A Look at the Bank of Canada

This is not an in depth look at the Bank of Canada. This is merely intended to arouse the interest of the readers with the hope that what they find here will spur them on to their own quest for the truth.

Let me start with a statement from the Bank of Canada'a own web site.

A special type of Crown corporation

The Bank was founded in 1934 as a privately owned corporation. In 1938, it became a Crown corporation belonging to the federal government. Since that time, the Minister of Finance has held the entire share capital issued by the Bank. Ultimately, the Bank is owned by the people of Canada.

The last sentence here reports that, "Ultimately, the Bank is owned by the people of Canada." The problem though, seems to be that The Bank operates as if it was a private bank. Private banks lend money (at interest) into circulation whereas public banks spend money into circulation. Lending money at interest always creates a situation were more money must be returned to the lending institution than was originally borrowed. This practice creates a never ending and a continually growing debt. Spending money into circulation creates no debt. This practice merely facilitates the constant strong growth of a society. It also eliminates the ability to "make" money with money.

The old saying, "If it walks like a duck and quacks like a duck" probably holds true here. The only reason to lend money at interest is to.

1. make money with money, 
2. to bind people to a debt, thus enslaving them, or
3. both.

In the case of the Bank of Canada number three seems to be the case.

But before we get off the topic of ownership here is an email from the Bank of Canada that states that the Bank is not a public corporation.

I have added a couple of questions in green.

From:                                     Robert Turnbull [rturnbull@bank-banque-canada.ca]

Sent:                                      Wednesday, March 20, 2002 9:13 AM

To:                                         XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Subject:                                 Bank of Canada Act

I hope the following answers the questions in your E-mail of March 14 to Bank of Canada Public Affairs.

1.     The Bank is not a public corporation. All shares are held by the Government of Canada.

2.     The Bank of Canada Act does not provide for the appointment of elected representatives the the Board of the Bank.

3.     The Bank has no powers under section 18 to make loans to the federal government and to Provincial governments. It is not the Bank’s role to be a source of financing for Governments and this power has only rarely been exercised (on two occasions that I am aware of, when a government has been in dire financial straights.) The Bank has no power to make loans to the Federal Government and to Provincial Governments. Does that mean that it broke the law on the two occasions it did? Corporations whether public or private must have a mandate to do what they do. No mandate, no action. Besides, all our governments are in dire straights now so they all qualify.

4.     The Bank issues notes by selling them at face value to financial institutions, who then put the notes into circulation. What does a financial institution use to pay for a $20.00 bill? A $20.00 bill????
The Bank also buys surplus notes from financial institutions What does the Bank of Canada use to buy these surplus note? Does it buy a surplus $20.00 bill with a non-surplus $20.00 bill? Something sounds fishy here. and destroys notes which are of poor quality. Each note is a claim against the Bank. The Bank accounts for notes on its balance sheet as liabilities.

5.     Subsection 23(b) means that the Bank may purchase shares of the BIS or make loans on the security of BIS shares. It does not authorize the Bank to borrow from the BIS. If the bank has complete authority to print as much money as it wants, why does it ever need to buy the shares of the Bank for International Settlements? It needs no security to make loans to other financial institution as these other institutions "buy" money at face value. 

I hope this information is of help to you.

Number one states that, "The Bank is not a public corporation. What determines if a corporation is public or private is the simple fact of ownership. If the Bank of Canada is owned by the people of Canada then it must follow that it is a public corporation. But the Banks own spokesperson denies this. But the next thing he says is that, "All shares are "held" by the Government of Canada." Now it is important to realize that the holding of something does not necessarily imply ownership. The fact someone asked you to hold their wallet while they went for a swim does not mean you now own the wallet. The ownership still remains with the one you're holding it for. So the ownership of the Bank of Canada shares would depend on who the Government of Canada is holding the share for.

When we look into that we find that the Bank Act states:

CAPITAL AND SHARES

Capital

17. (1) The capital of the Bank shall be five million dollars but may be increased from time to time pursuant to a resolution passed by the Board of Directors and approved by the Governor in Council and by Parliament.

Shares

(2) The capital shall be divided into one hundred thousand shares of the par value of fifty dollars each, which shall be issued to the Minister to be held by the Minister on behalf of Her Majesty in right of Canada.

We see that section 2 states that the shares are "held" by the Minister (of finance, Mr. Jim Flaherty) "on behalf of Her Majesty in right of Canada." It certainly does not say that they are held for the people of Canada. Maybe we could get the minister of Finance to request the Government amend the Bank of Canada Act to read, "the people of Canada" instead of, "Her Majesty in right of Canada. Then there would be no doubt. You think? All government are desirous of being transparent, or so they say.

As an aside, I wondered about the tag on, "in Right of Canada." What do these four words mean? Well after sending many emails to various Government departments I finally got back this answer from:
CeremonialetSymboles-CeremonialandSymbols@pch.gc.ca.

