Out of the Mouths of Babes: Twelve-Year-Old Money Reformer

[Miss*Bijou]

Would what she suggests work?
Why was the old system changed in the first place?
If what she says is true, why wouldn't we want to demand that the government go back to it?

What are your thoughts?....

Out of the Mouths of Babes: Twelve-Year-Old Money Reformer Tops a Million Views
by Ellen Brown


The youtube video of 12 year old Victoria Grant speaking at the Public Banking in America conference last month has gone viral, topping a million views on various websites.

Monetary reform—the contention that governments, not banks, should create and lend a nation’s money—has rarely even made the news, so this is a first. Either the times they are a-changin’, or Victoria managed to frame the message in a way that was so simple and clear that even a child could understand it.

Basically, her message was that banks create money “out of thin air” and lend it to people and governments at interest. If governments borrowed from their own banks, they could keep the interest and save a lot of money for the taxpayers.

She said her own country of Canada actually did this, from 1939 to 1974. During that time, the government’s debt was low and sustainable, and it funded all sorts of remarkable things. Only when the government switched to borrowing privately did it acquire a crippling national debt.

Borrowing privately means selling bonds at market rates of interest (which in Canada quickly shot up to 22%), and the money for these bonds is ultimately created by private banks. For the latter point, Victoria quoted Graham Towers, head of the Bank of Canada for the first twenty years of its history. He said:

Each and every time a bank makes a loan, new bank credit is created — new deposits — brand new money. Broadly speaking, all new money comes out of a Bank in the form of loans. As loans are debts, then under the present system all money is debt.

Towers was asked, “Will you tell me why a government with power to create money, should give that power away to a private monopoly, and then borrow that which parliament can create itself, back at interest, to the point of national bankruptcy?” He replied, “If Parliament wants to change the form of operating the banking system, then certainly that is within the power of Parliament.”

In other words, said Victoria, “If the Canadian government needs money, they can borrow it directly from the Bank of Canada. The people would then pay fair taxes to repay the Bank of Canada. This tax money would in turn get injected back into the economic infrastructure and the debt would be wiped out. Canadians would again prosper with real money as the foundation of our economic structure and not debt money. Regarding the debt money owed to the private banks such as the Royal Bank, we would simply have the Bank of Canada print the money owing, hand it over to the private banks, and then clear the debt to the Bank of Canada.”

Problem solved; case closed.

But critics said, “Not so fast.” Victoria might be charming, but she was naïve.

One critic was William Watson, writing in the Canadian newspaper The National Post in an article titled “No, Victoria, There Is No Money Monster.” Interestingly, he did not deny Victoria’s contention that “When you take out a mortgage, the bank creates the money by clicking on a key and generating ‘fake money out of thin air.’” Watson acknowledged:

Well, yes, that’s true of any “fractional-reserve” banking system. Even before they were regulated, even before there was a Bank of Canada, banks understood they didn’t have to keep reserves equal to the total amount of money they’d lent out: They could count on most depositors most of the time not showing up to take out their money all at once. Which means, as any introduction to monetary economics will tell you, banks can indeed “create” money.

What he disputed was that the Canadian government’s monster debt was the result of paying high interest rates to banks. Rather, he said:

We have a big public debt because, starting in the early 1970s and continuing for three full decades, our governments spent more on all sorts of things, including interest, than they collected in taxes. . . . The problem was the idea, still widely popular, from the Greek parliament to the streets of Montreal, that governments needn’t pay their bills.

That contention is countered, however, by the Canadian government’s own Auditor General (the nation’s top accountant, who reviews the government’s books). In 1993, the Auditor General noted in his annual report:

[The] cost of borrowing and its compounding effect have a significant impact on Canada’s annual deficits. From Confederation up to 1991-92, the federal government accumulated a net debt of $423 billion. Of this, $37 billion represents the accumulated shortfall in meeting the cost of government programs since Confederation. The remainder, $386 billion, represents the amount the government has borrowed to service the debt created by previous annual shortfalls.

In other words, 91% of the debt consists of compounded interest charges. Subtract those and the government would have a debt of only C$37 billion, very low and sustainable, just as it was before 1974.

Mr. Watson’s final argument was that borrowing from the government’s own bank would be inflationary. He wrote:

Victoria’s solution is that instead of paying market rates the government should borrow directly from the Bank of Canada and pay only token rates of interest. Because the government owns the bank, the tax revenues it raises in order to pay that interest would then somehow be injected directly back into the economy. In other words, money literally printed to cover the government’s deficit would be put into circulation. But how is that not inflationary?

