EIGHTH EDITION WINTER 1996
LONDON SCHOOL OF ECONOMICS:
Steeped in Treachery and Deceit
For years I have studied the twists and turns of economic theories espoused by "experts". My perspective has been as someone seeking a higher attainment in human consciousness through the process of stimulation. By higher attainment, I mean the expansion of the inner light in humanity. Stimulation encourages people to question, to search and to evaluate information gathered and participate in democracy. Manipulation, on the other hand, seeks to control people trying to make them do something that is not to their benefit. The latter is quite often used by politicians, media and those with vested economic interests in protecting the status quo.
While studying these various economic theories, a fascinating picture has emerged: that there are two opposing groups which really converge to one point; the self-appointed elite striving to control humanity through manipulative measures.
One group is striving for control through control of capital and assets of countries. They have legal control of the currencies by having the government borrow from private banks to meet the needs of government employing the tool of compound interest. Countries are on the verge of bankruptcy and the middle-classes are disappearing through ever increasing taxation. Eventually, countries lose their sovereignty and control is exercised by the World Bank and the I.M.F.
The second opposing group comes through the infiltration of the World Federalist movement. This movement also seeks to break down the sovereignty of nations and seeks to make the changes they need through the socialist side of the political systems.
In both cases, these opposing trends are guided by self-appointed elite dedicated to solely humanistic values and the destruction of democracy. The first group believes that material wealth is the source of all power and the second that political control is the source.
The guiding force behind both groups, where many have received their education and elitist training, is the infamous London School of Economics. They regularly grind out scholars who keep fulfilling the same mandate no matter which side of the spectrum they appear to operate from. Graduates from the London School of Economics include Pierre Elliott Trudeau. Other Prime Ministers were forced to uphold policies developed through this School and the Bank of England.
In our last newsletter, we demonstrated how the government borrowing $1,000,000 from the Treasury over an 80 year period at a 1 1/2% administrative fee for creating and issuing the currency, producing a debt of $2,200,000.
Compare this to the present system of government borrowing $1,000,000 from private banks over 80 years at (for example) 7% compound interest producing a debt of $224,234,388.
The current system of borrowing results in a debt load of over 100 times greater and is essentially, a debt in perpetuity. The end result of this kind of borrowing is a nations bankruptcy, the loss of sovereignty and private banks gaining huge profits in the process.
Rarely do any of the graduates of the London School of Economics show the benefit of a country:
issuing currency as an IOU
at an administrative cost of 1 1/2%.
Instead they defend the current system of:
government creating bonds and treasury bills
paying a brokerage fee to handle them
paying compound interest at the going rate.
In fact, when these graduate and "experts" are confronted with this method of borrowing which protects the sovereignty of a nation and keeps a measure of control over the private banks, their responses are usually condescending and accompanied with a practised sneer.
I feel that those, who practise and support the manipulation and debt enslavement of humanity with forethought and knowledge, are guilty of the highest level of treachery and treason against humanity.
We have not seen those who have continued this treachery held accountable for their actions. Instead the citizens continue to bear the burdens to keep this system going; through increased taxation, decreased spending on education, health care and social programs and deteriorating infrastructures such as roads and sewers.
Those who protect the status quo will continue to have access to expensive health care systems, send their children to private schools and avoid paying any kind of taxation. In short, they are vile leeches of any society who grow huge and bloated off the sweat and debt of citizens.
The Freedom Flame and guardians of democracy are dedicated to expanding the inner light of humanity and seeing this light reflected in all facets of society. With this expansion of higher octaves of energy come citizens who have developed self respect and are empowered through a true democracy.
Our dedication is directly opposed to those who wish to keep humanity acting solely as debt slaves.
A Chat With Preston Manning: Leader of the Reform
On January 26, 1996 a breakfast gathering was organized in Sidney, BC with Preston Manning as the guest speaker. One of our local FAIR members was kind enough to purchase a ticket for me to attend the event. We have been faxing a letter to various leaders and elected officials around the country which details the main cause of our National Debt and a solution to the problem (a copy of the letter has been included in this newsletter).
An opportunity was presented to all guests to submit a question for Mr. Manning to address. My question was "What is the policy of the Reform Party on controlling the Bank of Canada and private banks?" No surprise, my question was never brought up.
At the end of his speech, I asked that he answer one more question. I repeated the request until he asked that I leave with him and we were able to have the following conversation in the parking lot.
My original question seem to set him slightly back. He stated that the Reform financial committee was looking at various issues. I pressed on and detailed how $1 Million borrowed over 80 years cost 100 times more than was necessary but was of great benefit to the banks.
This method of government borrowing, creating bonds and treasury bills, which are placed on the open market at competitive rates and must be repaid at compound interest (for example 7%) produced a debt of $224 Million.
Alternately, the government could, by a direct transfer from the treasury to the government, issue an IOU at an administrative rate of 1 1/2% which would produce a debt of only $2.2 Million.
