Written by John Lounsbury
Forty years ago an international cartel successfully conspired to assume sovereign control of Canada. With reorganization of the government during the Great Recession of the 1930s Canada had operated for the following 40 years a under total independent sovereignty, more so than any other capitalistic democracy. But that all ended in 1974. How that happened and what is currently underway to restore Canadian sovereignty is the subject we explore in what follows.
The story has as its focus the Bank of Canada, Canada's central bank, chartered originally as a privately owned corporation in 1934. In 1938 it was designated a federal Crown corporation, whose shares are owned by the Government of Canada, and executively administered by the Crown in Right of Canada through the Governor of the Bank of Canada. The Minister of Finance holds the entire share capital issued by the bank. (The preceding 3 sentences are paraphrased from Wikipedia.) So, chartered as a private banking institution in 1934, the Bank of Canada was transformed to a public bank in 1938.
From 1938 to 1974 Canada operated with a public bank handling all the finances of the federal government in Ottowa, including interest free loans to fund all government activities. In 1974 the Bank of Canada stopped the practice of issuing interest free loans to the federal government. A prominent constitutional lawyer in Canada, Rocco Galati, contends that the continuation of interest free loans to the government is required by the public bank charter of the Bank of Canada and has filed a suit to re-establish interest free government loans.
Galati says that the reason for the bank policy change in 1974: It was a concession to the international banking community in the form of the Bank of International Settlements (BIS). Since that time, Galati says, the sovereignty of Canada has been compromised - the BIS determines facets of Canadian monetary policy and private banks diminish the function of the federal government. This is because interest is paid by the government to private banks that could otherwise be used for government expenditure on infrastructure and social wellbeing of the citizens, or could alternatively result in lower taxes.
Hat tip to John O'Donnell who sent me the video above.
This situation brings up a point that I have discussed before. Why doesn't the U.S. have a public national bank for all government financial operations? We could immediately solve "too big to fail" if the government did not depend on private banking for the creation of public credit. Previous discussion of these ideas can be found in the following (most recent first):
- How to Borrow Cheaply from a Government-Owned Bank (Shah Gilani)
- The Fed Scam: An Example of Confusion (John Lounsbury)
- A Nonpareil Public Bank: The Fed (John Lounsbury) List of additional references.
- Rogoff Opens a Can of Worms and U.S. Banks Take the Bait (John Lounsbury)
- What We Could Do with A Postal Savings Bank: Infrastructure that Doesn’t Cost Taxpayers A Dime (Ellen Brown)
- Banking: Destroying America (Washingtion's Blog)