Hello Mr. Ealing, 

As the living enbodiment of the Crown, The Queen of Canada,^[42] the sovereign is regarded as the personification, or legal personality of the Canadian state.^[n 8with the state therefore referred to as Her Majesty The Queen in Right of Canada ,^[n 9 or the Crown in Right of Canada.^] The body of the reigning sovereign thus holds two distinct personas in constant coexistence:   that of a natural-born human being, The Queen of Canada, and that of the state as accorded to her through law, Her Majesty The Queen in Right of Canada. 

It turns out that "in Right of Canada" is not a tag on at all. It's part of the full Corporate (Legal) name of the Crown.

Back to the question of ownership. As I see it the Bank of Canada is a private Bank who's shares are held by the Finance Minister for the Legal Corporation called, "Her Majesty the Queen in Right of Canada." The Bank of Canada operates like a private Bank because it is a private bank. There is no other reason for this.

 Private Banks have one result. In 1936, a Catholic Priest by the name of Father Charles E. Coughlin wrote a book entitled, Money! Questions and Answers. He claimed at that time that Private banks would lead us to the following:

1. Private individuals will coin money for their own personal gain.

2 Corporations organized for production, such as automobiles, steel and textiles, will be under the domination of the private money creators.

3. The government itself will be dominated by the money plutocrats.

4. The press, dependent upon advertising received from banker-dominated corporations and commercial houses, will continue to deceive the people.

5. The educational system will continue to ostracize the truths of economics from our schools.

6. The citizens, weighed down by the unbearable costs of war and depression, will be inclined to blame a democratic form of government and unwittingly relinquish the liberties already won for the bare necessities of life, which the plutocrats will allow them only at the sacrifice of liberty. Dictatorship will necessarily ensue.

Turns out that he was 100% right. Democracy has also turned out to be a dictatorship where the only control the citizens have is who will be their dictator for the next Four or Five years.

Part of Father Coughlin concluding statement in his book is:

Without economic freedom, both physical and political liberty are meaningless. Their existence depends almost totally upon financial freedom. It is essential that we Americans recapture our sovereign right of coining and regulating our money and of foreign coin. It is essential that we cease paying tribute to the Federal Reserve Banks who create our money out of nothing and lend it into use with an invisible tax appended to it. It is either your money or your life.

What Father Coughlin said about the American people is true of Canadians as well. It is essential that we Canadians recapture our sovereign right of coining and regulating our money. It is essential that we cease paying tribute to the Bank of Canada who creates our money out of nothing and lend it into use with an invisible tax appended to it.

Father Coughlin was a Christian and his message was aimed mainly at Christians. My message is aimed at everyone alive; all with a religious belief and all without one. This corrupt economic system has no regard for race, religion or gender. It enslaves us all.

The following was borrowed from: http://www.michaeljournal.org/appenE.htm.

Some of the most frank evidence on banking practices was given by Graham F. Towers, Governor of the Central Bank of Canada (from 1934 to 1955), before the Canadian Government's Committee on Banking and Commerce, in 1939. Its proceedings cover 850 pages. (Standing Committee on Banking and Commerce, Minutes of Proceedings and Evidence Respecting the Bank of Canada, Ottawa, J.O. Patenaude, I.S.O., Printer to the King's Most Excellent Majesty, 1939.) Most of the evidence quoted was the result of interrogation by Mr. “Gerry” McGeer, K.C., a former mayor of Vancouver, who clearly understood the essentials of central banking. Here are a few excerpts:

Q. But there is no question about it that banks create the medium of exchange?

Mr. Towers: That is right. That is what they are for... That is the Banking business, just in the same way that a steel plant makes steel. (p. 287)

The manufacturing process consists of making a pen-and-ink or typewriter entry on a card in a book. That is all. (pp. 76 and 238)

Each and every time a bank makes a loan (or purchases securities), new bank credit is created — new deposits — brand new money. (pp. 113 and 238)

Broadly speaking, all new money comes out of a Bank in the form of loans.

As loans are debts, then under the present system all money is debt. (p. 459)

Q. When $1,000,000 worth of bonds is presented (by the government) to the bank, a million dollars of new money or the equivalent is created?

Mr. Towers: Yes.

Q. Is it a fact that a million dollars of new money is created?

Mr. Towers: That is right.

Q. Now, the same thing holds true when the municipality or the province goes to the bank?

Mr. Towers: Or an individual borrower.

Q. Or when a private person goes to a bank?

Mr. Towers: Yes.

 Q. When I borrow $100 from the bank as a private citizen, the bank makes a bookkeeping entry, and there is a $100 increase in the deposits of that bank, in the total deposits of that bank?

