My 2020 VISION

January 2016
Our dollar is less than US $0.70

Is this our Canadian money by 2020?

A Hundred years ago, in 1916,we were halfway thru a world
war, and four years away from the ROARING 20's
The Economic Boom of the '20's was a healing salve for the
aftermath of the Great War and the Spanish Flu Epidemic
Will 2020 be the start of an era of prosperity for Canadians?

The Liberal's new deal for canada:

But first, I need to tell you,

this is NOT Government nor partisan propaganda!
I am not a member of any political Party, and although it doesn't really
matter, I didn't vote Liberal in the last election.
I DO suggest you read this, because....

Mr Trudeau told us it was time for CHANGE...

and HE WAS RIGHT!

Take the time to read this idea thoroughly because, if we can get our
Government to implement it, it will CHANGE EVERYTHING!
I call this my 2020 Vision because, for me, it is a matter of clarity.
We need a clear plan for the change we want to see. Like it or not, Mr
Trudeau is with us for 4 years, which takes us to 2020, and this proposal
could mean a rosy future for Canadians.
Read it! Talk about it! If you agree, Let's DO it!

Its the song of the century, isn't it?

Not enough money for Healthcare
Not enough money for Schools
Not enough money for Roads and Infrastructure
Not enough money to pay the National Debt
Parents can't afford good food for their children
Students can't afford College or University education
Seniors can't afford proper housing, care or nutrition

IS THE PROBLEM A LACK OF MONEY?

It's on the news and overheard in coffee shops everywhere:
Governmental Debt is due to overspending, waste, poor management,
yada yada yada. If we only had enough money.
Everyone dreams of winning the lottery, not because they believe
that it would solve everything, but because they are daily bombarded
with situations that scream,

Mo Money!
Today thousands of Canadians are jobless, and even homeless because of lack of money.
Teachers are unemployed while class sizes balloon and special needs classes are cut due to
lack of funding. Nurses and medical professionals, computer programmers, many of our
brightest and best migrate South, meanwhile patients pile up in the hospital hallways, tech
companies are starving for programmers or being bought up by international conglomerates.
Businesses go bankrupt, families are rent asunder, seniors are mugged for their meager
pension cheques. Parents turn away from produce aisles where heads of cauliflower and
broccoli are priced beyond their food budgets opting for cheaper but nutritionally bankrupt
choices. How many of us can afford a $45 roast of beef, or a $17 chicken?
It certainly SEEMS like there is a lack of money, but in a global market, Canada cant just mint
more loonies and hand them out because that would simply devalue our dollar even more than
it is.

INFLATION is a condition of TOO MUCH MONEY.

The truth is, theres lots of money around.
The problem is with circulation.

But that's the problem isn't it? If you and I don't have any money, we can't spend it. So how can
we get the money moving if it isn't in our pockets to begin with? And how can we put more
money in your pocket without causing more inflation?
If you know your history, you'll recall that in Italy, post 2nd World War, inflation was so bad
that people were burning money because it took a wheelbarrow full of money to buy a half a
wheelbarrow full of firewood!

I know some of you think the solution is to call for a collapse of our monetary system and to
start over again, but that would likely result in a level of chaos we would not choose to suffer.
Is there as way that we can save ourselves and our country without throwing the baby out with
the bathwater?
Recently in Greece... the Greek citizens had to suffer frozen bank accounts, and watched as
their money was taken away to pay for the actions of a bankrupt Government. That's not what
we want for Canada.
In 2008, the Wall Street tumble almost destroyed the US and threatened to take down the
entire world economic system. The bailout package that averted that tragedy is still ongoing.
Billions of money had to be poured into the system to prop it up.
Now, think about this. If the US Government had used that money to pay the mortgages of the
families who were losing their houses, instead of bailing out Wall Street, the banks would have
still got the money. The only real difference would have been that those families wouldn't
have lost their homes. And they'd be buying new cars with their no-longer-required mortgage
payments. Having disposable income is crucial to a healthy economy.
So a successful 2020 Vision has to be one that increases spending rather than the current belttightening Scrooge economy that we are used to.

But it has to be done in a way that doesn't increase

inflation or lead to a BUST like the 1930's or 2008.
In the last great days of the Roaring Twenties, production was up, automation and the success
of the industrial revolution was turning the world on its ear. Suddenly, energy was
everywhere! The petroleum industry and the internal combustion engine had liberated us from
the lumbering steam era, and electrical wires were spreading across the continent like a
spiders web carrying the hum of production with it. Warehouses were filling up with tables
and chairs, beds, shoes, radios, stoves, fridges, pots, pans, mowers, chewing gum and
breakfast cereal.
Production was outstripping demand because North Americans had not yet fully embraced the
consumerism mind set. They were still preoccupied with doing without, making do, and saving
their money. The result was disastrous. With the warehouses full, factories began laying off
their workers. There was no such thing as unemployment insurance, and with their wages cut
off, saving money for a rainy day seemed even more important and the belt tightening got
more severe. Less product sold. More layoffs. People began to fear that their money might not
be safe in the banks, and they were right! The banks had loaned that money out to industry
and the now infamous run-on-the-banks scenario ensued.

