Thursday 27 July 2017

How To Pay Off All Government Debt (And not Cheat Anyone or Default)

So, I figured out a kinda “cheat code” to our Canadian Monetary System and I don’t know what to do with it. 

In reality, I don’t feel like writing a report, and sending it along just to get it laughed and ignored. 

It started after reading this document that is produced by the Government of Canada and is published by the Library of Parliament

In a nutshell the Government of Canada issues a bond, the Bank of Canada (which is a wholly owned Crown Corporation) holds an auction for that bond.

Any of the major banks then bid on and buy that bond. Yet it seems that none of them actually pay any cash for it. 

They just accept the bond, make an entry in their books and presto, the Government of Canada instantly has cash in their account with that particular bank. 

The bank has a bond that the Government of Canada must pay back with interest, yet the Bank in question essentially got it for free. (I hope I have that wrong, cause that is fraud on a massive scale.)

The Bank of Canada automatically buys 20% of these bonds, so 80% are held by private investors or banks. 

Yet the Government of Canada, (through taxation) must not only raise enough to operate the government yet also pay those bonds out. (This amounts to about 40% of the federal budget.)

Let’s assume that I am now the Governor of the Bank of Canada. It would have to be me, because no one else would be crazy enough to actually do this.

All others want to have a career in the banking sector and are Economists (or Indoctrinated Economists as I call them.)

So, here is my plan: 

(Feel free to find a way to get this entry in front of some politician . . . the higher and more important the better).

1) Quantitative Easing (the spewing of currency into the monetary system) stops immediately.

2) All governments across the country (all three levels of them) only sell new bonds to the Bank of Canada. 

3) An assessment is made as to what it would take to buy back/pay out all: bonds, Treasury bills, loans, debts etc for all governments across the country.

4) A meeting is held with the: Federal Government, all Provinces and Territories. At this meeting the following is agreed:

a.      Debt Management Legislation limiting total borrowing for all levels of government as well as setting time limits for any debt to be paid in full

b.      Passing on large tax break on to the average person (Say 20 – 50% decrease in payroll taxes?). (I just gave you back 40% of your annual budgets.

c.      In exchange all debts would be erased, overnight.

5) How this would happen is this:

a.      The Government of Canada would issue one last bond to the Bank of Canada. It would be a 99 year bond with an interest rate of zero to be paid in full at maturity for the required amount to pay off all government debt

b.      The Government of Canada would then.

i.            Pay off its all of its debts

ii.           Transfer the required monies to each province and territory to pay of its debts and those of the cities/municipalities within them.

6) After all this, the Government of Canada and the Provinces and Territories should craft a new monetary system, as this one is irrevocably busted (looooong before this plan let me tell you.)

Anyways, I just had to blog that somewhere, as it was rattling around in my brain. I will get back to regular blogging tomorrow. I hope you at least enjoyed it.

As always: Keep your head up, your attitude positive and keep moving forward!

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