Canadian Action Party - A Real Choice

As always Catherine you write with passion, insight and common sense. I too have rejected door number one and two, but have only recently heard of CAP, once again more research on my part is called for. Thank you for your continuing focused letters and opinions, you put many of us to shame with your concise way of getting to the heart of the matter.

Thanks Rural, I appreciate your kind words, I am encouraged by the fact that once people know we have choices, people do get involved. It is the feeling of helplessness that is killing this country, and I am just getting a real feeling of hope from CAP's message. <img align=absmiddle src='images/smilies/smile.gif' alt='Smile'>

I don't want to rain on any parades, obviously its a good thing when a party seems to back up one's beliefs. Just to play devil's advocate though, I did spend some time going through their website, and am not particularly impressed. I am far more impressed when a party is willing to put it's policies into it's constitution, whereas this party's entire constitution reads pretty much as a mirror image of all the other parties, meaning that there really is no 'democratic impetus'. Like all parties the decision making rests within it's executive, hardly a vote for grassroots development. All of the newest parties in Canada, the BQ, PQ, Green and Reform parties got their start as grassroots organizations and it wasn't until they actually had representatives that they abandoned their constitutional amendments which gave power to that grassroots. This party doesn't even start with that. Most of it's policies are aligned fairly close to what the NDP has been saying for years, except for fairly extreme views that I doubt will have much resonance-namely, untying the canadian dollar from the american and giving more power to the Bank of Canada. Argentina did this in the late eighties and saw inflation hit 200%. In a country with a 'relatively' decent economy I doubt many people will want to take the chance of becoming a third world nation over claims of sovereignty (thats just my opinion though). It also doesn't help when the party's economic policy seems to come from one guy who did a survey among his friends! Nor does it help that he/she claims that editorialists, journalists, and businesspeople are 'the ones who advise our political leaders'. We'd REALLY be in trouble in that were true! As far as choices go, we clearly have 'alternative choices' federally, either the NDP or Green Party. I would gladly welcome this party if we had a system of proportional representation, since that would mean each party would be lobbying hard for their particular 'theme', and clearly this party has some good points. However, whether we'd actually want them in power is something I'd object to, and there are too many reasons to list them here. It is good that they are around though, the more federal parties there are, the more force will be placed on implementing a system of proportional representation.

You don't really think this isn't true, 'Nor does it help that he/she claims that editorialists, journalists, and businesspeople are 'the ones who advise our political leaders'. We'd REALLY be in trouble in that were true!' We are in trouble, and please tell me the media isn't running this show, also the business people are behind the major political parties, that is not news! As for monetary reform, it isn't as crazy as you think, that inflation argument has been used before mostly by the new economists, who can't imagine the banks not owning us. Sorry but when you read how it works, and how it worked for Canada in the past, you'll see it won't cause inflation, just some peeved off bankers who's profit margin will be threatened. As far as I'm concerned I'm tired of political parties that won't tell it like it is, because it might risk their career, playing it safe as they have, has increased their profit margin and decreased the people of Canada's resources significantly. It is time for some radical changes, real honest people with policies that represent the people. Abrogating NAFTA is the first step, or is that also one of those pie in the sky ideas? Not for me it isn't, it's the only way to reclaim our country.

Further investigation tells me this: 'The National Convention of the CAP shall be a meeting of the persons referred to in this Article. The National Convention shall be the supreme governing body of CAP, subject only to the authority of the CAP Constitution and the membership as a whole and the National Executive elected at the National Convention shall be responsible for the operation of the party between conventions.' it goes on to say: "# The policies shall be presented in the Policy Statement, which sets out the long range policy directions of CAP. # A National Resolutions Committee shall create a grassroots Policy Development Process, which shall include timelines, leading up to each National Convention. Such process will allow for all Constituency Associations to receive all Policy Resolutions to be debated at the National Convention not less than thirty (30) days prior to the National Convention. # All Policies placed in the Policy Statement shall be reviewed prior to each National Convention through the Policy Development Process. # The Leader and the Caucus are bound by the Principles and Policies as determined by the members of CAP." This says that the policies are decided at conventions and that the executive who are elected by the members carry out the operation according to the directive of the convention outcome. Of course I am not an expert, but sounds rather grassroots to me. Also I am not sure why you would want to enshrine policy in the constitution, since policy must be able to adapt as things develop in the world. Policy should be adaptable, the constitution would have to be changed everytime something new developed. Just my simple opinion on a complex issue.

