COMMITTEE VOTES AGAINST GIVING HIDDEN RESERVES
OTTAWA - June 16 - After 14 days of rising controversy over hidden reserves of the charter banks, the committee on banking and commerce today turned down a motion from A.G. Slaght (Liberal - Parry Sound) that would have compelled disclosure of the hidden reserves. Just before the vote which was 4 to 18, the committee witnessed a tumultuous scene as Slaght heatedly protested against regarding the motion as a want of confidence in the government and in the minister of Finance Minister J.L. Ilsley."
"The Edmonton Bulletin" June 16, 1944
WHY IT IS CALLED "INFLATABLE CURRENCY"
The only way new money goes into circulation in Canada under this wicked system is when someone borrows it from a Banker. When people are confident of success they borrow much money, which increases the money supply, and all seem to prosper for a while. Then, as they pay off their loans, the available money supply shrinks rapidly, and money becomes "scarce." Since they must always take more out of circulation that they put in (because of interest and other charges), only other people borrowing still more can keep a medium of exchange available to the nation. An example will aid our understanding.
IF $40,000 IS BORROWED: $179,292 MUST BE PAID BACK
When a citizen goes to a Banker to borrow $40,000 to purchase a home or a farm, the Banker's clerk first requires the citizen to assign to the Banker the right of ownership of the property if the borrower is unable to make the payments. The Banker's clerk then gives the borrower a $40,000 check, or he signs a $40,000 deposit slip crediting the borrower's checking account with a $40,000 deposit. The borrower in turn writes the necessary checks to the builder, seller, subcontractors, etc. (who in turn write checks), thereby putting $40,000 of "checkbook money" into circulation. However, on a 30-year mortgage with 15 1/4% interest, the Banker wants $498.97 a month paid to himself, or a total of $179,292. The buyer must take that $179,292 out of circulation, making the amount in circulation $139,292 less than when he purchased the home (see illustration on inside cover page).
The Banker has not produced anything of value (except the slip of paper called a check or deposit slip), yet he now has $139,292 more than he had before (minus a few hundred dollars of clerical and office cost) and the people, as a whole, have $139,292 less.
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