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 a decade of prosperity for Canadians?

YES, IT CAN BE!

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 you and I.
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 only we 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, 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.

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 a
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
dollars 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 runon-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.

Is there a NEW DEAL for Canada?

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

YES!

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 renter, 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...

You and I 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 the 2020 Vision plan, 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
Gross Wages
Income Tax
Deductions(EI, CPP, etc.)
Mortgage Payment
Bank loan, credit card payments
Food, clothing, utilities

Amount
$6,666
$1,200
$ 466
$1,450
$1,800
$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 NEW DEAL for CANADIANS

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 a $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.
The Vision 2020 Solution, 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 lender 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 decides 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. Its 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 are your doubts?
What are your objections?
What are your questions?
What are your 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 Robert @ rj-baker@shaw.ca