Mr. Towers: Yes. (p. 238)

Q. Mr. Towers, when you allow the merchant banking system to issue bank deposits which, with the practice of using the cheques as we have it in vogue today, constitutes the medium of exchange upon which I think 95 per cent of our public and private business is transacted, you virtually allow the banks to issue an effective substitute for money, do you not?

Mr. Towers: The bank deposits are actual money in that sense, yes.

Q. In that sense they are actual money, but, as a matter of fact, they are not actual money but credit, bookkeeping accounts, which are used as a substitute for money?

Mr. Towers: Yes.

Q. Then we authorize the banks to issue a substitute for money?

Mr. Towers: Yes, I think that is a very fair statement of banking. (p. 285)

Q. 12 per cent of the money in use in Canada is issued by the Government through the Mint and the Bank of Canada, and 88 per cent is issued by the merchant banks of Canada on the reserves issued by the Bank of Canada?

Mr. Towers: Yes.

Q. But if the issue of currency and money is a high prerogative of government, then that high prerogative has been transferred to the extent of 88 per cent from the Government to the merchant banking system?

Mr. Towers: Yes. (p. 286) 

Q. Will you tell me why a government with power to create money, should give that power away to a private monopoly, and then borrow that which parliament can create itself, back at interest, to the point of national bankruptcy?

Mr. Towers: If parliament wants to change the form of operating the banking system, then certainly that is within the power of parliament. (p. 394)

Q. So far as war is concerned, to defend the integrity of the nation, there will be no difficulty in raising the means of financing, whatever those requirements may be?

Mr. Towers: The limit of the possibilities depends on men and materials.

Q. And where you have an abundance of men and materials, you have no difficulty, under our present banking system, in putting forth the medium of exchange that is necessary to put the men and materials to work in defence of the realm?

Mr. Towers: That is right. (p. 649)

Q. Would you admit that anything physically possible and desirable, can be made financially possible?

Mr. Towers: Certainly. (p. 771)

 More home work. Please take an hour and a half and watch the video found at the link below. Then ask yourself if this is the kind of economic system you want to leave to your children, grandchildren, etc.


Please take an hour and a half and watch this movie; at least the first 14 minutes; you'll at least get one good laugh for the day. Then ask yourself if this is the economic system you want to leave your children, grand children, etc. You will see how completely ignorant our politicians are as to how our economic system works. Pass it on to others as well. It may be the best medicine for our sick economy. 

http://picasaweb.google.com/ohnocanada/OhCanadaMovie#5452543728926279634

Keep checking back to this site. There is a plan of action in the works that will be announced in January once all the pieces are in order. Your participation is needed.

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Comments to the author are welcomed.
david.ealing@gmail.com 

Presently Un-payable Debt

The phrase presently un-payable within this post always refers to the interest charged on all the dollars borrowed from the Bank of Canada that circulate within the Canadian economy at any one time.

[Note: All dollars circulating within the Canadian economy originate from the Bank of Canada. Someone may have borrowed money from a Chartered Bank, Credit Union, etc. but all that money originally came from the Bank of Canada and eventually must be returned to the Bank of Canada. Look at any Canadian note and you will find on it the words, Bank of Canada.]

The interest on all the dollars is always presently un-payable considering the number of dollars that are in circulation. As the interest charge is a charge over and above the amount of all these borrowed dollars, there is never enough dollars within the economy to cover these charges. The only dollars circulating within the economy is the principle, never the money to pay the interest, therefore, there is always only enough money to pay the principle. And that principle can never be completely paid off. If that would occur there would be zero dollars in circulation and the economy would be dead. The economy of our society must have dollars in circulation in order for commerce and trade to occur. Therefore, as the existing dollars are returned to the bank via mortgage and loan payments, more dollars must be borrowed so that the economy keeps functioning.

How then are these presently un-payable charges paid? For these interest charges to be paid, more money must be borrowed into circulation. As these new dollars enter our economy some of them are used to pay the interest charges on previously borrowed money. And with the new dollars comes a new presently un-payable charge – the interest on this new money for once again the money to pay these charges does not yet exist within our economy.

Consider this. When a government, corporation or individual borrows money they enter an agreement to pay two debts. The first is the principle or the full amount of the loan and the second is the interest charged on that loan.

Let’s consider a loan made by Corporation “A” in the amount of $10,000. If the interest charged on this loan is five percent (5%) per year and the loan is for one year, Corporation “A” has two debts to pay. The first is the repayment of the original $10,000 and the second is the 5% interest that amounts of $500. Now in order to “earn” the money necessary to pay these two debts Corporation “A” may spend the entire $10.000 manufacturing a widget. Let’s say that Corporation “A” was able to manufacture one thousand (1,000) widgets and now offered each widget for sale at $20.00. Once the 1,000 widgets were sold Corporation “A” would be able to repay both debts (principle and interest) and realize a profit of $9,500. Most would agree that if Corporation “A” could continually repeat this process it would be a successful business. They would also say that it has and would continue to contribute to the economy.

