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I'll believe it when I see it. Not saying it couldn't happen, but if it does it will be after all other options have failed. In other words, they'll be so desperate that even free money will be too late.
This is both encouraging and discouraging. It is discouraging because the BoC has been owned by Canadians since the 30's and yet has not been injecting debt-free money into the nation as it was designed. And equally discouraging that this was the free choice of the nation to do it wrong -- the law allows for the debt-free money to come from the BoC, yet even with it being lawful it was not done. As was said in the video, the money comes from bank bonds instead which is debt-money. This is the most discouraging part, that the law allows for right and yet we still allowed our leaders to do wrong by choosing the debt-money over the debt-free-money, that is the most depressing part. So I question whether new legislation or rules or even media visibility will corner them and force them to change. It is encouraging because it is being done in a court of law, which could go to the supreme court if needs be. This is good, and if the rule of law is still powerful in Canada then good things will come of this.
Somehow I forgot that printing money without interest attached was possible. I guess I've been obsessing over the impending <a href="http://seankerrigan.com/exponential-grow.... of medicare</a> that I completely forgot this was a thing and would actually help. That said, I don't see how this can be *allowed* to happen. We assume there are invested interests that understand that this being allowed to work is a threat to them and would actively pursue methods of sabotage.
To quote the Last Psychiatrist: "If you see any group advocating influentially for change in a media they dont own or control, you can double down and split the 10s, the dealer is holding status and quo. No change is possible on someone elses dime On occasion what the activists think they want may happen coincidentally to align with what the system wants, and from that moment on they will be lead to believe they are making a difference, which means theyre making money for someone else."
Since it is never the intent of government to pay off the debt, issuing debt free money at least prevents the rise of interest obligations it must pay.
Japan already has the problem of its interest payments making too big a portion of its national budget. So does Greece.
One must remember that the banks who buy these sovereign bonds do not do it out of reserves but create the money to buy the bond out of thin air. Thus the inflationary cost is the same as for debt free money.
If Canada goes the debt free money route, banks will still create debt backed money via lending.
The political problem with debt free money is that it weakens any check on increased government spending. The banks could still lend to cities and the private sector. To finally reign the banks in requires "One Dollar of Capital."
Even if the Supreme Court upholds this decision, Harper will just ignore it like he does so many other laws of our land.
As for inflation, I don't believe that's an issue when the money is SPENT directly into the economy. For example, if the Feds hold a tender for the construction of a bridge in Nunavut and then pay the winning bidder directly, that money is being used to pay for labour that converts raw materials (steel, aggregate, cement, etc.) into something with a much greater material value (a piece of functional civilian infrastructure). It does not result in a case of having more funds chasing the same amount of goods, and being interest-free, does not necessitate further downstream borrowing.
As Bill Still said, we did it this way from 1938 to 1974, and funded enormous (on a global scale) public works and social programs without spiking inflation or adding to the national debt in any substantive way.
Issuing additional money is always going to cause inflation - it is inflation. Debt or not debt, if there is more money chasing the same quantity of goods and services, the money is worth less.
Alfred, whether your federal government borrows or prints, whether the final product is a valuable bridge, or a wasteful program, the newly created money is going to have the same inflationary effect. The only way the newly created dollars would not lessen the purchasing power of all the dollars would be if they were never spent into circulation.
The difference is not in the inflationary effect, but in who profits from it. If the banks issue the money as debt, that benefits the banks, who get interest payments for their counterfeiting. If the money is issued without debt, then the inflationary effect is the same, but the banks get no interest payments.
I prefer not to have money created as debt. If the money is not issued as debt, there is no need to issue additional money to cover the interest. Non-debt money creation lessens the need for a Ponzi scheme. Finally, if the money is not issued as debt, the money is not extinguished when the debt is defaulted or repaid. Non-debt money creation lessens the risk of a deflationary spiral.
This is Canada's secret weapon and is the reason we actually allow our politicians to abuse national debt-financing less than almost all other developed nations. WE know that deep down the central banking syndicate doesn't trust our currency, and would attack it aggressively if BofC ever went back to debt-free money. Negative interest rates on the other hand......
When the system is corrupt absolutely you must seek representation by those who are absolutely incorruptible.
I don't understand why debt-free fiat money is supposed to be so great. As soon as a government/central bank creates money with no matching debt, holders of money become vulnerable because they possess something which other people only want in the short term for its liquidity properties, not for its inherent worth. It has no inherent value because nobody is obliged to sell anything to obtain it. With debt-backed money, all money in existence is wanted and needed by someone so that they can repay their debts, so there is always something of value which the holder of the money can buy with it.
To me, debt-free money seems like an accounting fraud, similar to overstating the value of assets, which only works as long as nobody calls your bluff.
Another way to look at it is to forget the movement of money, and just look at the movement of goods and services. With debt-free money, the government obtains goods and services from suppliers, and that's it. (The supplier may use the money to obtain goods and services from others, but ultimately someone is left with they money and no goods and services). With debt-backed money, the government obtains goods and services from suppliers, and the suppliers gain goods and services in exchange from those people taxed by the government. The taxation is explicit with debt-backed money. With debt-free money, the taxation is through inflation, and is disproportionately paid by those furthest from the government in the distribution of the money.