Summary Page Profit & Debt There Is A Better Way About Monetary Reform Take Action Article Index Feedback Page Links Page Monetary Reform Cinema
Placeholder Picture Placeholder Picture Placeholder Picture
Placeholder Picture
Supreme Court of Canada

Time For A Class Action?

Clearly the most devilish aspect of our monetary system is that everything of value must originate as debt. Even our nation's currency is born as a debt of the government. The problem is that all debts "earn" a premium called interest which is an amount above and beyond the original amount of the loan. Since this interest amount is not created at the time of the loan it cannot exist until a new loan creates it. This may satisfy the demands of the lender for the first loan but now the second loan becomes unpayable for part of the principal is missing (the part used to pay the interest on the first loan) and none of the interest due on the second loan has yet been created. As you can see, a third loan is required but once again this will only make the problem worse. This is the essence of a debt-based monetary system. This is why bankers love it.

Now it is true that a crafty business person can use borrowed money to their advantage to "earn" enough money from other people to pay back both the principal and interest demanded by the banker and still have some money left over. This hallowed reward is called profit. It is the hallmark of "good business". The problem here of course is that in order for both the banker and the business person to work their magic someone else must go into debt to create the additional money they demand. If you find this hard to believe, think for a moment about any business that you want. The owner adds up his costs including financing (both principal and interest), salaries, overhead etc., then adds a reasonable markup and embeds all these numbers in the price of his goods and services.

But if every business person is doing the same thing, it doesn't take a genius to figure out that the total amount paid out to workers as wages is going to be far less than enough to buy all of the goods and services they produced as employees. To make the magic work for the bankers and the business owners somebody has to borrow more money. If it is the government, the taxpayer will shoulder the cost (yup, you guessed it, that's you and me, the workers again). If it is another business, that business owner will work the magic again until the retail consumer shoulders all of his costs. Think about that the next time you are driving through downtown. Look at all the skyscrapers, malls, bank towers, movie theatres, industrial properties, all of the commercial assets that exist everywhere you go and consider that collectively, as taxpayers and consumers, we have paid to build and finance all of them several times over (due to interest costs and profit bonanzas each time the properties are flipped and refinanced) yet we have no claim or share in the ownership of any of them. (then please get very angry... you've been severely ripped off)

The absurdity of our debt-monetary system is especially obvious in the case of "public assets". Imagine that our government decides to construct a new bridge or road or hospital. An asset of great value which will serve the needs of the people for generations is born. The country as a whole is richer for having used the skills and energy of its population to complete such a worthy project. Yet at the same time, it is also poorer (according to the national balance sheet) since governments normally finance such projects by issuing treasury bills and interest-bearing bonds. So even though, through hard work, we increase the value of our assets, our new debt obligations rob us of any gains in the net worth of our country. In fact, once compound interest costs are factored in, we are actually worse off financially than before we started the project. Doesn't this seem a little odd to you? Are national infrastructures really a liability? Why should the cost of public works to the taxpayer double or triple because of interest charges? Who has a greater right than the government to create the nation's credit supply?

Originally, money was designed to be nothing more than a standardized way of representing the underlying value of goods and services. Money was not a commodity itself and had no inherent value of its own. Money was simply a yardstick used to measure and compare the relative values of a diversity of other goods and services. It was intended to facilitate production, trade and commerce, not hinder or restrict it. Today however money has taken on a complicated economic life of its own. It has become a speculative commodity in its own right, and because of a deliberate and planned shortage of it, it has become extremely expensive to rent or borrow.

Ideally, the money supply should always equal exactly the current value of a nations assets. Money should be introduced as new assets are created and reduced as old assets are used up or depreciated. "Loans" should only be used to bridge the gap between the contemplation and completion of new asset production. Once the assets are actually produced the "loan" should be cancelled. The newly created credit/currency should remain in circulation to represent the value of the new assets in the economy. As assets depreciate in value (ie. wear out), a corresponding amount of currency should be removed (ie. taxed) out of circulation. At any given point in time the total amount of currency in existence (in circulation or in bank accounts and savings) should equal the total amount of wealth that exists in the nation. Credit should not belong to anyone, that is to say it should not be someone else's money. It should be a public good, provided by the government to maximize the growth and development of every citizen.