But let’s look at the money used to purchase these widgets. Each of the $20.000 used to purchase the 1,000 widgets are borrowed dollars. Notice that $500 of the $20,000 was borrowed just to cover the cost of the interest charged on the original $10,000 loan. But now the presently un-payable interest charges has risen from $500 to $1,000.

Now, within this math is hidden the insidiousness of the Private Debt Money System. Notice that the presently un-payable interest of the original loan is paid only by borrowing more money. This is the trap of the Private Debt Money System. The borrower agrees to pay the loan and the interest charges with Bank of Canada notes. These debts can be paid with nothing else. So for the presently un-payable debt to be paid more Bank of Canada notes must be borrowed. And, as more dollars are borrowed, the interest charges increace. 

[Note: For a clear understanding as to how money is created out of nothing by the Bank of Canada visit: 
http://members.shaw.ca/theultimatescam/pdms.htm]

The Private Debt Money System creates an endless un-payable debt that continuously increases. We are caught on a treadmill that seems impossible to stop and impossible to get off. But it’s not impossible. The correction is for the Canadian population to mandate their Government to take back control of the creation of our money; that the Government once they have taken control of our money they institute a true Public Credit Money System. This in the only correction available to us. Without this correction we are doomed to a continually increasing Un-payable debt.

[Note: For a clear understanding of how this correction would work visit:

http://members.shaw.ca/theultimatescam/pcms.htm, and
http://members.shaw.ca/theultimatescam/provincialcredit.htm.]

Any Suggestions? Who wants to get involved?

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Comments to the author are welcomed.
david.ealing@gmail.com

2% Inflation Answers -- Exponential Growth

This is the answers to the post entitles Exponential Growth of 2% Inflation. That post can be read by following this link:
http://formulafordebt.blogspot.com/2010/11/exponential-grouth-of-2-inflation.html

Those who did the homework will know that the Dr. Albert A. Bartlett’s aim with this video was to show that the greatest shortcoming of the human race is our inability to understand the exponential function. They will also know that the exponential function is used to describe the size of anything that’s growing steadily, for example, 5% per year; ordinary fixed growth. If it takes a fixed length of time to grow five percent, then it follows that it takes a longer fixed length of time to grow by 100%. This longer time is called the doubling time. 

How does one calculate the doubling time? Just take the number 70 divide it by the percent growth unit time and that gives you the doubling time.  For example if the percent growth per year is 5%, divide 5 into 70 and you get fourteen. Thus, the time it takes anything to double that has a steady growth of 5% per year is 14 years.

Where did the 70 come from? Well, it’s approximately 100 divided by the natural logarithm of two.

Now we’re talking about the Bank of Canada’s plan to hold the inflation rate at a constant two percent. Most of us have no idea what that means for the future that our children and grandchildren will have to experience.

If you don’t yet have an understanding of the exponential function please watch the videos found at the link above. If you do you will understand that to find what two percent inflation means for the future all we need to do is find the doubling time of prices with a 2% yearly growth rate we divide 2 into 70 and we find that prices will double in 35 years.

So the answers to our questions are, Prices will double by 2045, double again by 2080 and double again by 2115. If the price of gasoline in 2010 is $1.15 it will be $2.30 in 2045, $4.60 in 2080 and $9.20 in 2115. I have a minivan with a 110 litre fuel tank. I complain at having to pay over $100.00 to fill it. In 2115 my great grangchildren will have to pay over $1,000.00 for the same amount of fuel.

Pick any product today and use this simple arithmetic function and see what the price will be in 2115. Let’s pick an automobile priced at $45.000 today. In 2045 that car will by $90.000, in 2080 it will cost $180.000 and in 2115 it will cost $360,000.

A home that costs $250.000 today will cost $500,000 in 2045, $1,000,000 in 2089 and $2,000.000 in 2115.

Now ask yourself if this is really what you want your children, grandchildren and great grandchildren to face.  And remember, this is if the Bank of Canada holds inflation at 2%. Do the math to see what prices will be if inflation averages 5%.

The doubling time when growth is 5% is 70 divided by 5 = 24 years. At that rate prices will double by 2034, then by 2058, then by 2082 and again by 2108. That litre of fuel will rise to $2.30 in 2034, $4.60 by 2058, $9.20 by 2082 and $18.40 by 2108. The car will by $720.000 in 2108 and the home will be $4,000,000. Inflation at any rate is bad.