Quite true, however, I wouldn't call this 'grassroots' simply because of canadian history. The constitution of the party is pretty much identical to that of every other major party, and we see what happens there. As you say things need to adapt, which is exactly the point. When you vote for a Quebec sovereignty party you know exactly what you are getting because the party's platform is enshrined in its constitution. Here, the policies are sound (maybe), and are similar to some NDP ones, however, the problem is that as the site says, decisions and policies rest with the executive and apart from attempting to throw the leader out, there is no way to enforce them. Which means you get a similar thing to what is happening in Manitoba where the NDP party passes resolutions, and the NDP Premier simply ignores them-no doubt because HE feels the policies need to be adapted. It is 'rule by executive', which again isn't grassroots. To be truly grassroots the resolutions passed at conventions must be binding-which was the case with the Reform Party and early PQ- thats the definition of grassroots (at least to me, and to say that they only need to be consultative is to basically admit that the Liberal Party, Conservative Party and NDP are grassroots parties, and that's quite a stretch I think). While I certainly understand the fear of creating a party where the grassroots has the final say, to my mind it is the ONLY way to make a party democratic-or at the very least implement some direct democracy tools such as party initiatives and referenda. In short, there is no way to be sure the party is telling the truth -just like the other parties. They could be a front for an american group just saying what they think we want to hear (thats being facetious but I'm sure you get the point). For sovereigntists, or federalists, or whatever you'd call it, no doubt this party carries the themes which are important to that group, just like the Green Party has themes important to their constituency. My critique comes from a democratic standpoint, I'm not arguing against their policies (although we could, but that should be saved for the election<img align=absmiddle src='images/smilies/smile.gif' alt='Smile'>

Actually it is their policies that got me interested. I don't care what name the party has, I care that their commitment is to the people of Canada, and not to the corporte elite controllers, that is my main interest. I am looking for a party that is willing to speak out on the issues that matter to me, which is why I started this thread in the first place. I haven't looked deeply into the constitution of other parties, nor do I feel the need. I am not suggesting everybody should believe what I believe, only that I found something which I think is worth taking a second look, and then make up your own minds. I was looking for somebody else that said, No to NAFTA which is killing us, somebody that says NO to Deep Integration, somebody that wants to support the family farm, protect our food supply,our environment and that shows me they have thought things through and that their ideas make sense to me. From my research I believe this party has it. The money creation issue, when you look into it, you will find that it won't create inflation because the same amount of money will be created, just by our Bank of Canada, and we'll be the recipients, not the Charter Banks. Here is a quote in part to explain the Argentine and other factors: "The question is not where will the money come from, but rather where did the money go? First of all, it has been wasted on unnecessary interest. In 1975 the total federal debt was $37 billion. By the year 2000 it was $585 billion. The dramatic increase from 1975 to year 2000 was a result of borrowing money from foreign and domestic chartered banks along with other foreign sources at market rates of interest, rather than borrowing from our own Bank of Canada at nominal rates of interest, the payment of which came back into government coffers as dividends. In short, the dramatic increase in the total debt was due to the failure to use our own Bank of Canada. In 1975 our Bank of Canada held about 22% of Canada's debt. By 1991 it held only 8% of our debt. By year 2000 our Bank of Canada held only 5% of our debt. You do not have to be a genius to see that borrowing at market rates of anywhere from 6% to 18% interest ( from banks and foreigners) rather than at about 1% which 1% comes back to you as dividends (from our Bank of Canada) is foolish to say the least, if not treacherous. (The Canadian provinces, in order to avoid the high Canadian rates, moved to get the lower U.S. rates, and in doing so incurred US dollar denominated debts. That is the sort of thing that ruined the Argentine. For every dollar the Argentines issued they had to have a backup of US currency. They had to pay off the debt in US dollars which became impossible. Mr. Martin should know that.) When the Liberals came to power in 1993 the debt was $408 billion. Now it is $510 billion. Using the surpluses accumulating as a result of the cutbacks to services arising out of Paul Martin's budgets referred to above, the Liberals reduced the debt as at today to $510 billion from $585 billion in year 2000. The reduction from $585 billion to $510 billion was due to application of the surplus discussed above against the debt. Rather than going back to our own Bank of Canada for servicing the debt, our government chose to suck money back from the people to pay the banks. They continue to choose to feed the banks rather than feed the people."

