1999 Green Party of Ontario Policy Guide 
ECONOMICS [Amended 1998-06-06-013] 
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
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. 
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. 
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 
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 
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 
JCT: John The Banking Systems Engineer grades their pass an A minus.

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