The Crash of 29 was felt round the world.

Was there a shortage of money? No. The money just stopped moving. The Grocer wouldnt hire
the Carpenter, and so the carpenter couldnt buy the grocers products. When money moves,
everyone gains, including governments. When it stops, well... you might get a decade of
widespread poverty.
The 30's was a terrible period for mankind. Most of the people who lived through it are now
dead, but they NEVER forgot it.

We can't afford to forget that lesson either.

It was, however, the birthplace of consumer credit as we know it today. Consumer credit got
things moving again and Roosevelt's 'New Deal for America' put people back to work building
and rebuilding America's infrastructure. They built the entire Interstate Road Network under
this program. Its worth noting that the US did NOT go to the private banks and borrow money
for this recovery.
Prime Minister Trudeau wants to put Canada to work too, building and rebuilding our aging
Infrastructure, but sadly, he intends to increase the National Debt to do it.

The Liberal's new deal for canada

Can rebuild our country, kickstart our economy and usher in a new
era of prosperity without adding to the National Debt

Four Important facts:

1. Our Government needs money to operate. Under the present system, either we pay
for it through taxation, or the Government borrows it.
Although we often curse it, few would argue that we could function in our modern
society without Government. It provides us with the socio-economic structure that we
rely on: our health care and education systems, our legal and police systems, roads and
infrastructure, rules and regulations. We all contribute something to the process
through one or more forms of taxation, with everyone sharing the cost of public
facilities and services.
For decades, our tax revenues have fallen short of enough and our Government has just
put the balance on our National Credit Card, never paying it off, and constantly asking
for a higher credit limit. It has to stop. We MUST pay this debt down.
2. Income tax is taken off your cheque before you get your hands on it. This takes the
wind out of the sails of our economy.
The largest and most identifiable, and most reviled tax is Income Tax. It is responsible
for reducing your spending power by 20 to 50% or more! Canada Revenue Agency knows
they have to collect at source, or they would have a helluva problem collecting it
later. The real negative is that taking this money off the top is very depressing to our
economy.
3. Mortgage interest is the second most offensive player when it comes to reduced spending
power. Mortgages can demand up to 40% of a family's monthly budget.

Whether you are a homeowner or rentor, you pay mortgage interest. It touches everyone and
everything we do in the marketplace. Anyone who has a mortgage pays vast amounts of money
each month in interest. Renters are indirectly paying their landlords interest.

4. Sales Tax is collected when money is spent. A Boom Economy is a bustling marketplace
where everyone is earning and spending money. Reduction in spending is a road to destitution
for people, provinces, and countries alike. Like a tree, an economy is either growing, or it is
dying.

If we could rid our monthly budgets of either Income Tax or Mortgage Interest, the
effect would be astonishing! Our economy would flourish because...

Canadians would have more money to spend!

The average Canadian family would have an extra $600 to $1000 a month!

But how can we accomplish this?

To understand my 2020 Vision, we have to do the math:

John Q. Canuck works as an electrician, he has 2 children, a car, a truck and a house.
Gross yearly earnings:
Allowable deductions
Taxable income
Yearly income taxes
Mortgage
Mortgage Interest @5%

$80,000
$24,000
$56,000
$14,400
$280,000
$14,000

Under the present system, his monthly budget is roughly:

Item
Amount
Gross Wages
$6,666
Income Tax
$1,200
Deductions(EI, CPP, etc.)
$ 466
Mortgage Payment
$1,450
Bank loan, credit card payments
$1,800
Food, clothing, utilities
$1,200

Balance
$6,666
$5,466
$5,000
$3,550
$1,750
$ 550 (disposable income)

At $550, the margin of money left over is slight, but John keeps his head above water, most
of the time.
Each month, John contributes $1,200 in Income Tax as his share in the cost of running the
country. But at this rate, the Government is slipping further into debt, and the interest on this
debt eats up most of his tax dollar. Still, if the Government were to ask him for an extra
couple of hundred bucks a month to help retire this debt, hed be reticent to agree since
money is already tight for him.
In our last election, we gave Mr. Trudeau and his Liberal Government a clear majority, and
one of the main planks of his platform was increasing the National Debt for much needed
Infrastructure spending. Compounded by our falling dollar and failing economy John Q.
Canuck's future looks pretty bleak.

MR. TRUDEAU PROMISED US CHANGE.

HOW ABOUT THIS?
In my 2020 Vision, the Government becomes the sole provider
of first mortgages on primary residences.
This creates a new source of income for Government: the interest on these mortgages.
Each Canadian would have two ways of contributing to the social structure:
1. Income Tax
2. Interest on his home mortgage

The Liberal's new deal for canada

If John was paying his mortgage interest to the Government instead of a private bank, in the
example above, he would be contributing $14,400 Tax and $14,000 interest. Good for the
Government, but it doesn't give John any more money to spend.

