Pen Meets Paper May 17, 2010

Opinion by Helge Nome
We are now about to enter a predictable and very painful stage of the “Great Recession”. Reckless spending and speculation in the private sector initially created a sense of panic resulting in massive bailouts of private financial institutions by governments across the world. That meant that the financial junk created by financiers, laying claim to have some kind of value, was exchanged for good money by politicians directly connected to these same financiers. Fraud was committed on a grand scale.
The next stage in this crisis is that governments that issued bonds and borrowed in order to raise money to pay for all the private financial junk are no longer able to make payments on that debt without incurring new debt at an ever higher interest rate. It is a self destructive process that feeds on itself.
What is the other alternative? You guessed it: Raise taxes and cut government services in order to feed the debt monster. And that monster is precisely the same one that created the problem in the first place. If we comply and keep feeding this monster it will eventually consume us, beginning with the most vulnerable.
Here in Alberta, Canada and the world generally, there will be massive cuts in government spending as the option of raising money through bond issues, or borrowing, gets increasingly costly. A sovereign nation has the legal ability to simply print its own fiat money and exchange it for outstanding bonds, but that has a net effect of increasing the total money supply and so decrease the value of each monetary unit (inflation). Those on fixed incomes and those with savings are the big losers here. There is no easy way out. We are really going to feel it now, just like our parents and grandparents did in the thirties when the catch cry was: ”There is no money!”
However, every problem has a long term solution. As a nation, Canada needs to become economically self sufficient and produce most of the goods and services required by its people. The nation’s money supply can then be regulated by the publicly owned Bank of Canada to match the goods and services available without anybody going hat-in-hand to a bunch of crooked money lenders that have fraudulently hoarded the nation’s money into their own possession.