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Research - April 2005 Update
By Sheryle Carlson
director of APIRG Working Group: Alternatives to the Canadian
Banking & Economics System
"What we measure is what we value. How we spend our time,
money and resources discloses our true values." - Mark Anielski
In order to understand how banks work, the question of money
creation inevitably arises, and few, even bank tellers, stock
investors, or business students, will be able satiate with a full
and comprehensive answer. As far as I've come to understand, money
is simply the entrance of a figure in a ledger, and poof! the
dollar has been made. Currently in Canada, banks don't require
to have any money on reserve in order to give out a loan, and
banks profit not only on the nominal amount of the loan they have
given out, but on the interest as well. Assessing the risk factor
of loan clients seems almost irrelative when a client is to pay
back money that did not exist in the first place.
The profit margin enjoyed by major banks also makes them arguably
the most influential lobbyists to the government. The government
is supposed to act a watchdog and somewhat of a steward of the
banks, to ensure its citizens needs are met, and banking corporations
do not exceed the power of that of the nation as a whole. Yet,
this is not the case. The banks have the power to finance other
corporations that will give back the highest returns, and often
these companies violate human rights and environmental standards
to achieve their profit goals. We are addicted to a vision to
pursue relentless and infinite growth in order to advance the
human race in the name of "progress," but the consequences
of this vision has in effect increased corruption and devastation
in the monetary system. There are no laws that hold banks accountable
to ethical codes. Unlike the United States where law is in place
that requires banks to invest money back into the community, we
Canadians have no such guarantees. Under the Community Reinvestment
Act (CRA) of 1977, U.S. bankers are required to submit detailed
reports on loan applications they've rejected. By forcing banks
to supply their loan refusal data for government examination,
one trillion dollars has been invested or loaned out to poorer
American communities in the past two decades. The Canadian Bankers
Association has stated we don't have poor communities and there
has been no discrepancies between loans given out to purchase
property in lower end neighbourhoods as opposed to richer ones,
just as lower-income people don't have problems opening up bank
accounts, even with clean credit histories.
The Canadian government borrows more money from private banks
that we do from our own Bank of Canada at higher interest rates.
Why is that we must owe our debt to private institutions and individuals
with obvious private interests? The Canadian government has the
constitutional right to create all of our money yet we are to
be stuck in a debt-based system as a method to finance our deficits,
and by borrowing from private financial institutions. The reason
for money creation is a means for a community or nation can control
its state of well-being through the management and distribution
of its capital, which is money. However, money has become unparallel
with what is supposed to represent, and is obviously distributed
inequitably.
Our working group has been able to make a few conclusions about
the banking system: it is unbalanced, inequitable, and unaccountable.
We are continuing to explore the reasons that corruption and greed
is intrinsically tied with the system, as we are looking at ways
to change the system into being more sustainable (economically
and environmentally) and seeking alternatives that focus on local
and community supported systems. We have embarked upon the genius
of Mark Anielski, a business professor here at the University
of Alberta, on his Genuine Wealth Accounting Model, a more accurate
and expansive measurement of the community's well-being, including
the assessment of financial, manufactured, human, social, and
natural wealth. We have explored successful community currencies
such as Calgary Dollars, Ithaca Hours, and Salt Spring Island
Dollars. We have interviewed Duff Conacher of Democracy Watch
and The Canadian Community Reinvestment Coalition, who we have
included in a short documentary produced this past winter. As
a means for outreach, the short has screened this past February
at the Alberta Social Forum in Calgary in association with Calgary
Dollars. In March, we presented with Deb Abbey, CEO of Real Assets,
a social investment company, hosted by the University of Alberta's
Women's Law Forum, and presented with Vancouverite Adam Cornier,
first-time filmmaker, who is producing a documentary on "Fixing
Capitalism." We will be screening the short again for a fundraiser
for the Youth Emergency Shelter on May 5th at the Fox Pub. Our
research will continue into the next year and we will be soon
developing a treatment for the documentary end product of our
work. Please check us out at http://altbank.apirg.org for news
and more banking analysis.
"We have all been brainwashed into believing there is only
one kind of money - one kind of wealth - and only one measure
of human worth - how much money you have - and one kind of exchange
- traditional buying and selling. And only one motive to do so
- the Siamese twins of consumer greed and the profit motive"
- Margaret Atwood
"Why does the Canadian government give away 19 billion dollars
each year to the chartered banks, free of charge, when this money
could be used to balance the books in one year, without any more
cuts, and later be used to pay down the debt?" - Ian Woods
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