The Current State of Canada’s Bank
The Current Situation
Since 2012, COMER or the Committee on Monetary and Economic Reform has been challenging the Bank of Canada in the Supreme Court over its monetary policy. Founded by Dr. John Hotson and William Krehm in the 1980s, COMER was founded as a left-wing organization that sought to challenge the private banking system in Canada, arguing that it goes against the intentions behind the Bank of Canada Act of 1938. It was under this act that the Bank of Canada was nationalized by William Lyon Mackenzie King.
Despite their left-wing leanings, COMER has represented a strong stand against the neoliberalism of the global market and they have represented a strong stand on behalf of the popular interests of nation-states. In this respect, they have represented a more left-wing variant of economic nationalism. So far, COMER member and Canada’s longest-serving member of the Queen’s Privy Council, the Honourable Paul Hellyer, P.C., has “launched a constitutional challenge against the Canada–Europe Free Trade Agreement at the Federal Court of Canada”. In addition to this, COMER’s Constitutional lawyer, Rocco Galati, has challenged Bill C-51 in the Supreme Court.
But COMER has had less success with their appeals against the Bank of Canada, which, after having been presented to the Supreme Court on a number of occasions, have been dismissed as of May 31, 2017. The question is, why is this the case?
Before we answer this, we must provide some context on the history of banking.
A Brief History
The following is simply an outline of the facts of history. It should be stressed that the majority of the Jewish peoples are not wealthy bankers. With that being said, one might find that they are disproportionately over-represented in global financial and political institutions like the IMF, World Bank, etc.
A maxim that is often attributed to the Rothschild House––in particular, Mayer Amschel Rothschild––goes as follows:
“Let us control the money of a nation, and we care not who makes its laws.”
It is worth noting that, according to the Jewish anarchist Bernard Lazare in his book Antisemitism: Its History and Causes, the French Revolution was backed by many prominent Jewish figures. These figures included many renowned Jewish thinkers (known as “Haskalah”) such as Moses Mendelssohn and wealthy Jewish bankers such as: Daniel Itzig (1722-1799), David Friedlander (1750-1834), Herz Cerfbeer (1730-1793), Benjamin Goldsmid (1755- 1808), Abraham Goldsmid (1756-1810), and Moses Mocatta (1768- 1857) who was the partner the Goldsmid brothers and uncle of Sir Moses Montefiore.
This is worth mentioning this because initially, the Jewish peoples were emancipated through the revolution only to find themselves suppressed later on. With the support of traitorous aristocrats like Honoré Gabriel Riqueti, Count of Mirabeau and Louis Philippe II, Duke of Orléans (otherwise known as “Phillippe Égalité”), the Jewish peoples pledged their support to the Girondin faction, only to find themselves attacked by the Jacobins, who opposed religion in all of its forms, favouring a secular state religion called the “Cult of the Supreme Being”, which was rivaled by the “Cult of Reason”.
It was under Napoleon that the rights of the Jewish people’s were re-established. The Jewish peoples were granted a representative body in the Imperial Government known as the “the Grand Sanhedrin” and they were granted the same rights as any citizen, without having to renounce their faith. Furthermore, the Rothschild banking family of France was also established in 1812. This relation eventually went sour, as the Rothschild’s and other banking houses were war profiteering off of financing both the British and French wars. In a letter to Champagny, Minister of the Interior on the 29
“[It is necessary to] reduce, if not destroy, the tendency of Jewish people to practice a very great number of activities that are harmful to civilization and to public order in society in all the countries of the world.”
He elaborated on this in 1822 in a letter to Barry O’Meara, claiming, “I wanted to make them leave off usury, and become like other men”.
It was on the 17th of March in 1808 that Napoleon passed his Décret Infâme, which ended up annulling any debts owed to the Jewish peoples.
After the British defeated Napoleon, many of the rights that the Jewish peoples had been granted were revoked. It was in 1815, that Napoleon famously claimed:
“When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.”
It was by the turn of the 20th century that names like the Rothschilds, the Warburgs, the Schiffs, the Guggenheims had become quite prominent in banking and finance in the West. It was also around this time that private, central banking became quite prominent.
As much as the previous history outlines a broad over-representation of the Jewish peoples in banking and subversive political affairs, the point was more to demonstrate what happens when a nation state relies heavily on private banking, within which such an over-representation exists.
Coincidentally, it was in the 1930s that William Lyon Mackenzie King famously refused a boatload of Jewish peoples fleeing from Germany only to later nationalize the bank of Canada in 1938.
Of the Jewish peoples seeking to enter Canada, Mackenzie King claimed, “None is too many”.