Let’s see. The government can borrow money that ultimately comes from private banks, which admittedly create it out of thin air, and soak the taxpayers for a whopping interest bill; or it can borrow from its own bank, which also creates the money out of thin air, and avoid the interest.

Even a 12 year old can see how this argument is going to come out.

https://www.commondreams.org/view/2012/05/30-1

 

[Dgodus]

Wasn't this basically what the first Zeitgeist movie covered (or perhaps the second, I really cant recal)

 

[Sleepmonger]

“If the Canadian government needs money, they can borrow it directly from the Bank of Canada. The people would then pay fair taxes to repay the Bank of Canada. This tax money would in turn get injected back into the economic infrastructure and the debt would be wiped out. Canadians would again prosper with real money as the foundation of our economic structure and not debt money. Regarding the debt money owed to the private banks such as the Royal Bank, we would simply have the Bank of Canada print the money owing, hand it over to the private banks, and then clear the debt to the Bank of Canada.”

The reason we incur debt is because the people are NOT willing to "pay fair taxes to repay the bank of Canada."
Politicians are also unwilling to force that payment, or deny the services the loans are being made for.

Her solution to clear the debt is to print insane amounts of money... really? Does she go over the monetary policy that will go into place to save the country from the economic damage this would cause?

 

[Tugela]

Basically what she is proposing is that the government pay for it's expenditures by simply printing more money. What this actually does is devalue the money allready out there.

The obvious solution is for governments on average to spend what they make in taxes. If they spend more then they have to borrow from someone, and if that someone is themselves it is actually you. It is sort of a secret taxation, they don't "tax" you, but whatever you have saved is worth less. The net effect would be to destroy ordinary people's savings and make the rich richer (since they own property that won't generally be devalued). That is something that people like this little girl and Miss_Bijou don't understand. It will have the exact opposite effect than they think it will have on ordinary peoples lives.

 

[godel]

The obvious solution to all of this, and I'm surprised Victoria and the Sexy Troublemaker haven't postulated this, is enacting legislation that would permit individuals to photocopy their paper currency if their debt load becomes onerous. If one doesn't have access to a photocopier, gold wrapped chocolate coins could/would be permissable as legal tender. I believe all sorts of remarkable things could be funded this way.

 

[Miss*Bijou]

The obvious solution to all of this, and I'm surprised Victoria and the Sexy Troublemaker haven't postulated this, is enacting legislation that would permit individuals to photocopy their paper currency if their debt load becomes onerous. If one doesn't have access to a photocopier, gold wrapped chocolate coins could/would be permissable as legal tender. I believe all sorts of remarkable things could be funded this way.

How about crawling back into the dark hole from which you came out?

Really, talk about a useless waste of a post.

If you don't have anything to write, how about you kindly STFU.

Thanks.

Basically what she is proposing is that the government pay for it's expenditures by simply printing more money. What this actually does is devalue the money allready out there.

The obvious solution is for governments on average to spend what they make in taxes. If they spend more then they have to borrow from someone, and if that someone is themselves it is actually you. It is sort of a secret taxation, they don't "tax" you, but whatever you have saved is worth less. The net effect would be to destroy ordinary people's savings and make the rich richer (since they own property that won't generally be devalued). That is something that people like this little girl and Miss_Bijou don't understand. It will have the exact opposite effect than they think it will have on ordinary peoples lives.

I wasn't claiming to understand but I was hoping to. Which is why I posted:

Would what she suggests work?
Why was the old system changed in the first place?
If what she says is true, why wouldn't we want to demand that the government go back to it?

What are your thoughts?....

...and not:

OMG OMG A miracle! This is what will solve all of our problems once and for all. This is it! Listen to me, I know what I'm talking about.

Unlike the few deeply insecure men here who will say just about anything while pretending to know what they're talking about when they don't, I have absolutely no problem saying I don't know much about something but that I would like to try to learn from others who do know more. So there is no need to be condescending.

 

[Miss*Bijou]

Wasn't this basically what the first Zeitgeist movie covered (or perhaps the second, I really cant recal)

I'm not sure. I've only seen the first one but I don't really remember.

They won't go back to it because

1) It is a young woman pointing it out. The ego of these men couldn't handle it.
2) They would look foolish.
3) Their pride wouldn't let them.
4) It makes too much sense and the government most of the time doesn't make sense.

