from the Diefenbaker government through the Finance Minister

* The government tried to fire him but was unable to do so, since only Parliament and not the Executive can fire the Governor. Mr. Coyne subsequently resigned as BOC Governor in 1961

* The political fallout from the incident is considered to be one of the reasons behind the Conservative’s defeat in the 1963 election

Riverwind · February 21, 2007

You can't use tax surplus to pay off the debt with our existing monetary system. Its impossible.

Let's take a look at some facts:

http://www.fin.gc.ca/ec2005/ec/ecc3e.html

As a result, the federal debt was $499.9 billion at the end of 2004–05, down $63.0 billion from its peak of $562.9 billion in 1996–97, resulting in interest savings of over $3 billion annually.
Federal debt as a percentage of the economy was 38.7 per cent in 2004–05, a reduction of 29.7 percentage points from its peak of 68.4 per cent in 1995–96.

Federal debt charges as a percentage of budgetary revenues have declined from 37.6 per cent in 1995–96 to 17.2 per cent in 2004–05, the lowest ratio since the late 1970s.

IOW, the government is most certainly able to pay off its debt if it wants to. However, it would take a very long time to pay it off entirely - just like it takes a long time to pay off a mortgage.

Albert Opstad Edmonton · February 21, 2007

Secondly, the BOC buying back all of the existing debt would significantly increase the money supply - this would lead to inflation. To counter act the inflation created by absorbing government debt the BOC would have to raise real interest rates. This means that interest rates on private loans and mortgages would go up significantly.

I must have done something wrong here because the statement here is from Riverwind and not from me. Albert Opstad

Albert Opstad Edmonton · February 21, 2007

Riverwind:To be clear: there is a big difference between using surplus tax revenue to pay off the debt and using the BOC to create money to pay off the debt. Both approaches would reduce the amount of interest that the government pays but using the BOC to do it would have many nasty side effects which I have described above.

You can't use tax surplus to pay off the debt with our existing monetary system. Its impossible. The BOC could pay the debt and then tax us for those payments interest free.

For your information, and any others, I include here my overall new money proposal for Canada.

New Money System for Canada

When I see that the major expenditure of the Government of Canada (GoC), is paying interest on its debt (16.2% of its total annual expenditures for Fiscal Year 2004-05[The latest fiscal year for which we have actual figures], in annual interest payments), I realize that this is a problem that all of us Canadians must tackle, and particularly realizing that the solution is so simple. All that the GoC has to do is to transfer its debt to the Bank of Canada (BoC). Had the BoC been holding 100% of the debt in Fiscal Year 2004-05, the GoC would have saved $33,800 million of the $34,100 million that it paid in interest payments. The BoC gives it profits to the GoC, while the private lenders do not. In Calendar Year 2005, while creating only 4% of Canada’s total money supply ($46,411 million. 11.2% of the GoC total funded federal debt of $415,178 million), and while issuing it all to the GoC, the BoC gave $1,732 million in profits to the GoC.

Here is my overall new money system for Canada: The creation and issuance of all new money shall be by the BoC exclusively; and, the BoC shall issue it in amounts calculated to maintain a stable general price level (Inflation/deflation shall be 0% +/- 1%). The BoC shall issue all of the newly created money debt free (and interest free) to those budgeted to receive it by the GoC. Every adult citizen shall receive an annual national dividend. The time period to increase to the 100% level of money creation and issuance by the BoC, from the present 4% level, shall be 15 years. During this 15 year period, that the money creation function of the BoC is being increased to the 100% level, the GoC shall be transferring its debt to the BoC, and shall be paying off its debt, so as to be debt free at the end of this 15 year period. Also, during this 15 year period, as the money creation function of the BoC is being increased to the 100% level, the statutory reserve requirements of the private banks shall be being increased at the same time, and at the same rate, so as to attain the ultimate 100% statutory reserve banking level at the conclusion of this 15 year period. In this way, at the end of this 15 year period, the BoC will be creating all of the new money for Canada, and the GoC will be debt free. All of this will be without any inflation, or deflation, at any time during this 15 year period. The BoC now operates at “arms length” from Government, and it shall continue to operate that way, except that the present fifteen management directors, appointed by the Finance Minister, shall be replaced by fifteen management directors, elected by the public.