Of the Bank of Canada, Mackenzie King echoed the sentiment of Napoleon, by claiming at the start of his 1935 re-election campaign that:
“Once a nation parts with the control of its currency and credit, it matters not who makes the nations laws. Usury, once in control, will wreck any nation. Until the control of the issue of currency and credit is restored to government and recognized as its most sacred responsibility, all talk of the sovereignty of parliament and of democracy is idle and futile.”
It was on these grounds that Mackenzie King nationalized the Bank of Canada in 1938.
According to Dr. Kerry Bolton in his essay “Breaking the Bonds of Interest”:
“Canada maintained this state credit system into the 1970s. The state owned Bank of Canada issued up to half of all new money at low interest, which in turn forced the commercial banks to keep interest rates low. This resulted in decades of prosperity. Now the Bank of Canada creates just 2% of the credit. From 1935–1939 the Bank of Canada was issuing most of the nation’s credit, and 62% of the credit during the last years of the War.
Until the mid 1970s the Canadian Government continued to create enough new state money to monetarize 20% to 30% of the state deficit. That ratio is now only 7.5%. While the money supply increases by $22 billion annually, the Bank of Canada now issues less than 2% of that money. It has been estimated that if the Canadian Government had continued to operate such a financial system as she had for around three decades, that nation would today be operating with a surplus of $13 billion.”
Ultimately, it is because of John Diefenbaker’s Central Banking policy that the Canadian dollar began to experience increasing inflation, which led to a conflict between Diefenbaker and the then BOC Governor, James Coyne, who wanted to reduce the money supply.
Furthermore, as of 1961, when Diefenbaker was in power, an explicit agreement was made that the Minister of Finance would have a greater say over the Governor of the Bank of Canada. It is worth noting that our Minister of Finance is also our Governor in the IMF, which pushes for Neoliberal policy.
Even under Pierre-Elliot Trudeau, inflationary monetary policy was a huge problem, and while Trudeau did try to reduce inflation with the Wage and Price Controls Act, he still ultimately sought to maintain a rate of inflation and a system of central banking that opposed the intentions of Mackenzie-King.
It was under Brian Mulroney’s FIRA that Canada actually began to open itself up to Foreign Investment, despite the purpose of the organization being to reduce foreign influence. The FIRA rarely blocked Foreign Investment and later reduced barriers to foreign investment, something that was criticized and protested against by nationalists at the time, paralleling what happened with the 1999 Seattle WTO protests, where many Americans took to the streets to protests against the globalization and expanding influence of Multinational and Transnational corporations.
Furthermore, in 2001, the federal government changed ownership rules over the bank, which increased the percentage of shares that a foreign or domestic individual could hold over what were formerly labeled “Schedule I” banks (now know as Large Banks). This percentage increased from 10% to 20%, while reserve ratios are now at 0% in Canada (meaning a bank is not required to hold any of its capital in reserves, i.e. it could lend everything out).
The Difference Between a Central Bank and a National Bank
Canada’s bank is technically a National Bank but it operates more like a Central Bank. This is a distinction that the economist Henry C. K. Liu has commented on in particular in his series on central banking, claiming:
“A national bank does not seek independence from the government. The independence of central banks is a euphemism for a shift from institutional loyalty to national economic well-being toward institutional loyalty to the smooth functioning of a global financial architecture. The international finance architecture at this moment in history is dominated by US dollar hegemony, which can be simply defined by the dollar’s unjustified status as a global reserve currency. The operation of the current international finance architecture requires the sacrifice of local economies in a financial food chain that feeds the issuer of US dollars. It is the monetary aspect of the predatory effects of globalization . . .
Historically, the term “central bank” has been interchangeable with the term “national bank”. In fact, the enabling act to establish the first national bank, the Bank of the United States, referred to the bank interchangeably as a central and a national bank. However, with the globalization of financial markets in recent decades, a central bank has become fundamentally different from a national bank . . .
The mandate of a national bank is to finance the sustainable development of the national economy, and its function aims to adjust the value of a nation’s currency at a level best suited for achieving that purpose within an international regime of exchange control. On the other hand, the mandate of a modern-day central bank is to safeguard the value of a nation’s currency in a globalized financial market of no or minimal exchange control, by adjusting the national economy to sustain that narrow objective, through economic recession and negative growth if necessary.”
A national bank relies on what Liu called STM or “State Monetary Theory”, which Liu outlines in the following terms:
“STM asserts that the acceptance of government-issued legal tender, commonly known as money, is based on government’s authority to levy taxes payable in money. Thus the government can and should issue as much money in the form of credit as the economy needs for sustainable growth without fear of hyperinflation. What monetary economists call the money supply is essentially the sum total of credit aggregates in the economy, structured around government credit as bellwether. Sovereign credit is the anchor of a vibrant domestic credit market so necessary for a dynamic economy.”
