Monday, October 08, 2018

What exactly is the Bank of Canada?

The Bank of Canada Act was first created as a private bank in 1935. In 1938 The Bank of Canada was nationalized and has been wholly owned by the Canadian people ever since.  Let’s digest this for a moment.  The Bank of Canada is still wholly owned by the Canadian people.  Can any other nation in the entire world boast of such a thing? Well, a public sector bank can be classified as a public bank if more than fifty per cent is held by a government which is, of course, supposed to represent the people.  And there are a few of these kinds of public-private banks in countries like Germany and India. But are there other wholly owned public banks, with no private interest involved at all, like the Bank of Canada?


Not so much.  Well, there is at least one.  The People’s Bank of China.  Perhaps having their own public bank is one the reasons for their rapid rise in the financial world?  When the Chinese people themselves lend their government the money for all of the incredible infrastructure taking place in China at little or no interest? I think their public banking system has a lot to do with it.  If true, why aren’t we doing the same with our public banking system?  We have our own public bank but it isn’t being used for the purpose it was created for.  


Our public Bank of Canada was created for our government (the Canadian people) to be able to borrow for capital expenditures with little or no interest. Between 1938 and 1974, the Canadian government borrowed many times over from the Bank of Canada and financed debt-free big infrastructure projects like the construction of the Trans-Canada Highway, the St. Lawrence Seaway, airports and subways.  It was our public bank that largely paid for establishing Medicare and family allowances and still left Canada with little debt.  But in 1974 things changed drastically.


Under Pierre Trudeau the Canadian government stopped borrowing from our own public bank and started borrowing from private banks?  Why? Well, it seems that Trudeau came under the influence of the Bilderberg Group, and the Basil Committee that was spawned by the Bank for International Settlements which is the global bank for central bankers.    Their argument was that public banks created the money they loaned out, thus causing inflation, while private banks only recycled pre-existing money.  This was Milton Friedman’s idea.  Pierre Trudeau and his government bought it and it isn’t even true.


The respect banking specialist Ellen Brown puts it this way:  “The difference is simply that a publically owned bank returns the interest to the government and the community, while a privately owned bank siphons off the interest into its capital account, to be reinvested at further interest, progressively drawing money out of the productive economy”.   So in 1974 our powerful economic tool of using our democratic public banking system was yanked out of our hands by the Liberal Trudeau government of that time and placed into the hands and control of a cabal of foreign bankers.  We all know the obscene amounts of money the private banks are making now along with the obscene amount of power they have accrued to themselves accompanied by the obscene amount of debt that Canada and other nations have acquired under this neoliberal order.  So can anything at all be done about this now, or is it too late?  I don’t think it is too late because as more Canadians become aware that we still have a public bank although it has been temporarily and cruelly wrested from us, more eyes have been turning toward Canadian Courts.  Next time.