Proposed by Albert Opstad, 10821-140 St., Edmonton, Alberta, Canada, T5M 1S4, Tel:(780)453-2011, Email:<[email protected]>. January 8, 2007.

Riverwind · February 21, 2007

the BoC shall issue it in amounts calculated to maintain a stable general price level (Inflation/deflation shall be 0% +/- 1%).

Montetary policy is not an exact science. There is no way to predict the exact amount of money required and there is a considerable time lag between the time money is added or removed and the time its effects are known. This a recipe for excessive boom/bust cycles as the bank is constantly trying to compensate for past mistakes.

The BoC shall issue all of the newly created money debt free (and interest free) to those budgeted to receive it by the GoC. Every adult citizen shall receive an annual national dividend.

What happens when the BOC decides it needs to decrease the money supply? It would have to that ask everyone to pay a annual national tax instead of a dividend. I doubt this would make people happy.

the statutory reserve requirements of the private banks shall be being increased at the same time, and at the same rate, so as to attain the ultimate 100% statutory reserve banking level at the conclusion of this 15 year period.

How exactly would this 100% reserve system work? Last time I checked the reserve ratio specifies what percentage of a bank's deposits must be held in cash. If the reserve ratio is 100% then the banks cannot lend anything. This implies you want to completely kill the private sector banking industry and make everyone dependent on the money from the government. Such a system is nothing other than Communism under a different name.

The BoC now operates at “arms length” from Government, and it shall continue to operate that way, except that the present fifteen management directors, appointed by the Finance Minister, shall be replaced by fifteen management directors, elected by the public.

The purpose of the 'arms length' relationship is to ensure that the BOC is free of political influence. Having the BOC directors elected by the public will make them part of the political process. You should not bother claiming you want to have an independent BOC - you want a system where the BOC and the money supply is tool of the politicians. Every country that did that ended up with hyper inflation and serious economic crisis (Wiemar Germany and Argentina just two examples).

PolyNewbie · February 22, 2007

Riverwind:The purpose of the 'arms length' relationship is to ensure that the BOC is free of political influence. Having the BOC directors elected by the public will make them part of the political process.

This is necessary the idea of th need to keep the banks isolated from politics is absolutely foolish and is a completely artificial idea that got planted somewhere and got stuck. Politicians are responsible to us and if power was taken away from bankers, not only their actions would incur responsibility but the politicians would be much more answerable to the public on all other matters such as social engineering, health and education and would not have to tolerate bankers agendas in these areas.

There should be for branches of government, not three in a democratic society. Leaving banks unanswerable to anyone means they use the monetary policy to direct their own private interests. It puts control of a nations economy into private hands.

You should not bother claiming you want to have an independent BOC - you want a system where the BOC and the money supply is tool of the politicians. Every country that did that ended up with hyper inflation and serious economic crisis (Wiemar Germany and Argentina just two examples).

Thats just not true. The international bankers will collapse any economy that decides to print its own money. We would be at war with the States and labeled as a rouge nation if we did this. All of the rogue nations in Bushes speeches are nations without privately owned central banks.

We must build awareness so that monetary reform can have a chance all over the world in a short time because any other way will result in wars. People have to become aware of the power and influence of the private banking interest so that power can be taken away from them.

I believe we must make as many people aware of monetary reform as possible before they change the internet to "internet 2". They will let people talk about wars and terrorism but the new system will put monetary reformers on a short leash.

Monetary reform will be the issue of our time in history and will be remembered as the most significant event over the past 100 years if it is acheived. It would be magnificent if monetary reform succeded. People couldn't imagine the positive change it would make and the positive direction society and humanity could go.