A central bank relies on what Liu calls QTM of Quantitative Monetary Theory, which Liu outlines as follows:
“[QTM] asserts that changes in the general level of commodity prices are determined primarily by changes in the quantity of money in circulation. The QTM formed the central core of 19th-century classical monetary analysis, provided the dominant conceptual framework for interpreting contemporary financial events and formed the intellectual foundation of orthodox policy prescription designed to preserve the gold standard. The economic structure in 19th-century Europe led analysts to acknowledge additional non-neutral effects, such as the lag of money wages behind prices, which temporarily reduces real wages; the stimulus to output occasioned by inflation-induced reduction in real debt burdens, which shifts real income from unproductive creditor-rentiers to productive debtor-entrepreneurs; the so-called “forced saving” effect occasioned by price-induced redistribution of income among socio-economic classes having structurally different propensity to save and invest; and the stimulus to investment imparted by a temporary reduction in the rate of interest below the anticipated rate of return on new capital.”
The goal of National Banking in the context of Canada would ultimately be to review the legitimacy of a lot of the debt our public institutions have incurred at the hands of private lending. This ultimately gives the government greater control over the monetary supply and prevents the growth of a currency based in debt while better enabling a currency based in a high purchasing power. This is a strategy that was not only employed by Germany and Italy in the 30’s (allowing them to thrive while other nations were unable to prosper) but it was also employed in China by Deng Xiaoping in the 1980’s.
According to writer Stephen Lendman in his review of Ellen Brown’s book Web of Debt:
”Under Deng Xiaoping, China changed from a centrally-planned economy to its own market-based model under government-owned banks able to issue credit for domestic development. Until the global economic crisis emerged, it grew impressively at double-digit rates.
Key is its banking system, its government-issued currency, and a system of state-owned banks. Henry CK Liu distinguishes between “national” and “central” banks – the former serves the national and public interest; the latter, private international finance at the expense of the nation and people.
In 1995, China’s Central Bank Law gave the People’s Bank of China (PBoC) central bank status, but more in name than form in that it still follows government policies by directing money for internal development, not bank profits. In addition, China is debt free and thus unencumbered by IMF mandates and predatory banking cartel interests. It also protected its currency by refusing to let it float (beyond a minor adjustment) and be vulnerable to speculative predators.
The proof is in the results. China’s independent monetary policy works, much like colonial America, government under Lincoln, and Nazi Germany under Hitler. They printed their own money, debt free, and prospered – impossible under today’s American model of indebtedness to predatory bankers.”
The Role of COMER
Restoring the Bank of Canada to its purpose as a National Bank is actually something that the BOC has been taken to court over by the Committee on Monetary and Economic Reform, who believe the BOC has come to contradict the purpose of nationalizing the bank and the function behind a national bank.
To quote COMER’s website:
“The Bank of Canada was nationalized in 1938 and is wholly owned by the Canadian people. Between 1938 and 1974, the federal government borrowed at low or no interest from the bank. But in 1974, Canada embraced monetarism, which helped usher in the neoliberal policies of North American countries in the 1980s and 1990s. The Canadian government began to borrow from private foreign banks rather than financing its own public programs. Massive public debt was the result. “
COMER’s stance relies on reasoning that is threefold:
The first element of it relates to the preamble of the Bank of Canada Act, which states that:
“WHEREAS it is desirable to establish a central bank in Canada to regulate credit and currency in the best interests of the economic life of the nation, to control and protect the external value of the national monetary unit and to mitigate by its influence fluctuations in the general level of production, trade, prices and employment, so far as may be possible within the scope of monetary action, and generally to promote the economic and financial welfare of Canada”
The second element relates to the intentions that Mackenzie King had when he nationalized the bank, which he quite clearly outlined when he campaigned on that policy during his re-election campaign in 1935. These were intentions to have the Bank of Canada operate as a National Bank over a Central Bank. Policy quite contradicted by the role the BOC had taken on under Diefenbaker, Trudeau, and Mulroney.
The third element relates to the involvement between the BOC and international banking organizations like the BIS (“The Bank of International Settlements” of which the BOC is a member) and the IMF (of which the BOC is also a member) and their relationship with the neoliberal policy of similar organizations like the Trilateral Commission, the Council on Foreign Relations, the World Trade Organization, and the World Bank. This is passed off as a conspiracy theory despite being grounded in a very real geopolitical and economic situation.
Unfortunately, COMER’s most recent appeal for a trial in the Supreme Court of Canada was dismissed. Previously, COMER’s case was shut down on the grounds that Mackenzie King’s expressed intention wasn’t explicit in the preamble of the BOC Act, despite being highly implicit and clearly intended when he nationalized the bank. It is beginning to look like the only way we will see real change in our banking system is on an executive or legislative level as opposed to a judicial one.
A National Bank is as important as a National Education Program and a National Militia. These serve as the three pillars of any strong Nation-State. Their fundamental importance lies in the sovereignty they establish.
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