So what if, instead of borrowing the money for public works from "financial markets", the government simply issued the credit itself through its own bank, The Bank of Canada. The bridge or road or hospital could then be built immediately... its cost monetized with new currency created to reflect the increased value that the project would add to the country's asset base. Upon completion of the project, the currency would remain in circulation interest-free, being reduced only slightly through taxation each year by an amount equal to the actual depreciation of the asset. Rather than being inflationary, government-created credit would be deflationary since all interest costs would be eliminated. Taxes could be reduced significantly. Never again would badly needed public assets remain unbuilt or unserviced due to a lack of money. The Fathers of Confederation recommended a system like this and warned the government specifically against giving away its sovereign right to create and control the monetary/credit supply of the nation. As the Auditor General of Canada recently pointed out, some 94% of Canada's total accumulated debt is due to interest costs, not initial borrowings. The story is the same in the USA and Europe, and it is well-known how interest costs have enslaved most governments of the Third World.

On January 1st, a common currency was launched in Europe. Eleven nations relinquished their sovereignty and gave away the most important economic tool they ever had... the right to create their own monetary/credit supply for the common good of their citizens. Now the brainwashing has begun to prepare Canadians to accept the inevitability of adopting the US dollar and handing over control of our monetary/credit supply to the Federal Reserve in the USA. The Federal Reserve, by the way, is a privately-held corporation, not a government agency. Merging monetary policy with the US would accomplish, in a single stroke, the privatization and complete foreign takeover of Canada's most precious and sovereign resource. A cartel of wealthy investment bankers and business executives, unelected, undemocratic, unaccountable to anyone but themselves, is making a power play to establish a global economic dictatorship daringly named "The New World Order". We must not allow this madness to take root in our country. We must educate people about what is really going on. We must not be afraid to confront our leaders and demand that they stop this treason! Rather than abandoning the Bank of Canada, the government should increase its power and use it exclusively to supply the credit needs of the nation. Perhaps a class action suit brought against the federal government and the Bank of Canada by citizens and businesses who have been ruined by the government's restrictive monetary policy would get the public's attention. There is certainly much evidence to suggest that the government has abdicated many of its Constitutional obligations to the citizens of Canada and acted unilaterally and unconstitutionally in many areas of taxation and finance. Anyone interested?

As a final note, a word to explain what is motivating the bankers, the businessmen and the government may be in order. The total cost of debt servicing in the economy has grown recently to an extremely unstable level. (This is why interest rates have come down and are staying relatively low... the government knows that high rates now would topple the economy). Remember all debt servicing costs in the economy are passed along to the consumer/taxpayer/worker to bear. When debt servicing costs become too big a proportion of the disposable income of consumers a downward spiral begins. Consumers cut back on their purchases, demand goes down, layoffs and bankruptcies follow and a recession or, even worse, a depression can occur. The debt-based house-of-cards begins to crumble and billions of dollars of paper wealth dissolve.

It appears that the downsizing of governments everywhere around the world is an attempt to reduce debt servicing costs and slow down the meltdown. This would please the business community since a bigger slice of the total credit pie would then be left for them to use to finance their takeovers and consolidation of global markets. It would please the bankers because democratic governments are always a threat to their schemes. Why governments would allow or even encourage this can be explained partially because the key power brokers in government (like the finance ministers) come from the business world and return to it upon leaving office and partially because big business funds control the political party system (as well as the media, the economists, the universities and our cultural institutions). In addition, there is a growing consensus in the upper levels of society that democracy has perhaps gone too far, that there is now "an excess of democracy" and that the "undeserving poor" and even the middle class have had it a little too easy lately. When business and government talking heads speak about "a more flexible workforce" what they really mean is "a more desperate population".