REMEMBER, increased disposable income is GOOD FOR THE ECONOMY.

There is a way to make this work for John too!

First, the mechanics:
Lord knows we don't need another Government agency, after all, the private banks already
have everything in place for handling mortgages so they can continue to do this service and
the Government will pay them for it.

And we are going to INCREASE JOHN'S MORTGAGE RATE by 2.5%

(don't have a heart attack John, keep reading!)
Gross yearly earnings:
Allowable deductions
Taxable income
Mortgage
Mortgage Interest @7,5%

$80,000
$24,000
$56,000
$280,000
$21,000

In the first example (previous page), John was only paying $14,000 in mortgage interest, but
he was also paying $14,400 in Income Tax, a total of $24,400.
Under the New Deal, because the Government is already receiving $21,000 in interest on his
mortgage, John isn't required to pay ANY income tax. His contribution to running the country
has already been satisfied. Therefore, Johns monthly budget looks like this:
Item
Gross Wages
Income Tax
Deductions(EI, CPP, etc.)
Mortgage
Bank loan, credit card payment
Food, clothing, utilities

Amount
$6,666
$
0
$ 466
$ 2,050
$ 1,800
$ 1,200

Balance
$6,666
$6,666
$6,200
$4,150
$2,350
$1,150 (disposable income)

That's an $600 a month increase in John's disposable income! The Government is collecting

$21,000 from John, of which they pay $2800 (1 of the 7.5%) to the bank for administration. The net
result is a contribution from John of $19,200.
My 2020 Vision gives John more money, and gives the Government an extra $5,200 per year.

There are an estimated 15 million households in Canada. That means the potential
increase in annual revenue could be as much as a whopping $78 Billion!

$78 Billion!

IS IT TOO GOOD TO BE TRUE?

Will the banks suffer from the loss of revenue currently provided by the mortgage market?
Well, remember, John now has an extra $600 per month of disposable income which makes
him eligible for more consumer credit which typically carries a higher rate of interest than
mortgages do. John will probably want to buy that boat or RV hed dreamed of, or maybe even
that summer cottage, and since the Vision 2020 Solution only affects his primary residence
mortgage, the bank will still be the lendor for John's new car and other purchases, as well as
commercial and industrial mortgages etc., etc.
Increased spending power in the hands of millions of Canadians will bolster the economy so
much that new businesses will spring up and thrive. Unemployment will become a non-issue.
The construction industry will go through the roof. Landlords will still pay both mortgage and
taxes (Remember, the interest=taxes Solution only affects primary residence mortgages for
tax-paying Canadians) Since renters must pay rent and income tax, they will automatically
want to own a home but will they be able to buy??
Does this place an unfair burden on renters? Maybe not. Using the Vision 2020 Solution, if a
young couple who rent decide to buy a house, their disposable income is actually increased.
Eligibility for mortgages is based on ability to repay... based on their net income vs expenses.
Because the Vision 2020 Solution removes all or most of the Income Tax from the picture,
their Net Income is actually increased, and people who do not qualify for a 5% mortgage
today, will qualify for a 7.5% tax/mortgage package once Vision 2020 is implemented.
Rental slums will disappear. Families will renovate or purchase new homes.
A booming economy means an increase in GST and provincial tax revenues such as sales tax,
etc. which will bolster the school and hospital funding processes, offering better facilities and
jobs to our talent resources. Besides, the mortgage/taxes opportunity is so attractive, that our
young people will want to come live in Canada, eh!

Some common doubts:

1. Yeah, but where will the Government get the money to loan out in the first place? Won't
they just have to borrow it from the banks?
The answer is NO.
Banks don't have the money they loan out to you, it's just numbers in an electronic ledger.
When you sign mortgage papers for $300,000, that money magically appears in your bank
account right out of thin air, and when you make your mortgage payment each month, the
principle portion of the payment goes right back where it came from: poof, disappearing into
thin air again. Only the interest is retained by the lender.
That practice is how inflation is controlled. If you don't already know that, research it
yourself. It's a fact. So the Government does NOT have to borrow money in order to lend it to
you. No increase in debt, and no inflation.

2. The banks will never give up their monopoly on Primary Residence Lending!
Really? Then let our politicians tell us that to our faces. Let them tell us that our Government
is powerless to pass legislation governing the operation of private lending institutions in this
country. Let them admit the truth about who REALLY runs Canada!
What
What
What
What

are
are
are
are

your
your
your
your

doubts?
objections?
questions?
hopes?

Tell me! Tell each other! Tell our Government!

The important point is to get a discussion going! When the buzz gets loud enough, maybe Mr
Trudeau will hear.

He says he's listening.

For discussion, email me: rj-baker@shaw.ca