Nobody is disputing anybody's choice of party support, that's a personal decision and nobody is smart enough to dispute that. All ideas succeed or fail by analysis, that's all that's going on here. I was looking up other parties and most of the fringe parties have similar themes to the ones that have been referred to here. They include 'The Global Party', 'The Social Credit Party', 'The Communist Party', 'The Marxist Leninist Party', 'The Progressive Canadian Party', and the 'Abolitionist Party of Canada'. Most of which have been around quite awhile, but without Proportional Representation they have very little clout. The Green Party and the NDP have very similar ideas to those espoused as well. Actually, practically EVERY party will SAY they are for such things, but along the way things change. On the economic front though, I have to dispute any claims that one cause is the reason for any economy's collapse. That Argentina adopted the US dollar is not the 'cause' of a collapse, that makes no sense. In a global economy there are thousands of markets, imports, exports, and hundreds of government policies which affect these things. In a short search I have found over fifty 'causes' of the Argentine collapse from notable economists. Governments do not borrow from private banks, they raise money from either taxes or the release of treasury bills or government bonds. The interest rates on these are set by the Bank of Canada and are purchased, quite often, by banks and other institutions. The interest rate is set by the government but it weighs heavily on international markets, nobody is going to buy canadian bonds if there are safer bets and better rates elsewhere. However, I am aware of a lot of debate about monetary policies, however, a bigger point is simply that there is no debt at all. Even during the eighties when there were claims of rampant deficits this was due to the fact that government does not use Generally Accepted Accounting Principles in accounting for investments. If government used the same accounting procedures which are enforced on businesses and corporations then no government in canada ever actually had a deficit. Debts are calculated compared to GDP, and of course Canada has always had a relatively healthy GDP. More and more people are aware of this, which is why corporate taxes are being lowered so low so that GDP won't enter into the equation. We'll effectively be a feudal society where we pay exhorbitant taxes simply to support the Manor Lords.

