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It all boils down to money, doesn't it? Whenever politicians talk about policy or what they can or can't do, somewhere in their speech they always use the word "costs" or "expense" or something similar. Political decision-making is always restricted by what politicians like to call "economic realities". They often, if not always, justify their decisions with statements like "We can't afford it" or "We've been living beyond our means". These are the reasons given for the funding cuts to health care, education, and many other government programs and services. But is it true that our governments can't "afford" to do what Canadians say they want them to do?

No, it's not true. To understand this, we have to understand what money is and where it comes from. Because it all boils down to money, and since we spend much of our lives chasing money, and politicians are telling us there isn't enough money around, it's essential that we stop for a minute and look at money itself.

The official figures from the Bank of Canada show that Canada's money supply now totals about $780 billion. Of this amount, less than 5% is cash and coin. Most of us think that all money is cash, but in fact only this very small percentage of the money supply is. The vast majority is electronic money, electronic money that is registered in the computers of the private banks. We all know that cash is printed by the Bank of Canada, that's obvious. But what's not obvious is where the electronic money comes from, the money that makes up more than 95% of our money supply, and here is where things get interesting.

When a bank lends money, we think they are lending their depositors' money. Isn't that what the banks tell us? They take in money for deposit and then lend out those very deposits at a higher rate of interest than they pay to the owner of the deposit. Well, it's not true. Banks do not lend their depositors' money and it's impossible to prove that they do. When a bank makes a loan no deposit anywhere is affected except the deposit that receives the loan, and this deposit increases by the amount of the loan. In other words, the bank prints the money for the loan, not on paper but on a computer screen. This is the great secret of the banks and they don't want you to understand or realize that they are printing money by tapping a keyboard. Last year in 2001 Canada's private banks printed about $65 billion.

If you or I printed money it would be called counterfeiting. When the banks print money it's called "issuing credit". Whatever you call it, this is where 95% of our money comes from. It is loaned into existence by the private banks. What an astounding privilege they have been given, and how profitable!

It's amazing how easy it is to produce money. The federal government does it via its agent the Bank of Canada, but the problem is that it refuses to take a leading role in the production of money, restricting its participation to cash only and leaving the rest to the private banks. Our constitution empowers Parliament to do banking and print money, but the government refuses to properly exercise this prerogative. And don't be fooled by the old nonsense that it would be "inflationary". If the federal government had printed last year's increase in the money supply instead of the private banks there would be no difference in the amount of money produced and it would be no more or less inflationary. The point here is that the production of money should be strictly and carefully regulated by Parliament and the private banks should be restricted from counterfeiting our money and putting us all in endless debt.

Almost beyond belief are the facts on the federal government debt. The Auditor General of Canada's 1993 Report states "In 1991-92, the interest on the debt was $41 billion. This cost of borrowing and its compounding effect have a significant impact on Canada's annual deficits. From Confederation up to 1991-92, the federal government accumulated a net debt of $423 billion. Of this, $37 billion represents the accumulated shortfall in meeting the cost of government programs since Confederation. The remainder, $386 billion, represents the amount the government has borrowed to service the debt created by previous annual shortfalls." Of course, the debt figure is much larger now ($550b) and all due to interest, interest on a debt that the government had no reason to incur in the first place. Imagine, in the 90s we averaged debt servicing payments of $42b annually on a real expenditure of only $37b. What honest borrower would enter into this kind of arrangement?

So the government's excuse of not being able to afford to provide the programs and services that Canadians want and deserve is a lie. And what a horrendous lie it is. Those of us who see through it can only be appalled at the tyranny of our politicians and of the financial elite who control them. Just look at what has happened to our society with its homelessness, food banks, crumbling infrastructure, deteriorating services, its anger and frustration, and all because the government refuses to be responsible for money. It's a crime and it's an outrage.

The solution is very simple. Let only public money be produced for public expenditure. At no time should the government ever go to the private banks to tap a keyboard and print money when it is fully empowered and perfectly capable of doing so itself.

by Marc Bombois