The weight of the national debt is weighing heavy on the public conscience, and we are even encouraged to develop a guilt complex because we allowed past governments to pamper us needlessly.
But some measure of reassurance has come one way through recent studies that indicate that of the almost $600 billion the government owes, less than 10 percent was actually used to pay for goods and services.
The rest is the result of constant borrowing to service the interest on the debt.
At 10 percent compound interest, any given sum will double in seven years, and with its accelerating nature it takes only 13 more to multiply to almost seven times as much as the original amount. …
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To further confuse things, we find that of our supply of working currency at any given time, only $28 billion (or six percent) is in the form of real money, the kind you can see and feel. The rest is the kind that flows from a banker’s pen, ledger entries created out of nothing, and which on repayment revert back to nothing that stays. (That is, all but the interest.)
And to muddy the water even more, we find that due to “slippery” Brian’s generosity, the moneyhandlers now need only four cents on deposit for every dollar they lend out.
Not bad, eh? Just think, if you could shovel 40 bushels of wheat into the truck, make a few strokes with a pen, and presto have 1,000 bushels!
But what bothers me most is, where is “our” Bank of Canada? It can create money just as well as the private money merchants.
The only difference would be the interest would go back to the Treasury, while in the other case it gets tucked away in somebody’s vault.
I very well recall the advent of the Bank of Canada. The year was 1935, we were in the grip of the great depression, and everything was in a state of paralysis.
The money lenders were in a panic after the crash of 1929, and had pulled the purse strings tight and nothing moved.
After floundering around for five years, some wise heads got together and created the Bank of Canada, with a mandate to provide low-cost credit for the government’s own needs and also for the provinces.
Slowly, things started moving again. It was valuable in our war effort, and at the end of the war, when we (not surprisingly) had a big debt, of a ratio to our GDP of 120 percent, we were able by 1975 to reduce that to a mere 20 percent.
So why is “our” Bank now holding only 5.8 percent of the debt? Why are we allowing these private banks to forage on this lucrative pasture? …
– Philip Lindenback,
Weekes, Sask.