Admitedly I am not an expert, nor an economist, but I do think monetary reform makes sense. I am posting a letter from an expert, which may help to explain in greater detail the issue. Mr. Krehm is a gentleman in his 80's, I believe and not that age guarantees wisdom, but in this case I sense it does, and I think we could benefit greatly by learning from those who have been around the block. It is long but it does explain things very well. IMO(For information only) An Open Letter from William Krehm, Editor of Economic Reform, to the Minister of Finance August 16, 2004 The Honourable Ralph Goodale Minister of Finance Government of Canada Dear Mr. Minister: Regarding your letter of June 11th to Richard Priestman, who had written to the Honourable John Gerretsen, Minister of Municipal Affairs and Housing for the Province of Ontario, suggesting that the Government use the Bank of Canada to finance a substantial amount of public capital expenditures of all three levels of government, which is still provided for in the Bank of Canada Act (18c,h). When this is done, as it was under the Federal governments right into the 1970s, the interest paid on the government debt ends up substantially with the federal government in the form of dividends. For though the Bank of Canada was founded in 1935 as a bank owned by private shareholders, in 1938 a Liberal government fulfilled its election promise to nationalize the Bank. That more than anything else made it possible not only to finance the Second World War at minimal interest charges, but to catch up with a decade of neglect and six years of war in renewing our infrastructures and assimilating a vast, mostly penniless immigration. Canada’s shame today is that our federal government claims that we cannot afford to maintain the infrastructure that the proper use of the Bank of Canada made possible to create under the most difficult conditions. On top of that, by making proper use of the central bank, Canada was able to reduce the ratio of our federal debt to our annual gross domestic product from the record 170% in 1946 to less than 20% in 1973. Those figures were obtained from the Bank of Canada Review. (Though they deal only with the funded debt, since the ratio of funded debt to GDP was being rapidly brought down, those figures probably understate the achievement if we included the unfunded federal debt). You write, “The Bank holds a portion of the Government of Canada’s debt on its balance sheet as assets to offset its liabilities of currency in circulation. If the Bank were to finance expenditures of Canadian governments, it would hold the governments’ debt as assets on its balance sheet, resulting in a significant increase in its liabilities and hence in the money supply. The expansion of the money supply would be inflationary. The resulting inflation would ultimately hurt the economy, increase interest rates and reduce the standard of living of Canadians.” This is a tangle of distortion. First of all, Mr. Minister, since double-entry bookkeeping came in some seven centuries ago, every liability incurred by anyone including our government should have an asset to balance it. Only in the event of scandals of one sort or another is this not so. However, the assets acquired fall into categories – some are for current needs, others are for long-term investment. In proposing to use the Bank of Canada as it was used for almost four decades of its existence, we are talking entirely of capital investments, not of current expenditures – of bridges, roads, hospitals, schools, and health, not of paper clips and floor-wax. Canada Year Book as Witness A nationalized central bank could provide near interest-free loans to the federal government, which would hardly be inflationary since the unemployed labour forces and the physical means are abundantly idle. It is a matter of mobilizing such wasting resources for social benefit. But to bring that to pass requires that the credit of the central government – which today is the only legal tender, i.e., the only Canadian money in existence – be available at affordable rates for essential capital purposes. This would cover the services that have been systematically loaded down from the federal government to the provinces without the funds to pay for them. The provinces in turn have passed them to the municipalities on the same impossible terms, and the municipalities have been left holding the bag. Let me refer you to a description of the facilities still in the Bank of Canada Act today, but are rarely if ever mentioned in public. Accordingly I will cite them from the Canada Year Book of 1973 (page773), along with the explanation of their purpose given in the same source. “The provisions of the Bank of Canada Act enable the Central Bank to determine the total amount of cash reserves available to the chartered banks as a group and in that way to control the rate of expansion of the total assets and deposit liabilities of the banking system as a whole. The Bank Act which regulates the operation of the chartered banks, requires that each chartered bank maintain a stipulated minimum average amount of cash reserves, calculated as a percentage of its Canadian dollar deposit liabilities, in the form of deposits at the Bank of Canada and holdings of Bank of Canada notes. The minimum cash reserve requirement, which came into effect under the legislation beginning February 1 1968, is 12% of demand deposits and 4% of other deposits. The ability of the chartered banks as a group to expand their total assets and deposit liabilities is therefore limited by the total amount of cash reserves available. An increase in cash reserves will encourage the banks as a group to expand their total assets (which consists chiefly of loans and marketable securities) with a concomitant increase in their deposit liabilities; a decrease in cash reserves of the chartered banks will bring about a decline in their total assets and deposit liabilities as they seek to restore their cash reserve ratios. “The chief method by which the Bank of Canada alters the level of cash reserves of the chartered banks over time, and through them the total of chartered bank deposits, is by purchase and sale of government securities. Payment by the central bank for the securities it purchases in the market adds to the cash reserves of the chartered banks as a group and puts them in a position to expand their assets and deposit liabilities. Conversely, payment to the central bank for securities it sells causes a reduction in the cash reserves of the central banks and requires them to reduce their holdings of assets and deposit liabilities. “The influence the Bank of Canada exerts on credit conditions (i.e., on interest cost and other terms of borrowing in financial markets) stems from its ability to limit the growth of bank credit and of the community’s holding of bank deposits and currency.” In short, at the time this and similar passages in later Canada Year Books were published (right into the latter 1980s), it was not only the Bank’s benchmark interest rate that was used as ‘the one blunt tool’ to enforce a supposedly self-balancing market, but the ability of the central bank to expand or curtail the power of chartered banks to create further credit. Indeed, official dogma is that banks do not create credit as a multiple of the base-legal tender, i.e., federal debt, they hold, but rather merely act as intermediaries of what they themselves borrow from the market. What Happened to Zero Inflation? You write: “That is why the Bank of Canada and the Government of Canada agreed in 1991 to adopt an inflation-targeting regime. The target range was reduced to between 1 and 3 percent and was extended several times...” That is being less than frank; the goal dictated by the Bank for International settlements was “Zero inflation,” and the attempt was made by the Mulroney government to put that in the constitution. Only the refusal of the finance committee caucuses of all three major parties stopped that. The Bank of Canada under Governor John Crow was preaching the nonsense that if the slightest amount of price rise were tolerated, it would end up as the sort of hyperinflation that hit Germany in 1923. But Germany had lost a war, and the French army occupied its industrial Ruhr heartland to exact reparations for that war in strong currency that Germany did not have. What ensued was a general strike and virtual civil war. To suggest any similarity between that hyperinflation and the slight amount of price rise in the 1990’s was charlatanry. What was targeted in 1991 was not a goal based on any serious economic theory, but the interest of the speculative finance capital that had gambled and lost big in the 1980s in gas and oil, in real estate like London’s Canary Wharf, and builder Robert Campeau’s sudden passion for collecting merchandising chains in the US. In 1991, with neither debate or even explanation in parliament or the media, the government began phasing out the statutory reserves that were described in the 1973 Canada Year Book and as the very essence of controlling inflation or deflation as the need may arise by encouraging or discouraging the chartered banks to create more or less credit without shooting down anything that moves in the economy. Toward the end of 1990 the Bank’s benchmark interest rate rose to 14.5%, which means that businesses were paying rates in the mid-twenty percent rage. In addition to helping to bail out overstretched banks throughout the Western world by the phasing out of the statutory reserves, the Bank for International Settlements’ Risk-Based Capital Requirements had already declared the debt of the developed (OECD) countries to be risk-free, requiring no additional capital to acquire. Between these two measures, Canada’s overstretched chartered banks were able to take on another 60 billion dollars worth of federal debt without putting up any money of their own. And that was not just capital that they were relieved of having to put up, but cash. Banks raise their capital as cash, but leave no more of it in that form than is strictly necessary because cash is lazy, sterile money that earns no return. A return to the use of the Bank of Canada for municipal and provincial financing, with an arrangement for the provinces and municipalities to get some of the interest that would end up with the federal government, could serve to get agreement on the adoption of federal standards and head off the eternal bickering between Ottawa and the provinces.

