In response to the letter on November 16 in the Nelson Star with the headline: “Local currency does not make any sense.” I would like to offer the comparison: “Canadian financial system does not make any sense.”
Most people think Canadian money comes from the Canadian government. In fact, our money is created by private banks when we get loans. Cash is not sitting in a vault waiting to be borrowed. It is conjured into our bank accounts with a few computer keystrokes.
The interest we pay on those loans, however, is never created. The result is a scarcity of money. We compete for a pool of money that is never enough for all of us to pay back our loans plus our interest.
A system such as this creates scarcity, competition, fear, and greed. It requires bankruptcies, foreclosures, and more debt with more interest. Statistics Canada recently released figures showing that the average Canadian owes $163.40 for every $100 they earn.
Even the federal government borrows money from banks with interest. As a result, Canadian taxpayers pay $40 billion a year in interest payments on money the government could have created itself without interest.
Meanwhile, cutbacks continue to undermine our ability to care for infrastructure, health care, homelessness, and food security. All over the world entire countries are on the verge of bankruptcy.
It does not make any sense. But I see no letters to editor about monetary reform, even with the ongoing global financial crises?
In Nelson we have created money as community equity rather than interest bearing debt. It is as if somebody came to town and simply gave us money, with the only condition that we must spend it locally.
In the long run, we build up our capacity to take care of ourselves, fix our roads, bridges, and sewers, grow food, build houses, make clothes, all with local production.
Does a local currency make sense? It takes a little more effort, but if the community accepts it, the benefits are tremendous.
Michael Sheely, Nelson