See The Money Masters free on google as well as many other historical videos about banking.

PolyNewbie · February 22, 2007

Riverwind:Last time I checked the reserve ratio specifies what percentage of a bank's deposits must be held in cash. If the reserve ratio is 100% then the banks cannot lend anything.

Thats because you still do not know what a reserve ratio is despite having posted many times on the topic of fractional reserve banking.

Riverwind · February 22, 2007

Riverwind:Last time I checked the reserve ratio specifies what percentage of a bank's deposits must be held in cash. If the reserve ratio is 100% then the banks cannot lend anything.
Thats because you still do not know what a reserve ratio is despite having posted many times on the topic of fractional reserve banking.

Why don't you try reading up on the definition of reserve ratio yourself:

http://www.investorwords.com/4206/reserve_ratio.html

Reserve Ratio
Definition

Amount of money and liquid assets that Federal Reserve System member banks must hold in cash or on deposit with the Federal Reserve System, usually a specified percentage of their demand deposits and time deposits. also called Federal Reserve requirement or reserve requirement.

IOW, if the reserve ratio is 100% then banks must hold 100% of their demand deposits and cannot lend any of money. If banks cannot loan the money they have on deposit then then cannot pay interest on it. If they don't pay interest then people have no reason to keep their funds in a bank.

What you are likely talking about is a system where banks are simply capital brokers that loan funds on behalf of people with extra cash. If that is the case then it does not make any sense to talk about 'reserve ratios'. You are talking about eliminating banks and replacing them with glorified mutual fund companies.

Riverwind · February 22, 2007

Thats just not true. The international bankers will collapse any economy that decides to print its own money.

Would that be the evil bankers with six tentacles from the planet Xenon or are you talking about the ones with 8 tentacles from Zargon?

The connection between political interference and hyper inflation is a well established fact. The connection is also obvious to any who understands how a fiat currency works.

We must build awareness so that monetary reform can have a chance all over the world in a short time because any other way will result in wars. People have to become aware of the power and influence of the private banking interest so that power can be taken away from them.

I see you forgot your tinfoil hat...

The economic theory behind the current system is completely rational and we are using it today because it provides a stable foundation for an economy. It is not perfect and it is reasonable to discuss its flaws and how to remedy them. However, it is lunacy to claim that the current system is some bizarre plot by 'evil bankers' to subjugate the world.

I am willing to discuss any rational argument that you can present in support of political interference in the monetary system. But if you insist on bringing your bizarre fantasies into the discussion then you leave me no choice but to mock you.

PolyNewbie · February 22, 2007

Riverwind:IOW, if the reserve ratio is 100% then banks must hold 100% of their demand deposits and cannot lend any of money. If banks cannot loan the money they have on deposit then then cannot pay interest on it. If they don't pay interest then people have no reason to keep their funds in a bank.

Thats not what the definition says and you are misunderstanding the definition. You do not know what reserve ratio even means and are passing yourself off as an expert.

Riverwind:Would that be the evil bankers with six tentacles from the planet Xenon or are you talking about the ones with 8 tentacles from Zargon?

The bankers themselves keep saying they are going to take over the world. Thats why I believe it.

Here David Rockefeller explains exactly what is going on:

"We are grateful to the Washington Post, The New York Times, Time Magazine, and other great publications whose members have attended our meetings and respected their promises of discretion over forty years. It would have been impossible for us to develop a plan for the world if we had been subject to the bright lights of publicity during those years. But the work now is much more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto determination practised in past centuries"- David Rockefeller, founder of the Trilateral Commission, at the Trilteral commission in June 1991.

Riverwind · February 22, 2007

Thats not what the definition says and you are misunderstanding the definition. You do not know what reserve ratio even means and are passing yourself off as an expert.

a specified percentage of their demand deposits and time deposits.

The wording is clear - hold 100% in cash then you have nothing to lend. The concept is described in detail in many sources and they all say the same thing.

You really need to stop pretending that you understand the fundamentals of banking.

