The only way new money goes into circulation in Canada under this system is when someone borrows it from a Banker. When people are confident of success they borrow much money, which increases the money supply and all seem to prosper for a while. Then as they pay off their loans, the available money supply shrinks rapidly, and money becomes "scarce". Since they must always take more out of circulation than they put in (because of interest and other charges), only other people borrowing still more can keep a medium of exchange available to the country. An example will aid our understanding:

IF $40,000 IS BORROWED:   $126,432 MUST BE PAID BACK

When a citizen goes to a Banker to borrow $40,000 to purchase a home or a farm, the Banker's clerk first requires the citizen to assign to the Banker the right of ownership of the property if the borrower is unable to make the payments. The Banker's clerk then gives the borrower a $40,000 check, or he signs a $40,000 deposit slip crediting the borrower's checking account with a $40,000 deposit. The borrower in turn writes the necessary checks for the builder, seller, subcontractors, etc. (who in turn write checks), thereby putting $40,000 of "checkbook money" into circulation. However, on a 30-year mortgage with 15.25% interest, the Banker wants $498.97 a month paid to himself or a total of $179,292. The buyer must take that $179,292 out of circulation, making the amount in circulation $139,292 less than when he purchased the home.

The Banker has not produced anything of value (except the slip of paper called a check or a deposit slip), yet he now has $139,292 more than he had before (minus a few hundred dollars of clerical and office costs) and the people, as a whole, have $139,292 less.

Small loans are disastrous too

For those who haven't quite grasped the impact of the above, let us consider a small auto loan for only 3 years.

Step 1 :  Citizen borrows $3,000 and pays it into circulation (it goes to the dealer, the factory, the miner, etc.) and signs a note agreeing to pay back to the Banker $3,600.

Step 2 :  Citizen continues to work and pays $100 per month to the Banker. In 36 months, he has taken $3,600 out of circulation and paid it to the bank, where it remains until someone else borrows it out again. Net result? $600 less money in circulation than before he made the loan. Since money requirements, as is well known, INCREASE with increased population and production, and paying off any loan DECREASES the available supply of money, it is obvious that we would quickly run out of money completely UNLESS MORE AND MORE PEOPLE BORROW MORE AND MORE MONEY TO KEEP MONEY IN CIRCULATION!

The cost to them?  Practically nothing

In the tens of millions of transactions made each year like those above, little actual money changes hands, nor is it necessary thta it do so. 95% of all "cash" transactions in Canada are by check, so the Banker is perfectly safe in "creating" that so-called "loan" by writing the check or the deposit slip, not against actual money, but against YOUR PROMISE TO PAY IT BACK!  The only cost to him is the paper, ink, and a few dollars in salaries and office costs for each transaction. It is "check-kiting" on an immense scale.

This means that the banks get this money for only the cost of issuing this credit and the bank's expense of cancelling out the cheques. They do not pay depositers a share of this interest as the Credit Unions do.This means a tremendous profit on the first use of this money.

This benefit should go to the people of Canada rather than to the private banks.

This is how 95% of our money is created. The private banks create a bank deposit against which the customer can write cheques. These cheques move goods and services the same way as dollar bills. The amount of real money in Feb 1980 was $8,952,000,000 in dollar bills. The amount of bank deposit cheque money was $135,345,000,000 and there was approximately 14 times as much chequing money as there was real money (dollar bills).