Saturday 24 May 2014

Blog 10 May 11, 2104 - Farming is at the heart of our economic problems and solutions - Parity is a viable solution.

Blog 10 May 11, 2014  
Farming is at the heart of our economic problems… and our economic solutions – Part 2 This is the story

To repeat: The current conundrum is that 50% of the people in Nova Scotia work for the government. This does not create wealth.  Of the remaining 50%, 25% cannot work because they are either too young or too old to create wealth.  Of the remaining 25%, supposing 5% cannot work for whatever reason, this leaves 20% to create the wealth to run Nova Scotia. This 20% is diminishing. Parity and agriculture can create wealth. Thus this is the story of Parity.

At the beginning of WWII, Wilken, who we mentioned before, went to congress.  He warned them that the USA would go bankrupt and loose the war if they did not have a means of paying for the war. Few believed him, however, he did convince the committee on banking and currency that agriculture provided 70% of the new wealth into the economy, and that agriculture could finance the cost of war.  So they drew up what was called the Steagall Amendment (see some links below) which guaranteed farmers PARITY. To insure that congress would not veto the amendment, they attached it to the National Defense Act. People were led to believe that war brought prosperity when in reality it has always been agriculture, and the other three basic resource industries, that foster economic prosperity. Historically, the farmers at the beginning of the 1900s were the bankers of  the local area.
What is happening now?

At the end of the war, as industry the world over converted from military to domestic needs, everyone prospered. People paid off their debts, very few were borrowing, and at that time the banks were only lending 37.5% for each dollar deposited. (Now the banks only keep a small amount (in more recently years I believe the rule has been 5-7 dollars for each $100.00; this means the banks have no money in the bank and nothing in reserve.)  That is when bankers said, “Look we have to take the fat away from the people.  There is too much prosperity.  We have got to force people to borrow more money from the bank.” And they have done just that.

Banks planned, thus to short change the monetary system.  If  fair prices to producers of new wealth brought prosperity to the nation, than the opposite will force a down turn of the economy.  Since agriculture provides 70% of the new wealth into the economy each year, that became the target industry to undermine.  In 1953, the bank lobby scuttled the Steagall Amendment.  Government switched to a sliding scale where by farmers would only get 90% of Parity. The next year they would only get 90% of 90% and down and down each year.  Farmers  were put in a position to borrow from the banks to cover lost income. Pretty soon it backed up the entire system until every segment of society was borrowing money. When the plot to scuttle agriculture was set in motion in 1953, that created the current situation now known to be the most fantastic debt infested economic situation the world has ever known. We have a global condition of government debt, business debt and people debt all because farmers were denied a fair price for their produce, and of course now, we have very few farmers left.

If you are still puzzled about farming parity, and its relationship to the economy, if you still wonder what this  has to do with employment and debt, just take a look at one piece of equipment the farmer buys and how it affects others: tractors.

In the last 30 years we have lost 300,000 Canadian farmers.  If they had remained in farming, each of them would most likely have bought a tractor about every 10 years. That means that there were 900,000 tractors that were never sold.  That represents millions of dollars that no farm equipment dealers earned one penny of profit on, the servicemen would not had them to service, no railway men or truckers moved them, no working man in any factory received a salary for building them.  It represents 3,600,000 tractor tires that no rubber company was able to provide.  It represents 900,000 tractors’ worth of steel that no steel company received a penny for producing. It represents tons and tons of iron ore that no miners ever mined.  Then, there were all the office workers, advertisers, sales people and so on who lost jobs.  All of this represents business, work, wages, profit and earned income that was gone, gone because farmers did not receive a fair price for their product. And of course now, we have to look at pension plans and realize that future generations may have no pensions at all. 

Here is a different example of how far far away from parity we have deteriorated. In 1973, 9300 bushels of corn would buy a large combine.  In 1983, it took a farmer 25,000 bushels of corn to buy the same sized combined. If Parity had remained in place, the farmer would still be able to buy a combine for the equivalent of 9300 bushels. Do a little calculating and you will be amazed at how this works out in bags of potatoes, litres of milk, pound of pork, etc. Society and government have lost touch with realities of where new wealth comes from, how vital it is, and how it will restore us back to national prosperity.  However, new wealth alone is not the answer. Parity prices on new wealth is the answer.  (Parity price = fair price for product.)  Agriculture is the backbone of the economy and farmers are the backbone of agriculture.  No longer can farmers go to the market place with nothing more than hope that they will be paid a fair price.  Farmers are the only people who have not joined the human race in putting the price on the product and a price on their labor. What should be the price of their labor? (will be addressed later in a blog

Any mathematician or economist studying the workings of any economy will discover that whenever farm income goes down, unemployment goes up.  For every 1% increase in interest borrowing rate 10,000 people become unemployed. We can no longer as a nation, or province, or as individuals borrow ourselves out of debt, you cannot borrow yourself out of debt. Parity will help create a better balanced world and a peaceful world. Do we want this? Or do we do nothing and let our world collapse.  PARITY – THE KEY TO NATIONAL ECONOMIC PROSPERITY.

Next blog – questions and answers about Parity.

Link re Steagall Amendment:

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