There are probably more reasons, some of them will be made up as they read the article.

I could be proved wrong but I somehow doubt it.

Victoria is a very smart young woman and I hope she can help some changes come about.

While I agree with your list of reasons why they might resist change, if a majority of people demand something, the government doesn't have much choice. And even if the current government doesn't do it, when it's something that is important enough to the majority and the majority puts constant pressure on the government, eventually they wouldn't have much of a choice. That applies to anything, really...not just this.

But the problem is too many people thinking that showing up to vote every 4 years then spending the following 4 with the comfortable, reassuring belief that government knows best so there is no need for criticism or accountability. Too many people like that who are convinced that showing up to vote every 4 years means the government truly represents us, works with our interests in mind and that ours is a healthy, functioning democracy.

The truth is that the one thing you can know for sure if that's all we do, is that all of these things are definitely not happening, especially not changes that would result in some corporation ending up with less money in its coffers at the end of the year.

 

[overdone]

Here's the whole problem right here

In other words, said Victoria, “If the Canadian government needs money, they can borrow it directly from the Bank of Canada. The people would then pay fair taxes to repay the Bank of Canada


They've borrowed far more for wants, not needs or even just sensible debt, for far too long.

We got too many people sucking on the gov't tit that don't provide anything

get rid of them and you would have plenty to pay the debt and still provide actual fair and balanced programs that people need and deserve, while taking a reasonable amount of taxes

 

[PlayfulAlex]

You might like this short paper...financing without debt, through an honest monetary system...

http://www.michaeljournal.org/badfruits.htm

 

[godel]

How about crawling back into the dark hole from which you came out?

Really, talk about a useless waste of a post.

If you don't have anything to write, how about you kindly STFU.

Thanks.









I wasn't claiming to understand but I was hoping to. Which is why I posted:





...and not:





Unlike the few deeply insecure men here who will say just about anything while pretending to know what they're talking about when they don't, I have absolutely no problem saying I don't know much about something but that I would like to try to learn from others who do know more. So there is no need to be condescending.

I'm sorry, I thought you were just trying to stir up shit based on your rather intemperate posts in the Quebec tuition fee thread. Hence the self-given Sexy Troublemaker moniker.

Since you acknowledge your lack of knowledge in this area, a good first or second year macroeconomics textbook would be a good starting point, typically found in any of the local municipal libraries. Additionally, study the works of Moshe Milevsky, Associate Professor of Finance at York University, and Sylvain Raynes of R + R Consulting, two brilliant minds. Neither of them do politics like you, Victoria or the Public Banking Institute.

 

[Miss*Bijou]

You might like this short paper...financing without debt, through an honest monetary system...

http://www.michaeljournal.org/badfruits.htm

Thanks, I will read it.

 

[Miss*Bijou]

I'm sorry, I thought you were just trying to stir up shit based on your rather intemperate posts in the Quebec tuition fee thread. Hence the self-given Sexy Troublemaker moniker.

Since you acknowledge your lack of knowledge in this area, a good first or second year macroeconomics textbook would be a good starting point, typically found in any of the local municipal libraries. Additionally, study the works of Moshe Milevsky, Associate Professor of Finance at York University, and Sylvain Raynes of R + R Consulting, two brilliant minds. Neither of them do politics like you, Victoria or the Public Banking Institute.

 

[Sleepmonger]

While I agree with your list of reasons why they might resist change, if a majority of people demand something, the government doesn't have much choice. And even if the current government doesn't do it, when it's something that is important enough to the majority and the majority puts constant pressure on the government, eventually they wouldn't have much of a choice. That applies to anything, really...not just this.[/COLOR][/FONT]

You agree with what list of reasons? I don’t see a single word in her post that isn’t stereotypical feminist bullshit about people in a position she knows nothing about. How about, they won’t go back, because it's obsolete compared to modern monetary policy, and completely unsustainable?

I've nothing against young Victoria. I'm sure she's a wonderful kid. I hope she learns to speak for herself later in life and not just continue regurgitating the ideals indoctrinated into her by her conspiracy theorist parents.