A forthcoming post will tell you why the Private Central Banks of the world need inflation

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Comments has been disabled as this in not meant to be open for public discussion. However comments to the author are welcomed.

david.ealing@gmail.com



The Cause of Poverty and Our Present Global Economic Crisis

Written November 29, 2008

I’m not usually one to offer challenges, but in this case it seems like the appropriate thing to do; considering children’s lives may be (actually are) at stake. Let me get right to the crux of the matter. There are approximately thirty-five thousand (35,000) children starving to death each day in this wonderful world of abundance we happen to be occupying. And my difficulty seems to be that I know why and nobody’s willing to listen or prove me wrong. [At least, I think I know why.] It’s not that I haven’t tried to find someone that’s able to show me the error in my thinking. Paul Martin, a past Finance Minister and Prime Minister of Canada declined my offer. Steven Harper has declined my offer in the past, but I’ve given him and our present Finance Minister a second chance. A Notice dated November 6, 2008 was sent to them requesting their response if they noticed any errors in my thinking. They were given thirty days to respond. December 4, 2008 has passed with no response as yet. [As of today, November 16th 2010, there has still been no response.] So my challenge to any and all is to find the error in my thinking and prove me wrong. To start that prosses you need to prove my Formula for Debt wrong. You can find that by clicking this link.
http://formulafordebt.blogspot.com/2010/11/formula-for-debt_09.html

There is a great effort throughout the world by many well-meaning people aimed at eliminating poverty and hunger. Entertainers like Bob Geldof and Bono as well as organizations like Make Poverty History encourage people to give so that the hungry can be fed. But still, the number of children starving to death grows. In 1997 there were only about ten thousand (10,000) children starving to death each day. With all the hundreds of millions of dollars (maybe even billions) that have been given to the cause of eliminating hunger so far, humanity has limited that daily number in this year of 2008 to only thirty-five thousand (35,000) a day.

Could it be that more money is not the solution? Could it be that there is no amount of money that could solve this problem? And, could it even be that money is the problem? I will argue that the answer to all three questions is: Yes. To understand how this could be, we first need to understand what our present form of money is.

It is commonly believed that money is an asset. It is not! Each paper note that you have ever had in your hand is a record of a debt. It’s basically an IOU that records the amount of the debt. A $5.00 bill is a record of a $5.00 debt owed by someone to the Bank of Canada. If you happen to have one of these notes, and you aren’t the borrower, then it seems to be an asset to you. You can now trade this note for some goods or a service. But no matter where this note travels or into whoevers hand it may arrive, it is still a debt note. The person, corporation or government that borrowed it must one day repay it to the lender. And while it circulates within our society the borrower must pay the lender a fee for its use. This fee we all know as interest.

I know. You’re all saying, “Well of course. That’s how our economy works.”

To this I say, “Of course that’s how our economy works, and that’s the problem!”

Let me explain. Our economic system is called a Private Debt Money System. A Private Debt Money System is one in which all “money” circulating within a society has been borrowed from a private corporation. Some will argue that the Bank of Canada is not a privately owned corporation. I would argue otherwise but that is not the determining factor to my main argument. The determining factor is the interest charged on the money. If all the money circulating within the Canadian economy has been borrowed from the Bank of Canada, and an interest fee is charged, then more money must be paid back than was originally borrowed.

This formula of money creation MUST result in a debt. It’s not even complicated calculus folks. It’s simple arithmetic. We all learned this in grade school.

Consider this:

1. Every dollar within our economy has been borrowed directly or indirectly from the Bank of Canada.
2. All these dollars must be repaid directly or indirectly to the Bank of Canada.
3. Interest must also be paid to the Bank of Canada for the use of this money.

This means that more money must be repaid than was originally borrowed.

One way in and one way out

Money enters our economy in only one way; it is borrowed from the Bank of Canada. A Borrower may go to a chartered bank such as the Bank of Montreal for a loan but the money for the loan ultimately comes from the Bank of Canada. And just as ultimately, all money must be repaid to the Bank of Canada. Think of the Bank of Canada as a big building with a large conveyor belt running out of it. This belt carries one hundred percent of the money entering our economy. There is no other source of money. All money has been borrowed and at the time it is borrowed it is added to the outflow conveyor belt. Once this outflow belt leaves the Bank of Canada it splits into two. The size of these two belts varies depending on the interest rate at that time. For the sake of argument let’s agree that interest is at five percent. In that case one belt would be ninety-five percent as large as the original outflow belt and the other would be five percent the size as the original outflow belt. Both belts together would equal one hundred percent of the original outflow belt. The belt carrying ninety-five percent of the money now carries on into our economy. The smaller five percent belt now leaves the money supply and immediately returns to the Bank of Canada building. This is the first year interest payment being returned to the Bank of Canada.

At the end of every year that the remaining money circulates throughout our economy another Five percent belt is added to return the interest payment to the Bank of Canada. If the average loan is for four years the original loan money will have been reduced to eighty percent by the bank taking their yearly five percent interest payments. Now only eighty percent remains to repay one hundred percent of the loans. But even that is not a true number. Many billions of dollars have been accumulated by the wealthy, those with no loan payment to make. As long as these people hold onto “their money” other people will not be able to repay their loans. Again, it’s simple arithmetic. Somebody must fail the meet his or her payment obligations and bankruptcy is guaranteed.

