Very few Canadians are aware that, in his November 1993 report, the Auditor General of Canada calculated that of the $423 billion federal public debt accumulated from Confederation to 1992, only $37 billion (8.75 %) went to make up the shortfall in actual goods and services spending for the Canadian people. The remaining $386 billion (91.25%) was to cover what was the cost to borrow (interest) that $37 billion.
In 1971, Canada’s public debt was about 20.3 billion dollars (104 years after confederation), which quickly ballooned to the $423 billion over the course of the next 22 years. That is a 20 fold increase in our public debt. And yes, we, the taxpayers, are the ones liable for this “debt”, which we pay towards via income tax.
So what changed to cause such a dramatic increase in Canada’s public debt over this short time period?
Prior to 1971, the government of Canada borrowed monies from the Bank of Canada to cover any shortfalls in goods and services spending. Why?
The Bank of Canada Act, under section 18, authorized the Bank of Canada to make loans and advances directly to the government of Canada, interest free, to cover these shortfalls. In addition, the Bank of Canada was also authorized under the Act to make loans and advances directly to the provinces for their shortfalls as well, interest free. That’s right, no interest!
However, in 1974, the government of the day, and governments from that point onwards, began borrowing money from private banks and investors, paying them interest on those loans, and securing those loans with government issued interest bearing bonds.
There are many who would consider this a criminal act as there was never any referendum of Canadian taxpayers whereby they agreed to permit the government to start borrowing money from private banks and investors and pay them interest on those borrowings when there existed a mechanism for the federal government and the provincial governments to borrow monies, interest free, from the Bank of Canada to cover any shortfall in the cost of providing programs and services to the people of this country.
But there is some good news on the horizon.
In December 2012, the Committee on Monetary and Economic Reform (COMER), and two private citizens, brought suit in the Federal Court of Canada against Her Majesty the Queen, The Minister of Finance, The Minister of National Revenue, The Bank of Canada, and the Attorney General of Canada, on this very issue.
The case is currently before the Federal Court of Appeal where the parties await a decision on the claim moving forward. If you want to follow this matter, visit www.comer.org to keep up to date with the proceedings because the mainstream media are not giving this story any coverage, reasons for such I leave to the readers to speculate for themselves.
(To get an idea of where money comes from and who really benefits, watch the 5 part series on how money is created at: www.hiddensecretsofmoney.com)
This an issue of great importance to all Canadians because we the citizens, and more importantly, our children and grandchildren, are the ones left “holding the bag” as a result of the government’s current borrowing practices.
Grant Baudais, Kelowna