[Nicholai]

An EXCELLENT article from Martin Hattersley, former director of research, Social Credit Association of Canada, Edmonton.

The Edmonton Journal
Published: 1:32 am

There is one explanation for the current meltdown of the stock market, with all its consequences of unemployment, poverty and waste, which every financier and politician seems to avoid.

That is, that our capitalist "boom-and-bust" economy, propped up by more and more personal and corporate debt, is based on deceptive and dubious monetary foundations.

As a lawyer who has operated a trust account for clients' money for nearly 50 years, I have been required by the law society to keep all clients' money deposited with me so it is available for withdrawal at a moment's notice.
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It staggers me, therefore, that I am expected to do this by depositing the money in a banking institution, where I know quite well that every dollar of my deposit is backed by less than five cents of legal tender money, and the inadequate resources of the Canada Deposit Insurance Corporation.

Our current real estate boom has been powered by long-term mortgage money, much of it created by the banking system out of thin air. Borrowers promise to pay their bank, say, $250,000 plus interest over 25 years, and the bank gives its own promise to pay in return, which is treated as money and used to pay the workers who build the house. As this loan money is spent, the workers get jobs and paycheques, the borrower receives a mortgaged home far beyond what he or she could otherwise pay for -- and the public foots the bill, since the value of the dollar is diluted by the inflation that this new bank credit entails.

Over the years, as the loan is paid down and the money so created is cancelled, inflation is replaced by deflation. But no mechanism exists to replace the buying power that the public has lost. Hence unemployment, foreclosures, "poverty amid plenty," and business stagnation -- all of which could be avoided if we learned to create and distribute money to the public without debt, as indeed the mint already does with coinage.

I have used the illustration of house building, but the situation is even more pernicious when bank financing is used not for the creation of useful assets such as housing or industrial plant, but to finance unproductive speculation in the stock market, in commodities, or in foreign currencies.

All these things give profits to the speculator -- until the bubble bursts -- at the expense of those living on fixed incomes or savings.

People who care about ecology may wonder why our economic system is continually focused on growth, even when this involves destruction of habitat and the environment. Our debt-based monetary system makes this an essential if we are to avoid recession.

So let's not shed too many tears over the financiers who up to now have been handsomely lining their pockets at public expense.

We need to use our heads to adopt a system that reflects the reality of what our economy can and should be delivering, not something that is simply a means to exploit the public as a whole for the sake of those on the "inside track."

Martin Hattersley, former director

of research, Social Credit Association of Canada, Edmonton

[Nicholai]

Just thought it corresponded nice with the "Spank Your Parents" story.