This is a repost of a letter (in its entirety) from Richard Priestman, President, Kingston Chapter of the Committee on Monetary and Economic Reform. They can be found at: http://www.comer.org/
Public medicare cuts and long waiting times are unnecessary because there can be sufficient money IF our government borrows more from our public bank, the Bank of Canada, to finance these services and less from commercial banks and very wealthy bond holders.
Unnecessary interest paid on federal government debt (2011) – $31-billion.
Interest paid on Ontario’s public debt (2011) – $9.5-billion or $26-million a day.
Question: How many Ontario hospital budget shortfalls could be eliminated with a cash infusion of $26-million (which is the amount Ontario spends on public debt interest in one day)?
For more information go to http://www.monetaryandeconomicreform.ca/
In December 2011, the federal government announced that it would cut $31 billion from public health care by 2024 effectively downloading much of the responsibility for health care onto the provinces and territories. The federal withdrawal from health care policy and the transfer of more of the responsibility and risk to the provinces could have profound implications for our public health care.
The federal government could reduce the interest paid on public debt by borrowing more from the Bank of Canada at near zero cost and less from private financiers because it owns the Bank of Canada and all interest paid into it is returned to the government minus a little for administration. So, why doesn’t it do that? The government is up to its neck in interest-bearing debt of over $847-billion (1) – and when you owe that much you are inclined to listen to the wants of your creditors over the needs of ordinary Canadians. Government indebtedness to private financiers gives that sector undue influence over government policy decisions. It is not in the interest of banks and wealthy bond holders for the government to borrow from the Bank of Canada, but it is in the interest of ordinary Canadians. Not only would it save billions in debt charges, but more importantly it would reduce the influence of private sector financiers on government policy decisions. This would occur because use of the Bank in this way would provide government an alternative source of financing for its debt – and therefore more independence to adopt policies which are in the interest of most Canadians even if not to the liking of its major bond holders and the banks.
Provinces could borrow from the Bank of Canada, too, but this would require the federal government’s co-operation and willingness to rebate the interest paid to it.
Can we change the situation? Yes, but only if we reduce the influence of banks and wealthy bond holders on our government by electing supportive politicians.
To save public medicare (and other public services, public infrastructure and the environment) we must say to our politicians and political candidates, “If you want my vote you have to agree to support use of the Bank of Canada for financing public debt to invest in public services, public infrastructure and protection of the environment”. Note: this use does not include financing for aggression or aggressive weaponry.
If, in a given riding, none of the party affiliated candidates agrees to this, the community could then organize to elect an independent candidate. We have a choice! It could be thought of as a new kind of politics!
The knee-jerk reaction to the suggestion that government borrow from its own Bank is that it would cause run-away inflation. Since for over 30 years our government has not borrowed significantly from its own bank, but primarily from private sources at interest we might assume that there has been little inflation. We know, of course, that is not true. Just think for a moment what a house cost 30 years ago and what a similar one costs today.
“While borrowing too much money can lead to inflation, once the decision to borrow has been made it is no more inflationary for the government to borrow from the Bank of Canada than it is for it to borrow from private financial markets. In fact, it is less inflationary by exactly the amount of the interest that the government saves by using its own bank.” (2)
Interest increases price levels without a corresponding increase in commodities and is therefore, by definition, a major cause of inflation. (2) In the 2012 edition of Occupy Money (released in last week of October, 2012), Professor Margrit Kennedy writes that a stunning 35% to 40% of everything we buy goes to interest. This interest goes to bankers, financiers, and bondholders, who take a 35% to 40% cut of our GDP. That helps explain how wealth is systematically transferred from Main Street to Wall Street. The rich get progressively richer at the expense of the poor, not just because of “Wall Street greed” but because of the inexorable mathematics of our private banking system. (4)
Economic stimulus occurring from government investment in public services, public infrastructure and protection of the environment with money borrowed from the Bank of Canada at near zero interest will put more money in the pockets of Canadians. (5)
(1) Annual Financial Report of the Government of Canada, Fiscal Year 2011–2012
(2) Don Findlay: “There Is a Way to Reduce Taxes Without Increasing the Deficit, Causing Inflation, or Destroying Canada’s Social Programs!” 1997
(3) Inflation- increase in price levels arising from general increase in expenditures without corresponding increase in commodities. (Funk and Wagnalls dictionary)
(4) Ellen Brown, President of the Public Banking Institute (USA) November 3rd, 2012
It’s the Interest, Stupid! Why Bankers Rule the World
(5) Ellen Brown, February, 2012, “I actually think there is too little money in circulation, period. We NEED more money out there. It’s not going to drive up prices if it’s spent on needed goods and services. It will drive up productivity. I know you’re not keen on ‘useless productivity’, but I’m talking about the useful kind — homes for the homeless, research and development to make resource use more efficient, better health systems, etc. People will spend first on things they need.”