| Over the Edge, March 24 - April 7 2010

Page7 |

Governmental debt and money creation

Thomas Cheney Contributor

My last column | dedicated to criticizing the Olympics and the monumental burden of debt that it will impose on my gen- eration. However, this week | am going to discuss the role of debt and money creation... yawn. Although money creation, at the surface, appears very worthy of a yawn, understanding of the process and implications of the means of money creation should be something that is at the heart of our national dis- cussion regarding economic and public policy. The reason why the issue of money creation is so important is that it is the pri- vatization of the carrying of the national debt to private bankers under the neo-liberal economic revolution of the 1980's. We are often told that the major cutbacks of the 1990's directed by Paul Martin on the direction of the International Monetary Fund to reduce the number of hospital beds by 20% as well as cut- ting far into the backbone of our public sector. | am all for hav- ing government live within its fiscal means and not burden future generations. But the issue here is not spending vs. fis- cal responsibility, it is a matter of taxing the average hard work- ing Canadian and giving those hard earned tax dollars to bankers. That is right, to bankers!

However, insult is added when the fact is that bankers don't take other peoples money and then lend it out. That would be fair, but the fact is the create all of the money they loan out and then, get this THEY MAKE IT OUT OF THIN AIR. THIN AIR. Prior to the 1970's most public spending was financed by the Bank of Canada, and Canadian's enjoyed strong public serv- ices and fiscal stimuli. Canada was at the top of international ranking as the best country to live in the world. Toronto, rather than being seen as the basket-case of the country, evoked in- ternational admiration as one of the world's safest and func- tional major cities, earning it the moniker of New York run by the Swiss. Where did Canada go wrong? Was it that the wel- fare state or government largess? From what | can tell it was neither, the vast majority (91%) of the debt held by the provin- cial and federal government in 1992 was related to the com- pound interest payment during the stagflation in the 1970's. In 1972, according to the Canadian Action Party the national debt was carried by the Bank of Canada, rather than the creation of private interest-bearing debt which is the prime reason that the national debt ballooned to 500 Billion, that is right Five-Hun-

dred Billion or around $30,000 dollars per citizen. The interest payments alone on this debt, amounts to over $1000 dollars per citizen per year! In contrast, Canada spends only $4000 dollars. The fact is the government has far better things to do then do spend money unnecessarily by giving money to pri- vate banks that the public sector could do for far less money. Thus, the Bank of Canada, a Crown Corporation, could create the credit, and the interest paid on the national debt would go back into government coffers.

One argument often made against the government financ- ing its own capital projects is that they are inflationary. Such an argument is partially true, but inflation depends on the amount of money supply, not whether the money is created by a private or public bank. That said, one must use caution as purchasing the national debt from private banks would free the ability of private banks to make credit and thus could drasti- cally increase the money supply potentially fuelling inflation as inflation is caused by the amount of money in comparison to the amount of potential productivity of oureconomy. Thus, the national debt could only be slowly bought by the Bank of

Canada.

However, Parliament of Canada still possess the constitu- tional prerogative to have the Bank of Canada purchase the government bonds, thus allowing new roads or social housing to be created at far less expense to the taxpayer as the Bank of Canada's profits from the loan would, after subtracting the cost of administration would return to the Crown's coffers. Let's pretend that the government is going to upgrade the rail line between Prince George and Vancouver. The initial cost of the improvements would be around 2 Billion dollars. Under the cur- rent policy, this would be financed by debt at a rate, for exam- ple, of about 5% in reasonable economic times. Therefore the interest on the debt would cost about 100 million dollars per year. If we were to pay for the public investment in 20 years, the total cost of the project has just doubled and half of the money went to those poor Bankers. | am all for welfare, but | think the CEO of the Royal Bank is far less worthy of tax dol- lars than those who work to deliver our public services. The same goes for student loans.

Maple Syrup News

The news that lacks credibility and style

St. Patrick’s Day mayhem

Haakon Sullivan Columnist

The people of Ireland wanted to have a day of drunken- ness and revelry on St. Patrick's Day but it just couldn't be so after it was discovered that the country was in the middle of an alcohol shortage. People marched out of the pubs angry and confused a few minutes after happy hour, but it didn't take long for the populace to find the culprits: leprechauns.

Polices forces across Ireland scoured the country for the source of the shortage and, because of many shady dealings in the past (such as dealing “gold dust” and “lucky charms’), it didn't take long for them to find the stockpile of booze under the rainbow.

“This is discrimination!” yelled Greenie Greengulligan as the police raided Rainbow Road, “Just because we have kegs of ale it doesn't mean we stole it!”

Greenie went on to explain that they used their whole pot of gold to buy all the alcohol in the country from importers and breweries. He declined to comment on the reason of why they need all that alcohol, but the police found signs around the rainbow road which said things such as “20 Euros for a Pint,” “Celebrate St. Patty's at the Rainbow Road,” and “Nowhere to go? We got Guinness!”

“It's obvious that they were trying to hold the country hostage,” said Constable O'Connor at a press conference, “They bought up all the liquor in the country and were prepared to sell it back at inflated prices. We have confiscated the goods and have redistributed it to the pubs just in time for people to enjoy the last wee hours of St. Patty's.”

What would make the leprechauns take such a risk with their gold?

“We wanted to invest our gold to take advantage of the market so we got financial advice from an expert from the United States,” said Greenie. “He told us to 'go hard or go

home' and 'throw our hats into the ring’ by 'thinking outside the box'. He suggested that we take this route.”

It ended up being a banker from the US.

What made things worse for Greenie is that they didn't do anything illegal, but the police seized their assets anyway.

“You're right, they technically didn't break the law,” stated O'Connor. “But only a real prick would do that to people and thankfully the law doesn't protect leprechauns or other mysti- cal creatures. We thought it would be best to take the goods back.”

Rainbow Road has threatened to sue the police to obtain their goods back, but it would be moot as their supply of alco- hol was consumed over a couple days by a cheery Irish pop- ulace.

On that same note, the man who advised the leprechauns left with a large pouch of gold from the pot and a rich portfolio after advising them to buy ales and draughts from his brew- eries.

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5 things I

’°m in love with this week

Stephanie McCullough Managing editor

1 — Compression shorts. My dearest friend, Alan, told me about these beauties in reference to rugby. Well, they are like a bra for my bum enabling me to run without holding it down with my hands. The most hilarious thing is that with all the running and exercising I’ve been doing, | still measure a whopping 100 centimeters in the “hips”. Please hit me back over-the-edge@unbc.ca if you are anything similar! | read a poll on CollegeHumour.com and it showed that the highest

percentage of visitors said that a big bum was the hottest feature on a female.

2 — Doughnuts. Can we please get a Krispy Kreme?

3 — BlackBerryCool.com . This site is sweet. It bashes on the iPhone’s lack of functionality. Articles include: most downloaded apps comparisons, reviews, quotes, tips and all sorts of fun, slightly biased information. It’s definitely funny though.

4 — The Wolf. | know, | hate myself as well. How dare | listen to country? Well, let’s give everyone the option to listen

to music that scores a 6 or a 8 all day, or music that fluctu- ates between a 9 and a1 (ona 10 point scale). Then let’s also play those 9 value songs so often that you recognize them three seconds in. Now hopefully you can see that the Wolf is simply easy listening and since Country already sounds the same, what's the matter with hearing country all day; it blends into the background.

5 — Girls touching themselves. Please see my review of the Vagina Monologues for an explanation and elabora- tion. | guarantee it’s worth it.