Once money has entered our economy it is put to many different uses. It is used to pay wages, invest in mutual funds or the stock market, start a business, take a holiday, purchase cars, buy homes, etc. But all this must be done with money that has entered the economy via loans from the Bank of Canada. There is no other source of money. And, because this money is on loan it MUST return to its source. There is one way in and one way out.

The simple question is, “How can one hundred percent of all loans be returned when twenty percent is skimmed of the top as interest and the haves and the wealthy hold on to another large percentage of the original loans? The simple answer is, “It can’t.” There is a guaranteed shortfall built into the Private Debt Money System.

Once you understand this you will also realize that there hasn’t been a Finance Minister or a Prime Minister of Canada for the last one hundred years who did not know that debt was a result of this system. And none of them told you. They all told you lies instead.

Many have said that under this economic system the interest can never be paid because the money to pay it is never lent. The truth is that the interest is the first thing to be paid. That guarantees that there will never be enough money left to repay the principle of the original loan. This is why banks love mortgages so much.Under the Private Debt Money System poverty is an assured result, poverty, unemployment and homelessness.

Study this system long enough and you’ll also see that inflation too, is a guaranteed result. Inflation lowers the buying power of the existing money supply and increases the amount of new borrowed money needed to buy the now higher priced items. Now part of the newly borrowed money can be used to pay the principle on the old loans, thus giving the appearance of a strong economy. The end result of this continued practice could best be understood by studying the exponential function. Dr. Albert A. Bartlett describes this will in the following series of eight videos: 

Part 1:  http://www.youtube.com/watch?v=F-QA2rkpBSY&feature=related

Part 2:  http://www.youtube.com/watch?v=Pb3JI8F9LQQ&NR=1

Part 3:  http://www.youtube.com/watch?v=CFyOw9IgtjY

Part 4:  http://www.youtube.com/watch?v=yQd-VGYX3-E

Part 5:  http://www.youtube.com/watch?v=t-X6EpvWWu8

Part 6:  http://www.youtube.com/watch?v=-3y7UlHdhAU

Part 7:  http://www.youtube.com/watch?v=RyseLQVpJEI

Part 8:  http://www.youtube.com/watch?v=VoiiVnQadwE

No money is ever created within our society. Producing a product and selling it for a profit does not add one penny to the existing money supply. Investing money and receiving a larger return adds not one penny to the existing money supply. Hiring employees and paying good wages adds not one penny to the existing money supply. All these activities merely rearrange where the existing money is located. It merely moves from one pocket to another. The final result will always be an over-all debt to the central bank. And this debt the central bank uses to increase its control over our government. Central banks are not concerned with monetary profit. They are debt farmers. Debt is their avenue to control.

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Comments has been disabled as this in not meant to be open for public discussion. However comments to the author are welcomed.

david.ealing@gmail.com/

The Bank of Terrace

Although  I spend much of the year traveling through British Columbia my home address reads Terrace BC. So I have the following question for all the citizens of Terrace:
What if the Corporation of the City of Terrace started its own bank?
Let's call it The Bank of Terrace. Let's also assume that the focus of this bank was the benefit of all the citizens of Terrace as opposed to itself. And let's further assume that instead of operating a Private Debt Money System like the Bank of Canada does, it operated a Public Credit Money System similar to what occurred on the Island of Guernsey in 1816 and 1822.  Consider the following borrowed from the Internet:

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Alternative Monetary system: Republic of Salt spring Dollar

Thursday, December 27, 2001 7:59 PM

Season’s Greetings to All and a Prosperous 2002: Let me add my 2 cents worth:
I had occasion to write an article for the Monetary Reform Magazine on the Guernsey Monetary System on the Island of Guernsey in the English Channel, just off the French coast. Both Guernsey and Jersey, famous for their dairy cows, are what is called a ‘Bailiwick’ or territory under the authority of a Bailiff or sheriff. This all goes back to the 13th century and before to 1066 and the Norman Conquest.

These islands are semi-independent and are not actually part of the UK and not responsible to parliament. They are directly responsible to the Crown and Privy Council. They do have a defence agreement with the UK.

Back in 1816, they were bankrupt due to the Napoleonic Wars and were in a desperate situation. High unemployment, extremely high debts, poverty, large emigration, no services or public infrastructure and worst of all, the island was being washed into the sea due to the deteriorating dikes and sea walls.

