Why is Canada En­rich­ing Bankers at the Ex­pense of its Peo­ple?

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In 1938 the Bank of Canada was pub­licly owned. Its char­ter re­quired that it lend money to the fed­eral govern­ment and prov­inces. The fed­eral govern­ment bor­rowed money at zero in­ter­est, while oth­ers bor­row­ing from the bank paid in­ter­est that was re­cap­tured for the pub­lic.

The bank was not al­ways op­er­ated that way. It was pri­vately held for the first four years of its ex­is­tence. In 1938 the govern­ment na­tion­al­ized it, in part to re­spond to the Great De­pres­sion, which gripped North Amer­ica like a vise.

Be­tween 1938 and 1974, the bank served as the pri­mary lender for the Cana­dian govern­ment. It pro­vided debt-free funds to pay for in­fra­struc­ture to lift the coun­try out of the De­pres­sion, sim­i­lar to how the U.S. govern­ment in­jected money into its Works Progress Ad­min­is­tra­tion pro­grams to pro­vide jobs when none were avail­able any­where else.

Dur­ing World War II, the Bank of Canada was the source of money for Canada to take on its big role in the war. It helped pay for the cre­ation of the third­largest navy in the world and Canada be­com­ing the fourth-largest sup­plier of Al­lied war matériel. Af­ter the war, the same bank paid for pro­grams for vo­ca­tional train­ing, univer­sity ed­u­ca­tions and even sub­si­diz­ing the re­build­ing of the coun­try’s farm­ing in­dus­try.

For the fol­low­ing 30 years af­ter the war, the bank – as the coun­try’s lender and cen­tral bank – made it pos­si­ble for Canada to do amaz­ing things: The Tran­sCanada High­way, the St. Lawrence Seaway, ma­jor air­ports and sub­ways in key metropoli­tan ar­eas were all made pos­si­ble thanks to the bank. It also helped es­tab­lish things like Medi­care, free health care, pen­sions for se­niors, the build­ing of uni­ver­si­ties (and spe­cial project fund­ing for them), re­search cen­ters and fam­ily al­lowances.

The money the coun­try bor­rowed was also in­ter­est­free. What that meant was all this was created with min­i­mal fed­eral debt. Crazy as it may sound, be­cause of this fi­nanc­ing ap­proach, the govern­ment changed the lives of its cit­i­zens with only an $18 bil­lion debt as of 1974. That debt was also vir­tu­ally un­changed since 1867, 107 years ear­lier.

For a coun­try twice as big as the United States and with one-tenth the pop­u­la­tion, hav­ing ac­cess to debt­free fund­ing en­abled Canada to be­come one of the best, most liv­able coun­tries in the world at a frac­tion of what it would have cost oth­er­wise.

De­spite the vast dis­tances be­tween Canada’s com­mu­ni­ties and its widely dif­fer­ing cul­tures and lan­guages, the de­vel­op­ment made pos­si­ble with the debt-free fund­ing set a tone of unity, pride, courage

and op­ti­mism that res­onated across the great land and in­vig­o­rated com­mu­ni­ties. It touched the hearts, minds and souls of ev­ery Cana­dian.

Flash-for­ward to 2017. Dur­ing the 43 years since 1974, that fed­eral debt has spi­raled to $728 bil­lion. The com­bined fed­eral and pro­vin­cial debt in 2017 was $1.4 tril­lion. What hap­pened is not out-of-con­trol bor­row­ing by the govern­ment. And the bank did not change ei­ther – at least, not by it­self. What hap­pened in­stead is that in 1974 the cor­rupt govern­ment of Pierre Trudeau de­cided to cut back its bor­row­ing of money from the in­ter­est-free Bank of Canada. It shifted in­stead to bor­row­ing from char­tered banks and be­gan pay­ing in­ter­est on the loans in order to en­rich a pow­er­ful in­ter­na­tional elite and dis-em­power the na­tion.