It's a nice history lesson, but hardly what I'd call an argument, and certainly doesn't address what we know these days about economics and monetary policy. For example, he doesn't actually address the problem with the expansion of the monetary supply. Instead he takes us to some straw-man argument about liabilities and assets balancing each other out. This is completely orthogonal to the problem of inflation that the response mentions. Inflation doesn't require an imbalance between assets and liabilities (which is what he's implying) so saying that because this imbalance doesn't happen there's no inflation is poppy-cock. The simple fact is, when the government creates money for the nation as it thinks is needed, unless you have an *exceptionally* prescient and disciplined government, you're going to run into problems.

I sort of kind of agree, but admit that I'm out of my league here. The growth of monetary supply has 'reflated' according to many american economists, for reasons which none seem to agree on. In Canada, this seems to be combining two issues into one. First,I think the point is right on (though I could be mistaken) that banks have in effect been given a license to print money. However, the reason I think is because of the changes to regulations in the eighties wherein banks didn't have to keep hardly any cash reserves for loans they distributed. So in effect the bank could loan out 'X' amount of dollars with no fear that there would be a run at the bank, since that regulation changed as well-they could simply shut their doors. Then they were free to invest their own funds in whatever way they saw fit. We saw this happen with insurance companies, whose rates went up because their international investments weren't paying off (they even admitted this). What that did was free up the banks. There have been many commentators pointing out that the chief money maker of our economy has been housing, the banks are much more free to lend money since they don't need the money in reserve. They only need enough to cover the few who sell their homes and don't want another mortgage. This drives a large sector of the economy, and I would suggest keeps it afloat. I do agree with the various party's positions, however, in a global economy I question the wisdom of saying to world markets 'we've decided to do things differently'. I think there are dozens, if not hundreds of policy decisions that can be changed before such drastic action is needed. Coming from the maritimes perhaps I'm 'closer' to the vagaries of capitalist markets and the power they wield. It's not by chance that the Antigonish Movement worked 'within the system' to better peoples lives. If we are the mouse sleeping next to a sleeping elephant then surely we are the mouse sleeping next to a blue whale in globalizations eyes. There are plenty of ways to stay 'under the radar' rather than standing up and throwing rocks and people who could easily squish you. As I said previously, if the government merely adopted generally accepted accounting principles and stated as much in its documents, the 'deficit fears' would be over.