Desperation has a way of broadening one’s vision and the Council decided to strike a committee to look into this situation. The committee reported that there was only one way out and that was to print their own money, hire contractors and repair the sea walls immediately. This was all well and good except that the merchants wanted to know how they were going to get rid of this money if they accepted it. The Council agreed that all taxes could be paid in this currency. Thus, a circular system was created from creation of the bank notes to eventual destruction. This all worked well and all notes were recovered and burned as agreed. In the process, a church, a war monument and some repairs to sea walls and dikes were completed.

Then, in 1822, they once again printed 4500-One Pound notes to construct a covered market building. This was completed and every year 450 notes were burned. At the end of ten years all the notes were gone and the building was debt free at zero interest. This building still stands to this day with two additions all paid for with ‘printed’ money. The Council still owns these buildings and I estimate that they have returned at least $5 million or more in today’s money to the treasury over the past 179 years This profit has, of course, been used to finance other public projects and today Guernsey has a flat income tax of 20% and no other taxes. They are not needed.

The circulation is about 17 million Pounds and this in effect is an ‘interest-free’ loan to the Treasury from the note holders. The benefit to all citizens of Guernsey are very low taxes, excellent public infrastructures and lower prices compared to the UK, which is still paying for the War of Independence against the Americans, plus all other war debts.

This massive public debt, which is totally unnecessary, causes both inflation in prices as the interest must be paid by taxing everything and immense poverty, not to mention vast lost opportunities to create all manner of beautiful public works and infrastructure.

Best regards,

Baron Fowler

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To see a true example of a Public Credit Money System visit:

http://www.members.shaw.ca/theultimatescam/pcms.htm.

Now if there was a Bank of Terrace controlled by the City Council, Terrace could have interest free and debt free money at any time. Just like the Island of Guernsey. The Bank of Terrace would issue money into circulation for whatever the City Council deemed necessary; a new garbage truck, medical facilities, better roads, fire halls, fire trucks, etc. And just like on the Island of Guernsey the Terrace Bank Money spent into circulation interest and debt free would be used by those who received it to purchase goods and services within Terrace as well as pay Municipal taxes and licence fees. If this were possible fewer dollars would leave Terrace through big box stores.

What I'd like to know is, "Why is the City of Terrace required to use Borrowed Bank of Canada debt notes that guarantee a debt for the users via interest charges?" As Canadians each and every one of us has a share in The Bank of Canada. The bank's web site confirms this fact

• The Bank was founded in 1934 as a privately owned corporation. In 1938, it became a Crown corporation belonging to the federal government. Since that time, the Minister of Finance has held the entire share capital issued by the Bank. Ultimately, the Bank is owned by the people of Canada. 

 Then why does the Bank of Canada act like the privately owned Federal Reserve operating in the United States.

Did you also know that the Province of British Columbia has the authority to print its own money and spend it into circulation at no interest and no debt.

 The following was taken from:  http://members.shaw.ca/theultimatescam/provincialcredit.htm

This is a great site. The owner lives in Kelowna.

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 A second option available to the provinces, failing action by the federal Government, is to set up its own mechanism to provide additional credit to British Columbians based upon the wealth of the province. The BNA Act of 1867, our Constitution, Section 92.3, the province is allowed to "borrow on the sole credit of the Province", that is to say, upon the real wealth of the province. A few short years ago, The World Bank published a report in which they estimated the worth of Canada's natural resources at 2500 trillion dollars! This figure did not include our water resources or the resources of the northern territories.  Based upon the size of British Columbia and its known resources, B.C.'s wealth could be conservatively estimated at 150 to 200 trillion dollars. More than enough to make all British Columbians very wealthy. Under the BNA Act of 1867, the provinces or more precisely, the people, hold exclusive authority over their natural resources. Presently, governments borrow from private banks and other sources because these lenders recognize this natural wealth and lend against it. Therefore, there is no doubt that there is actually a provincial credit and the province can certainly establish its own mechanism to use this credit directly, without mortgaging its wealth nor going into debt and paying unnecessary interest charges to individuals or corporations, like the private banks.

  What is needed in B.C. as well as the other provinces, because they face the same problem, is a Provincial Public Credit System. A mechanism whereby, the province can provide  credit within the province of B.C. for its own legislatively approved expenditures, including health, education, highways, bridges, resource development and other concerns. This credit would be interest free and repaid through taxes or user fees to keep the system in balance (See The PCMS). The key here is "interest free". Interest charges amount to a growing, significant expenditure for government, business and individuals. These interest expenditures are absolutely unnecessary!

