Use the whole infrastructure plan; it's time to rescue Canada from the banks

Ron Gray

It's good to see that the federal government is contemplating investing in infrastructure renewal as a means of relieving the credit crunch.

This was what the CHP proposed in an open letter to Finance Minister Jim Flaherty.

It's a good idea, because the injection of liquidity will put money into circulation, which will stimulate employment, give consumers the funds with which to buy goods from manufacturers' surplus inventories, and add funds to relax credit restrictions. And best of all, when the crisis is over, Canada's renewed infrastructure will remain behind.

There are a couple of flies in the Conservative ointment, however:

• First, the federal government apparently plans to use Bank-Created Money (BCM), which comes into the economy as interest-bearing debt, thus compounding and adding to the national debt.
  
  The CHP plan was for the Bank of Canada to create the funds—Government-Created Money (GCM)—which would not incur interest-bearing and -compounding debt. It is simply wrong to saddle future generations with more debt.
  
  What's the advantage of using BCM instead of GCM? Who benefits? Only the banks. And the children suffer.
• The CHP proposal was for the Bank of Canada to inject the money into the economy in the form of interest-free loans to provinces, municipalities and other local authorities. Local authorities know better what infrastructure is needed locally. And when the loans are repaid from the increased revenues generated by the economic stimulus, the funds created can be retired—or directed to other needs—so that the GCM does not have an inflationary effect.

If Ottawa is going to use the idea — which was proven successful when the government of MacKenzie King used it in 1945—they ought to take the whole package. In those days, 50 percent of Canada's money was GCM; today, none of it is.

There's no point in Ottawa "renting" our money from the banks. That makes the banks richer, but it impoverishes future generations to do so. Perhaps its time the big banks were booted off the Board of the Bank of Canada. Clearly, they have far too much influence over the Minister of Finance and the Governor of the central bank.

Join the grassroots movement to the Christian Heritage Party - true fiscal conservatives – for the sake of future generations of Canadians.