You might like this short paper...financing without debt, through an honest monetary system...

http://www.michaeljournal.org/badfruits.htm

From what I understand this article is talking about changing from a fractional reserve banking system to a system where 100% of loans given out must be backed at the bank by deposits they have on hand. The problem with this is the fractional reserve banking system IS A GOOD THING... It allows our economy to grow at a multiple of deposits made. The smaller the fraction reserved the better the growth rate... but the higher the risk that a lot of people will attempt withdrawals during an economic downturn and bankrupt the system.

The comments that these banks are creating wealth at the click of a button are entirely false, the money is always backed by something... wealth cannot be arbitrarily created.

I'm terrible at trying to explain all this. I highly recommend godels suggestion of taking a look at some first year macroeconomics texts. They will explain everything nicely.

 

[godel]

Ugh. SO lame.

MB, You really, completely, totally still missed the point. Again.

Obviously you don't care about anything other than ranting about whatever.


So I'm not going to bother. Obviously, you don't care about being besides the point. You just want to keep repeating yourself without bothering to listen. I have no time for that, clearly you're not able to listen.

Whatever.

Whatever.

SOOOOOO lame.

K...

 

[Dgodus]

We got too many people sucking on the gov't tit that don't provide anything

get rid of them and you would have plenty to pay the debt and still provide actual fair and balanced programs that people need and deserve, while taking a reasonable amount of taxes

I'm curious to know who you think are parasites and who aren't.

I'm not making any implications with that question, I just genuinly am curious for the sake of conversation.

 

[the old maxx50]

Yes to have the simplistic thinking of a child who has never work for a living , has every thing payed for ..l and never been in dept. I once thought as she did . with a simple solution to all the world woos ..

What she is talking about has been done in many countries .. you may of herd of then through the years , Mexico , Brazil , Italy , Greece , and even some of the G10

Germany in the 1920. France and others .. When a government prints more money to spend above what they can get from tax revenue it leads to inflation , some time 200 , 300 , percent and more .. and the money is only good enough to wipe your ass with ... It has happened . It is happening in Greece and Russia .

Economically maybe Canada could weather through having our dollar deflate internationally and prices inflate .. That was the case in the year that she mentions in her speech ..

In a global economy it dose not work to well .. it may be good when you sell but not that good when you have to buy out side your country

 

[chilli]

From what I understand this article is talking about changing from a fractional reserve banking system to a system where 100% of loans given out must be backed at the bank by deposits they have on hand. The problem with this is the fractional reserve banking system IS A GOOD THING... It allows our economy to grow at a multiple of deposits made. The smaller the fraction reserved the better the growth rate... but the higher the risk that a lot of people will attempt withdrawals during an economic downturn and bankrupt the system.

The comments that these banks are creating wealth at the click of a button are entirely false, the money is always backed by something... wealth cannot be arbitrarily created.

First of all it's clear from your post - no you don't know what she's talking about.

So you should just stop posting.

It's obvious you think you know a whole lot of nothing - it's precisely why the worlds economy is in the mess it is in now - people like you who cling on to old economic models that have been proven that they don't work for anyone except the banks.

And yes your last sentence really proves your ignorance.

 

[PlayfulAlex]

Money as Debt...I've posted this video on another thread in the recent past. Invest the 47 minutes and you'll come away with a whole new appreciation of the money system in which we live, and get an introduction to the concepts of Monetary Reform.

[video=google;5352106773770802849]http://video.google.com/videoplay?docid=5352106773770802849[/video]

 

[wilde]

Money is basically a promissory note/an I owe you, and at some point, you have to make good on those promises...

 

[Miss*Bijou]

By fluke, I just landed on this documentary.

I've started watching it and at this point I'm getting confused, especially because of the replies earlier in this thread. I'm going to keep watching and hopefully it will all make more sense soon haha


If anyone's interested:

Oh Canada: Our Bought and Sold Out Land

This documentary presents these issues that affect every Canadian from the perspective of and delivered by concerned youth in a astute and colourful manner. This is a serious journalism piece that asks the tough questions directly to such politicians as Former Prime Minister of Canada Paul Martin, Canadian Finance Minister Jim Flaherty, Green Party Leader Elizabeth May, Ontario Gas Man Dan McTeague, NDP Leader Jack Layton, Mayor of Oshawa John Gray, Former Prime Minister of Canada John Turner and many more!


1. Amount of money in circulation
2. 91% Federal Debt is interest
3. How money is created
4. Legislation
5. How much we spend on debt
6. Every country is in debt
7. German company printing bank notes
8. Pension companies losing money

PlayfulAlex - Thanks for the video. I will watch it as well.