 A prime example as to how this can be utilized, would be mortgages for principal residences in B.C. The province, through a system of "public" banks or credit unions, can issue "credit"(loans)  to British Columbians for the purchase of a principal residence within B.C., interest free! The only necessary charge would be a nominal administration fee to monitor and process payments. (We don't need to borrow from the private banks and pay them interest!!) This single action alone would allow every British Columbian to own their own home within a few short years. No more paying for a home 3,4 or 5 times over because of burdensome interest charges levied by private banks. This single act alone would also free up hundred's of millions of dollars for consumers to spend on other goods and services, creating thousands of new jobs and  giving the economy an enormous boost. Another example would be resource development. The province, through a Provincial Credit System can advance credit to companies to develop our natural resources. For example, if we needed to increase our natural gas production, the province can provide the credit needed for the private sector to construct the facility. By charging a nominal rate for the use of the Provincial Credit plus a royalty percentage based on production, the province would earn revenues to repay the credit advance and support some of the other needs of the province. In Alaska, the state collects royalties from the producers, who develop their natural resources, and then pass some of this revenue on to each and every citizen of the state in the form of a state dividend. There is no reason why this cannot be done here.

   In 1939, the Provincial Government of Alberta under William Aberhart passed a law, which was to provide exactly this. The Alberta Credit House Act was passed with the intention of providing additional credit to Albertans. This is where the network of "Treasury Branches" originated. It was the intention of the Alberta Government to provide interest free credit to Albertans and get away from the debt money system operated by the private banks. Unfortunately, World War ll brought about a suspension of this Provincial Credit System and in 1943, William Aberhart died in a car accident. The Act is still on the books but it has never been implemented.

  This system would operate similar to the pictorial example of the Public Credit Money Sink. The only difference would be that the province would create credit and issue it within the province to meet our provinces needs and extinguish the advances (loans) as payments came in. The Provincial Credit Office would extend credit for authorized provincial public and private expenditures. Payments would come back in the form of a regular payment schedule (in the case of credit advances to the private sector for development of provincial natural resources) or through taxes and fees for public services to keep the system in balance.

  To summarize, governments at all levels, private industry and the public at large are all under financial pressure. We see, on a daily basis, government cutbacks, budget shortfalls, reduction in services, pressure to either raise taxes or find other means to raise revenue and an increasing public debt which cannot ever be paid back under the present debt money system. Businesses either moving out of province or going under, leaving thousands of our citizens unemployed, unions striking for higher wages and benefits, injured workers fighting for support payments which are harder to come by or are reduced. More and more, wives are forced to work to provide a second income in order for families to survive, husbands are taking on second jobs, part time work or working overtime and weekends just to make ends meet. And on top of all this, personal debt has climbed to an all time high and shows no sign of stopping. 

 The problems are daunting but not impossible to overcome. But the promises and the remedies offered by past and present governments and politicians will not solve the problems. Provincially, we have the power to make the necessary changes. All that is required is the will to do what must be done. We need to establish our own mechanism for providing credit within the Province. A growing and expanding economy requires a growing and expanding supply of money to meet the needs of society. Under our present system, the banks supply the "money" to meet demand but extract more back in the form of principal and interest payments. This causes the constant shortfall of the money supply in the economy and results in problems such as those referred to above. Under a Provincial Credit System, the supply of "credit" will always be adequate enough to meet the needs of the people and provide for a prosperous future for all of us. 

Think on these things and ask your politicians why they insist on borrowing money from a bank that demands interest and thereby creates debt for all. I'm sure that every Canadian (except those who have an interest in private banks) would agree that their bank could do this. They may even demand this once they truly understand how the Canadian banking system works.

This question,

"What if the Corporation of the City of Terrace started its own bank?" could be asked of any little town or city in any country of the world.  What if we all did that. The world would instantly become a wealthy place for all, except private bankers. And the control that they exercise over all Governments would vanish. Let's do it.

Comments has been disabled as this in not meant to be open for public discussion. However comments to the author are welcomed.

david.ealing@gmail.com

Exponential Growth of 2% Inflation

The Bank of Canada aims at holding the inflation rate at 2%. What really does that mean for the average Canadian over the next seventy years or so?

Should you choose to accept, your home work is to watch the following videos and answer the following questions.

Starting at 2010, when will prices double with the growth of inflation at 2%?

When will it double again?

With Gasoline at $1.15 a liter in 2010, what will a liter cost in 2105?

The answer to these and other questions will be added to this post on November 19th, 2010

Part 1:  http://www.youtube.com/watch?v=F-QA2rkpBSY&feature=related

Part 2:  http://www.youtube.com/watch?v=Pb3JI8F9LQQ&NR=1

Part 3:  http://www.youtube.com/watch?v=CFyOw9IgtjY

Part 4:  http://www.youtube.com/watch?v=yQd-VGYX3-E

Part 5:  http://www.youtube.com/watch?v=t-X6EpvWWu8

Part 6:  http://www.youtube.com/watch?v=-3y7UlHdhAU

Part 7:  http://www.youtube.com/watch?v=RyseLQVpJEI

Part 8:  http://www.youtube.com/watch?v=VoiiVnQadwE

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Comments to the author are welcomed.
david.ealing@gmail.com