THE CANADIAN SOLUTION

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 Section 38 of the Bank of Canada Act. If this takes more than 48 hours, legislation should be introduced to amend the Act to specify their eligibility.

3. That step accomplished, the government should 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 then deposit $150-billion in the government’s bank accounts as directed. 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 police or fire services, close museums and sell valuable assets.

4. The above might be adequate to get Canada out of the slump, but if not, a second major infusion of debt-free money might be required until unemployment is reduced by half and the GDP growth rates reach 3½% or 4% annually, minimum.


5. Concurrently with the above, the federal government must introduce amendments to the Bank Act to reinstate cash reserves against deposits and to give the Governor in Council (the federal government) the power to set the level of cash reserves from time-to-time. Their elimination in the early 1990s cost the Canadian people billions in lost seigniorage, i.e. the profit from printing the cash. The legislation should allow the Governor in Council to delegate to the Bank of Canada its power to establish the level of cash reserves provided the increase is not less than 5% per annum until 34% cash reserves have been established in 7 years or less.

What Would Make the Money Valuable?

Every job that was saved from the axe at one of the three levels of government and every new job created in the arts, medicine, education, the construction and infrastructure, and so on would mean an increase in the real goods and services available to the economy. And each new job created has a multiplier effect. The process would be exactly the same as from bank-created money with one absolutely essential difference – the money would not have to be paid back with interest! In addition, each job saved and each one created would mean someone paying taxes who would not otherwise be in a position to do so. So governments at all levels would be beneficiaries. Business, too, would benefit. Each additional person employed would be a potential market for the goods and services that they provide. So it’s a win-win situation.

Aims of the Game

Q. What are the short and long term objectives?

A. The first, and most urgent, is to end the recession/depression, first in Canada and then in the rest of the world. The infusion of $10-trillion initially, worldwide, and more if necessary, of what might be called government-created, debt-free money (GCM) will accomplish that.

The second objective is to put some semblance of morality into the system and stop privately-owned banks from lending the same money so many times to different people. So I am proposing that bank leverages be reduced from their present high levels. (In Canada the Bank Act allows the banks to own assets up to 20 times their capital) to 2 to 1, where interest-bearing assets could not be greater than two times the cash in their vaults or on deposit with the central banks. This could be achieved in seven years or less by federal governments creating enough GCM to keep their economies growing while at the same time buying back about 1/3 of their outstanding debt.

Once banks have achieved 34% cash reserves, the money-creation function would be shared between government and the private banks 34% GCM, 66% BCM.

The biggest achievement of the whole process, however, would be the democratization of the so-called democracies. At the present time there is not one country in the western world that is master of its own destiny – not Canada, not the United States, not Germany and certainly not any of the countries that are mentioned in the daily news. They are all under the control of the international banking cartel, both financially and politically. It’s time for the sham to end and for electors to gain control.

Q. But isn't government-created money inflationary?
A. No more so than bank-created money. It is the total quantity of money in circulation that determines prices, not who prints it. There should actually be less inflation with cash reserve requirements under government control than there has been with the current capital (in)adequacy system. The Stakes are too high to fail.

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