I asked you to provide one credible source that supports your bizarre definition of the reserve requirement and its affect on the money supply. You have not provided a link - most likely because you cannot find one.

David Rockefeller, founder of the Trilateral Commission, at the Trilteral commission in June 1991.

Yet another out of context quote that means nothing. The Trilateral Commission is a talking club that was

formed to encourage mutual understanding and closer cooperation among these three regions on common problems.

(see http://www.trilateral.org/moreinfo/faqs.htm).

They do have a vision of a peaceful interdependent world linked by trade, however, that is hardly revolutionary nor threatening. They also seem to believe that national sovereignty should take second place to a system of global trade rules and regulations. That is also not revolutionary. Ultimately, this group is no different from Green Peace or the anti-Globalization movement. They have an opinion and they try to convince people that their opinion is worthwhile.

PolyNewbie · February 22, 2007

Riverwind:I asked you to provide one credible source that supports your bizarre definition of the reserve requirement and its affect on the money supply. You have not provided a link - most likely because you cannot find one.

The Creature From Jekyll Island explains it, so does the video "Money as Debt". The banker sites don't explain it.

Riverwind:They have an opinion and they try to convince people that their opinion is worthwhile.

Do you completely trust the government, banks and special interest groups and secret societies to work in your interest 100 % of the time ?

Riverwind · February 22, 2007

The Creature From Jekyll Island explains it, so does the video "Money as Debt". The banker sites don't explain it.

I said credible source - an economic text book or journal or anything that has references that can be checked.

Do you completely trust the government, banks and special interest groups and secret societies to work in your interest 100 % of the time ?

Hell no. But I also don't believe that these groups have superhuman powers to control our leaders. They are just another lobby group that tries to persuade the political leaders and the public.

PolyNewbie · February 22, 2007

Riverwind:I said credible source - an economic text book or journal or anything that has references that can be checked.

The sources you quote are being mis interpreted by you. There are lots of sources that explain what a reserve ratio is. Your textbooks do not say what read them as saying. There will be no Official source that exactly explains banking. If you want to know who owns the bank you have to see a congressional report written in the 70's by Larry MacDonald. They won't give you that info in Forbes.

You think the banks have a Washington lobby group ?

geoffrey · February 22, 2007

They won't give you that info in Forbes.

But the longtime economic scholar PolyNewb will give you all the details on an internet forum!

Riverwind · February 22, 2007

The sources you quote are being mis interpreted by you. There are lots of sources that explain what a reserve ratio is. Your textbooks do not say what read them as saying.

Why don't I quote one of your own sources (the Money Masters):

http://www.themoneymasters.com/faq.htm#q7

The Federal Reserve Notes and equivalent Federal Reserve Deposits (mentioned above) are deposited in local banks or to their credit at one of the 12 Fed banks. These funds serve as the base of bank loans, which require a 10% reserve. For example, if $1,000,000 of Federal Reserve notes or Fed deposits are entered on the books with the Fed to the credit of a bank (usually the bank of the person or company which just sold the Fed a Treasury bond/bill or note), that bank may loan all of that money out (at interest), except for 10% which is kept as its reserve. Thus $900,000 in this example may be loaned out by that bank.
In the usual case, the borrower of the $900,000 will not, of course, keep the money under the mattress, rather, it is deposited either in the same bank or in others. This $900,000 in new deposits may then be loaned out at interest by these banks, except for the 10% reserve. Thus $810,000 is loaned out a second time ($90,000 of the $900,000 being retained as reserves).

Read it carefully Poly. Your own source explains fractional reserve banking in _exactly_ the same way I do. It clearly indicates that a reserve requirement of 10% means the banks can only lend out 90% of the deposits which means that if the reserve requirement is 100% then the banks cannot lend anything.

Why do expect anyone to take you seriously when you can't even get the basic facts rights?

Why should anyone take your 'book' knowledge seriously when it is obvious you don't understand what is written?

