Pen Meets Paper June 1, 2009

Opinion by Helge Nome
What happens if there is no money or credit available to a lot of people? What would happen if the government of the day were to refuse to dole out unemployment or welfare payments to those that had no income?
There would obviously be riots with unpredictable consequences. So as long as there is a government of sorts, money would be made available, in one form or another, to prevent anarchy.
Somalia is a case in point. Without a functional government, a good number of former fishermen have turned themselves into pirates on the high seas and are effectively ruling parts of that country by using the wealth they have acquired by their daring off shore behavior.
How does a government get its hands on money when it is needed? Especially when the stuff has suddenly become scarce, as is the case today. The universally accepted method is to go to somebody, like a big bank, and borrow the stuff at interest. The assumption being that this bank has vaults full of money that is available for lending. That is what the common man generally believes, and has been subtly made to believe all his life. So if we were to march into the vaults of the Bank of Canada we would expect to see a lot of money, maybe even gold?
It wouldn't be worth the trip. The only money in the Bank of Canada is to be found in the petty cash tin, used to buy coffee for the staff, etc.
How about the International Monetary Fund. Surely they would be loaded? How else would they be able to prop up a bankrupt state like Iceland? And save third world economies? Just the Petty Cash tin again. This is very disappointing. Whatever happened to Uncle Scrooge McDuck? He used to have a whole barn full of money.
Hey, that may be where our misconceptions come from. Walt Disney, YOU Are In Trouble! All this time we have believed that banks have vaults full of money. And it is a bunch of baloney!
So how does the Government of Canada get its hands on money to keep people from starvation and rebellion? If nobody has any money in their coffers, how is it possible to get a hold of the stuff and give it to people that are in need?
That's were magicians come in handy. Abra Cadabra, and there you are, pigeons or money, it is all the same to a magician. All that is required to make it work is that we believe in the magic.
Therefore, when everybody finally go running to the International Monetary Fund folks for money, all they have to do is to hire a good magician and he will produce all the money anyone could ask for, at a good rate of interest, of course.
The question is, why couldn't the Bank of Canada hire its own magician?