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AN OPEN LETTER TO FINANCE MINISTER FLAHERTY
We, the undersigned, firmly believe that 2015 is far too late to balance the federal budget. Powerful stimulus is essential now, to revive the economy and get it running on all cylinders. All that is necessary is to use the power given to you by the Canadian Constitution. There is a precedent.
From 1939 to 1974 the Bank of Canada provided the Canadian government with large sums of money at near zero cost. This got us out of the Great Depression, helped finance World War II, and many great post-war projects like the St. Lawrence Seaway and the Trans-Canada highway, as well as contributing to the establishment of our Medicare and social security systems which were the envy of the world.
All was well until 1974 when, without government approval, the Bank of Canada abandoned its shareholders, the Canadian people, and adopted the rules of the Bank for International Settlements. The Bank for International Settlements (BIS) is the de facto headquarters of the international banking cartel, a club of immensely rich con artists who have persuaded kings, queens, emperors and politicians to give them licenses to lend the same money to 15 or 20 different individuals, companies, or governments simultaneously, and collect interest from each one of them – a global fraud without equal.
This international Ponzi scheme has been so successful that big banks now control the ultimate destiny of trillions of dollars in assets which they acquired with virtual (debt) money that isn’t worth more than about five cents on the dollar – not much more than monopoly money.
Since the Bank of Canada joined the BIS club in 1974 it’s been all downhill for the Canadian economy. In 1974 there were no food banks in Canada. Today there are 1,921, and the need is still growing. Then, Medicare was well funded and tuition rates were low. Now there are long waiting lists for elective surgery, and tuition fees are far too high.
This decline in our welfare since 1974 is the direct result of the Bank of Canada adopting two BIS edicts. First the adoption of the ideas of Milton Friedman, especially monetarism. Second, the Bank of Canada agreed to stop providing the federal government with low-cost money as it had been doing for 35 years. Instead, the government has had to borrow in the market and pay as much as 20% interest.
The first of these decisions resulted in using high interest rates, which are the clumsiest of all possible tools to fight inflation. The terrible recessions of 1981-82 and 1990-91, that created both social and economic chaos proved that the cure was far more dreadful than the disease.
The Bank of Canada’s second decision to stop providing low-cost money has resulted in monstrous increases in government debt at all levels. Between 1974/75 and 2010/11 Canadian taxpayers paid 1 trillion, l00 billion dollars interest on the federal debt alone – more than $2,000 each year for every man and woman in the workforce – and all of it unnecessary. And the debt remains. There is no way to pay it off!
The system is broken! John Maynard Keynes and Milton Friedman both erred when they assumed it was self-regulating. It has to be managed by governments on behalf of all the people. Our government has to use its sovereign power to liberate us from being slaves to debt.
We therefore demand that you table your austerity budget – an idea that was tried in the 1930s and failed miserably – and adopt a new deal for Canadians. So that you will know exactly what we mean and want, we have spelled it out for you as follows.
A SOCIAL CONTRACT BETWEEN THE GOVERNMENT
AND PEOPLE OF CANADA
AND PEOPLE OF CANADA
In view of the fact that our present banking and financial system is unstable, unsustainable and basically immoral, we the undersigned, on behalf of all Canadians, demand that the federal government use its constitutional power over all matters pertaining to money and banking by forthwith taking the following action to benefit all Canadians.
1. The government of Canada should print fifteen non-transferable, non-convertible, non-redeemable $10 billion nominal value Canada share certificates.
2. Simultaneously the Justice Department should be asked for a legal opinion as to whether the share certificates qualify as collateral under the Bank of Canada Act. If not, legislation should be introduced to amend the Act to specify their eligibility.
3. The government should then present the share certificates to the Bank of Canada that would forthwith book the certificates as assets against the liability of the cash created, and deposit $150 billion in the government’s bank accounts. The federal government should immediately transfer $75 billion to the various provinces and territories in amounts proportional to their population, with the understanding that they would help the municipalities, as appropriate, so there would be no need to cut back on essential services, or sell valuable assets.
4. Amend the Bank Act to reverse the 1991 amendments that eliminated the requirement for the Canadian chartered banks to maintain cash reserves against their deposits and provide the Minister of Finance, or someone acting on his or her behalf, the power to set the level of cash reserves for banks and other deposit taking institutions up to a maximum of 34%, provided the increase, beginning in fiscal year 2013/14 is not less than 5% per annum until the new 34% base has been established in 7 years. This will ensure that there will be no inflation resulting from the government-created money.
5. Repeat the action prescribed in Sections 1 and 3 above in accordance with the following schedule. (a) 2014/15 $150 billion of government-created money (GCM); (b) 2015/16, $150 billion GCM; (c) 2016/17, $125 billion GCM; (d) 2017/18, $125 billion GCM; (e) 2018/19, 50% of the estimated increase in GCM to bring bank reserves up to 34% by the end of fiscal year 2019/20 (likely to be an amount greater than $100 billion); (f) 2019/20 the remaining amount of GCM to increase bank reserves to 34% (again likely to exceed $100 billion).
6. In each fiscal year following 2019/20 the amount of GCM spent into circulation will be 34% of the desired increase in monetary expansion for that year with the remaining 66% to be the prerogative of the chartered banks.
N.B. The great advantage of changing the system over a 7 year period is to allow all levels of government the certainty of a cash flow adequate to complete projects once begun, and to facilitate a smooth transition to the new stable and sustainable system.
7. After a year or two of robust economic growth, as tax revenues begin to rise, the amount of GCM created during the transitional period should exceed prudent budgetary requirements, so governments at all levels should take advantage of the opportunity to pay off significant amounts of their outstanding debt. It is estimated that the federal government could reduce its net debt by as much as one-third, providing further relief to hard-pressed taxpayers.
8. We demand that the parliament and government of Canada implement items 1 to 4 above not later than midnight May 10, 2013 in order that the economic benefits will begin for students seeking employment.
9. We believe these actions to be so essential for the future welfare of the majority of Canadians, and as a precedent for other struggling countries, that should parliament and the government fail to meet the deadline above we will feel duty bound to adopt such peaceful measures as are within our power to guarantee that the 99% of Canadians on the lower end of the income scale are not shortchanged one more time.
Jerry Ackerman, Paul Amodeo, Erik Andersen, Carol Bailey, David Banerjee, André Bernier, Erick Bittschwam, George Crowell, Arestia Dehmassi, Derrel Dular, Ann Emmett, Helen Ferreira, Connie Fogal, Claire Foss, Sarah Harrington, Paul Hellyer, William Krehm, Christopher Lambe, Chris Lang, Judy Lewis, John McMurtry, Dennis Morrison, David Patrick, Richard Priestman, Susan Rawley, Hon. Alan Redway, Hugh Reilly, John Riddell, Sarah Sackville-McLauchlan, Michael Sinclair, Derek Skinner, Myra Sonnichsen, Victor Viggiani, Andrew Ward, Sydney White, Keith Wilde, Pierre Zgheib
Contacts: Jerry Ackerman (613/375-8256); Ann Emmett (416/654-3499); or Paul Hellyer (416/850-1375).