Albert Opstad Edmonton · February 23, 2007

the BoC shall issue it in amounts calculated to maintain a stable general price level (Inflation/deflation shall be 0% +/- 1%).
Montetary policy is not an exact science. There is no way to predict the exact amount of money required and there is a considerable time lag between the time money is added or removed and the time its effects are known. This a recipe for excessive boom/bust cycles as the bank is constantly trying to compensate for past mistakes. Reply: It will be much easier to control the money supply in an acceptable way when we have only the BoC creating our money instead of the multiplicity of private creators that we have now.
The BoC shall issue all of the newly created money debt free (and interest free) to those budgeted to receive it by the GoC. Every adult citizen shall receive an annual national dividend.
What happens when the BOC decides it needs to decrease the money supply? It would have to that ask everyone to pay a annual national tax instead of a dividend. I doubt this would make people happy. Reply: Do one or more of the following: (1) Decrease money creation (2) Decrease the dividend (3) Tax the people.
the statutory reserve requirements of the private banks shall be being increased at the same time, and at the same rate, so as to attain the ultimate 100% statutory reserve banking level at the conclusion of this 15 year period.
How exactly would this 100% reserve system work? Last time I checked the reserve ratio specifies what percentage of a bank's deposits must be held in cash. If the reserve ratio is 100% then the banks cannot lend anything. This implies you want to completely kill the private sector banking industry and make everyone dependent on the money from the government. Such a system is nothing other than Communism under a different name. Reply: 100% reserves means that the private banks cannot create any money, but can loan out depositors money, but only for the time duration that the depositor has deposited his/her money. Pension fund deposits would be the obvious deposits to loan out.
The BoC now operates at “arms length” from Government, and it shall continue to operate that way, except that the present fifteen management directors, appointed by the Finance Minister, shall be replaced by fifteen management directors, elected by the public.
The purpose of the 'arms length' relationship is to ensure that the BOC is free of political influence. Having the BOC directors elected by the public will make them part of the political process. You should not bother claiming you want to have an independent BOC - you want a system where the BOC and the money supply is tool of the politicians. Every country that did that ended up with hyper inflation and serious economic crisis (Wiemar Germany and Argentina just two examples).

Reply: I propose that we elect our government and that we elect our BoC directors and that the government and the BoC operate independently of each other. We could elect each separately and at different times.

I would appreciate you telling me how you pull out the quotes from an email and then reply to each one in turn. Thank you. In the mean time I will reply the best way that I know how to do. I will write: Reply, after each one of your replies and then I will make my reply. Albert Opstad Edmonton T:(780)453-2011

I realize that money reform has a global aspect but this cannot stop us from installing a new money system in Canada. Albert Opstad

Riverwind · February 23, 2007

Reply: I propose that we elect our government and that we elect our BoC directors and that the government and the BoC operate independently of each other. We could elect each separately and at different times.

You cannot elect people if you want them to be apolitical. Do you want to see supreme judges elected? How about civil servants?

Typing in the following creates the text above:

[quote name='Albert Opstad Edmonton' date='Feb 22 2007, 04:41 PM' post='188817']Reply: I propose that we elect our government and that we elect our BoC directors and that the government and the BoC operate independently of each other. We could elect each separately and at different times.[/quote]You cannot elect people if you want them to be apolitical. Do you want to see supreme judges elected? How about civil servants?

PolyNewbie · February 23, 2007

You cannot understad this subject by reading a few web sites. Your process explains how 10 % of the created money comes into existence.

You are going to have to learn for yourself how the bank creates money from your deposits. I'm sick of your combined arrogance and stupidty and wish you would stop polluting my threads with your know it all attitude and know nothing reality.

From that site "...That made it lawful for banks to loan far more than they had in deposits – to practice fractional reserve banking...."

I'll let you find it.

Now you know that (1) The Federal Reserve creates money from nothing (2) It is privately owned. This has been the main thrust of your arguements all along and after 80 + pages of argueing with you you now finally know.

Now, go away and start writing threads that you know something about.