CANADIAN ONTARIO GREENS SUPPORT LETS TIME-BASED CURRENCY
GREEN PARTY OF ONTARIO
http://www.greenparty.on.ca
1999 Green Party of Ontario Policy Guide
http://www.greenparty.on.ca/policy/guide.htm
ECONOMICS [Amended 1998-06-06-013]
Overview
The economy of Ontario is burdened by high levels of unemployment, a
large deficit, a large public debt, reliance on technologies that are
not sustainable due to high levels of resource consumption, and
reliance on technologies that are harmful to both human and non-human
residents of Ontario. Its relative success is not judged by the
happiness or health of the population but rather on its ability to
perpetuate a cancerous growth rate and an unsustainable rate of
resource consumption.
Establishment Of Provincial L.E.T.S
Economics serves the political objectives of elite establishments.
Resource depletion and long term sustainability in general, are
ignored as external costs. A healthy sustainable local economy is best
achieved by a local currency. To this end the Green Party advocates
the creation of provincially licensed, locally controlled Local
Employment Trading Systems or L.E.T.S.
A L.E.T. system is a non-profit, interest free, bartering system.
Individuals can buy services and pay taxes with the system. Service
exchanges such as the L.E.T.S. are really an interest and tax free
money system. (JCT: Not tax-free)
Creating a Steady State Economy
Introduction
The economy grows in physical scale but the ecosystem does not. Our
growing economy is a threat to the health and well being of our
society and our long term survival.
Money
Aristotle first noted the dangers involved when an economy shifts its
focus from use value of money to exchange value of money. In a
sustainable economy, money is a tool to facilitate exchange. Modern
economies have perverted this to make money into a commodity that
generates production with the purpose of generating more money.
Abstract exchange values accumulate by themselves due to interest.
This is an absurd human convention that pits itself against the basic
laws of nature, the law of entropy. An economy is not sustainable if
the use value of money is bypassed by exchange values of money.
A Steady State Banking System
The Federal Government, through its agency the central bank, must be
the sole authority for manufacture and redemption of all forms of
money. It is vital that the central bank's activities be controlled
non-politically. The controlling body for the central bank would be an
elected commission whose mandate was to provide enough currency for
the economy without creating inflation.
All banks will be required to hold 100% reserves of central bank
notes or currency against their depositors' balances. Banks will then
make loans only from their holdings or central bank money. The key
effect of this will be to enable the central bank to control money
supply and thus control recessions and inflation directly. This will
be done by varying the supply of money rather than through the
manipulation of interest rates.
The national debt would be refinanced at the central bank at no
interest. Interest rates will be restored to their legitimate function
of compensating a lender for depriving himself or herself of the use
of the money while it is lent to a borrower. Interest rates will
return to levels that existed before the current high interest rate
dogma became fashionable with the financial establishment. All public
capital projects would be funded by central bank credits provided
interest free. The principle of these loans will be repaid over the
useful lifetime of the project. The central bank will allocate funds
at a rate that will be guided by its money supply management policy of
inflation/recession control.
Background
Too much money in circulation results in inflation; too little causes
recession. A proper balance ensures stability. Yet we suffer from both
in the present system. The reason for this phenomenon is that the Bank
of Canada issues and redeems only about five percent of Canadian
money. The other 95 percent is issued and redeemed by chartered banks
under the fractional reserve banking system in which they are required
to hold, in cash or central bank credits, a reserve of only five
percent against their deposit liabilities.
Chartered banks do not lend their depositor's money. When a loan is
taken at a chartered bank new money is created. As a result of this
system 95 percent of the money in circulation in Canada has been
issued and remains in circulation only as long as someone has taken
out a loan at a bank. The quantity of money in circulation is equal to
the total loans outstanding. This has little to do with the correct
amount of money in circulation that would provide reasonable stability
for economic activity without excessive inflation or recession.
The Bank of Canada attempts to influence the quantity of money in
circulation by influencing the quantity of loans by manipulating
interest rates. Higher rates discourage borrowing, while lower rates
encourage it.
This is an undesirable method because:
Chartered banks are able to circumvent Bank of Canada measures when it
is in their interest to do so. The range of interest rates is
restricted by the perceived need to "protect the dollar". A "flight of
capital" is considered a disastrous scenario and the results are a
high value Canadian dollar, high interest rates, and a severe
recession.
Canada does not need foreign capital or speculative investments that
are attracted by interest rates. We advocate that the Bank of Canada
provide the money the economy needs. Our money is just as valid as
those currently provided by foreign banks to foreign investors or
speculators. Canada possesses abundant resources and a well educated
work force capable of producing almost all of our needs for a high
standard of living using sustainable economic principles.
The provincial and national debt.
The chronic inability of governments in Canada to avoid deficits and
higher taxes, may be traced to the existence of the fractional reserve
banking system. The Bank of Canada currently provides five percent of
government loan requirements interest free. This is restricted to five
percent of government loan requirements because the Bank of Canada
credit forms the reserves of chartered banks. If it were to expand so
would the reserves of the Banks. This would greatly expand the money
supply and cause inflation. The solution is to raise chartered bank
reserves to 100% of loans. This would limit the threat of inflation.
The result of the current system is that one-third of all of your tax
dollars go to pay interest to privately owned banks who have been
granted the ability to issue money to the Federal reserve and charge
you interest for the service. Government overspending will not be
reduced by restructuring transfer payments or cutting spending on
Social services but rather by raising chartered bank reserves to 100%
of loans and financing governments monetary requirements at no
interest.
This presupposes that the government will run a balanced budget but
that would be possible because the largest expenditure of the Federal
government, interest at 35% of total expenses has been reduced to
zero. Inflation would be avoided because the government is not
"Printing money" nor is it allowing the banks to print money.
All yearly federal government loan requirements could be financed at
no interest at the Bank of Canada, all of the provincial and nation
debt would be refinanced there too. Under the current system the debt-
interest dilemma remains totally unsolvable. The current social system
must collapse and the current recession must continue and the debt
load will continue to grow or inflation must be allowed to devalue the
debt.
JCT: John The Banking Systems Engineer grades their pass an A minus.
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