It is es­ti­mated that roughly 90% of the to­tal 2017 debt of $1.4 tril­lion is from com­pound in­ter­est charged by the char­tered banks on the loans. Un­like the Bank of Canada, the char­tered banks keep the in­ter­est pay­ments. They also con­tinue to lend at rates de­signed to make profit for them­selves, some­thing which was also not a re­quire­ment for the Bank of Canada. All it needed to do was keep from go­ing un­der while han­dling its own debt.

One of the rea­sons for this change is that in 1974 the se­cre­tive Bank for In­ter­na­tional Set­tle­ments formed the no­to­ri­ous Basel Com­mit­tee with the pur­ported goal of main­tain­ing global mon­e­tary and fi­nan­cial sta­bil­ity. At that time, the world – and Canada in par­tic­u­lar – was suf­fer­ing from what was called “stagfla­tion.” It was a dreaded pe­riod of high in­fla­tion, slow eco­nomic growth and high un­em­ploy­ment. The Basel Com­mit­tee, of which Canada was a part, was rec­om­mended as a solution for stagfla­tion to en­cour­age gov­ern­ments through­out the world to stop bor­row­ing from their own pub­licly owned banks and in­stead shift to pri­vate banks for their fund­ing. They would also pay in­ter­est to those pri­vate banks.

The flawed logic be­hind the shift was the dogma that pub­licly owned banks – es­pe­cially ones op­er­at­ing with­out col­lect­ing in­ter­est – tended to in­flate the mon­e­tary sup­ply, with prices flowing up­wards too. The the­ory was that pri­vate banks only re­cy­cle ex­ist­ing money.

That logic was dead wrong, as the ex­act op­po­site is re­ally what hap­pens with pri­vate banks. They loan money, col­lect in­ter­est and then set at least some ma­jor part of that in­ter­est into self-con­trolled cap­i­tal accounts. The ef­fect is to con­tin­u­ously strip out ma­jor parts of the pri­vate bank lend­ing pool and take it away from the coun­try’s econ­omy. If the banks need more money, they just ad­just their in­ter­est rates and ef­fec­tively “cre­ate” more money – in direct con­trast to the the­ory of the Basel Com­mit­tee and the Bank for In­ter­na­tional Set­tle­ments.

This has left the coun­try sad­dled with so much debt that it will not dig out from un­der the fi­nan­cial mess for gen­er­a­tions – even if the econ­omy is soar­ing.

Be­cause so much of Canada’s wealth is now be­ing given to banksters, the coun­try has gone from be­ing an op­ti­mistic one to one with fail­ing in­fra­struc­ture and wide­spread anger, frus­tra­tion and pes­simism.

In recog­ni­tion of what the rul­ing elite has done to Canada by shift­ing to pri­vate bor­row­ing, in 2011 the Com­mit­tee on Mon­e­tary and Eco­nomic Re­form sued the Govern­ment of Canada and the Bank of Canada to ask them to “re­store the use of the Bank of Canada to its orig­i­nal pur­pose by ex­er­cis­ing its pub­lic statu­tory duty and re­spon­si­bil­ity. That pur­pose in­cludes mak­ing in­ter­est-free loans to the mu­nic­i­pal/pro­vin­cial/ fed­eral gov­ern­ments for ‘hu­man cap­i­tal’ ex­pen­di­tures (ed­u­ca­tion, health, other so­cial ser­vices) and/or in­fra­struc­ture ex­pen­di­tures.”

The com­mit­tee and the peo­ple lost.

On May 4, 2017, the cor­rupt and in­com­pe­tent Supreme Court of Canada be­trayed the Cana­dian peo­ple and de­clined to even hear such a crit­i­cally im­por­tant case, de­fer­ring to the equally cor­rupt and in­com­pe­tent politi­cians to sort the is­sue out.

If Canada were a real democ­racy and the ma­jor three po­lit­i­cal par­ties weren’t con­trolled by the same sin­is­ter forces, this is­sue would be­come a po­lit­i­cal one and the peo­ple could vote for the party that would re­solve it. But Canada is no longer a democ­racy and is as much of an oli­garchy as is the United States.

The AMERO could by­pass the banksters and bro­ken po­lit­i­cal sys­tem and re­store debt-free fund­ing to Canada – but only if enough Cana­di­ans par­tic­i­pate.

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