Clearly, the current system benefits the bankers and our solution benefits the people. Mr. Manning grasped the picture quite quickly. I further remarked, having heard that Mr. Manning is a spiritual man, that I feared the Reform Party may be getting dragged into the web of Mammon. I advised Mr. Manning that perpetuating the myth that the debt crisis could be solved through reduction in government spending was a cruel hoax on the citizens of this nation.
It will be interesting to see what, if any, developments come from this conversation. We will be sure to keep you posted.
FUNNY MONEY: A Common Sense Alternative to Mainline Economics
Paul Hellyer, Chimo Media Ltd. 1994
Paul Hellyers aim is to detail the policy changes needed to achieve full employment without inflation in both Canada and the U.S. These changes are three in number:
Reduce the commercial banks ability to create money
Achieve full employment by increasing spending
Institute an incomes policy for non-competitors.
Our present banking system, Hellyer notes, is based on the London goldsmiths scam of 350 years ago: issuing receipts for gold on deposit in excess of the gold on deposit. Equally today, the amount of commercial-bank created money - phoney money - is many times the monetary base: the banknotes created by the central bank, the true legal tender.
No bank can lend more money than it has on deposit. Yet the banking system as a whole can create brand-new money many times greater than the total amount actually deposited in all the banks.
Say the cash reserve ratio - the ratio of cash on hand in the banks to the deposits of their customers - is 4%. Say the central bank decides that the economy needs a $250 Million increase in the money supply. The central bank will buy $10 Million worth of bonds from the government, which will then have $10 Million of brand-new money to deposit in its accounts in the commercial banks.
Assuming the banks wish to be fully loaned up - which they normally do - the banks will make loans by creating new accounts equal to 96% of their new cash deposits (which remain on deposit in their vaults). On this increased money supply of $9.6 Million being spent by cheques being drawn on the accounts, and assuming no additional cash drain (money in the pockets of the public), $9.6 Million of new deposits will now occur. Loans equal to 96% of these, too, will be made by the banks - and thus the money supply increases by a further $9.216 Million (= 96% of $9.6 Million).
At the limit, when all these successive rounds of making loans equal to 96% of new deposits followed by these being redeposited with again loans equal to 96% of new deposits being made, the money supply will have increased 25-fold. The initial $10 Million created by the central bank will have increased to $250 Million with $240 Million have been created by the commercial banking system to its profit.
It was to the governments - and the taxpayers - advantage for the first $10 Million to be created by the central bank: the government effect paid no interest since the central banks profits reverts to the government.
The governments - and the taxpayers - advantage would be twenty-five times greater if all the increase in the money supply - in new money - was created by the central bank. And it could be - if the cash reserve ratio were set at 100% so that the commercial banks were no longer able to create any money at all.
Hellyer does not go this far. He opts for the middle of the road: neither the zero required reserves to which Canada has now gone, nor the 100% reserves just described but rather, a 50% solution. Setting the cash reserve ratio at 50% would still be a very considerable increase over the 4% in Canadas recent past, while still leaving the commercial banks sufficient revenues to continue as very important financial intermediaries. Moreover, in Hellyers view, with half of the increases in the money supply being created by the central bank, either by buying Government bonds as it did to help finance W.W.II or by buying common shares to be issued by the federal treasury, as Hellyer ingeniously suggest, federal government deficits would be entirely funded by the central bank and would, therefore, be costless. The appeal of the equity route, as Hellyer points out, is that it tends to put a cap on total debit, which has become a psychological burden of significant proportions.
This fundamental reform of the banking system is, for Hellyer, an absolutely necessary condition for the achieving of full employment. Unless the government takes back its sovereign right to create at least part of the money supply, and reinstates the requirement that the private banks maintain cash reserves, the Bank of Canada will be limited in its options and will continue to restrict commercial bank lending by raising interest rates. And this raising of interest rates adds to costs, decreases spending and increases unemployment.
With lower interest rates and the assurance that they will remain low, both businesses and households will be encouraged to increase spending. This increased spending will reduce unemployment. Likely this will not be enough to achieve full employment, that is, say 4% unemployment.
The government can fill the gap by increasing its spending with money newly-created by the central bank through its buying of government bonds. As Hellyer stresses, this increased money supply will not be inflationary because the commercial banks ability to create money will have been greatly reduced by the 50% cash reserves requirement that will have been gradually introduced in proportion as the central bank increased its share of money creation.
William Henry Pope
Reprinted from Economic Reform, the monthly publication of COMER, the Committee on Economic Reform, 284 Yonge St., Toronto, Ont. M4N 3M7
Our Next Annual General Meeting
We will be holding our next Annual General Meeting in the upcoming months in Victoria, BC. We will be contacting all FAIR members to give all an opportunity to attend. We hope to see you there.