To The Editor,
On January 30, the Fraser Institute posted a dissertation on the rationale for central banks to be free of government interference in order to efficiently serve a market economy. It sounded so sensible until we realized that it was advocating a society run by the market with no direction, influence or correction by an elected body. Big Money doesn’t like ordinary people interfering with its march toward total dominance!
Banks were originally conceptualized as a way to pool resources and make seed money available to assist the development and establishment of needed services and amenities. During World War II, Canada’s economy boomed and its contribution to the war effort was incredible for its size because of the sharing of the money-making function between the government and the private banks. The Central Bank bought Government of Canada bonds and paid for them with newly-minted money. The government paid the bank interest on the bonds, which, because the government owned 100 per cent of the bank shares, was returned as dividends, with only the cost of administration deducted. This money that the government spent now went into circulation and what made its way to the private banks could be leveraged and lent to help build factories, develop essential products, buy War Bonds, etc. It transformed Canada in a few short years from an agricultural and resource-based economy into one with a strong manufacturing, industrial and scientific base. It played a key role in the Saint Lawrence Seaway development, the building of the Trans Canada Highway, new airport terminals and port facilities. It made possible the establishment of a social security network and universal health care.
The system worked splendidly until 1974 when the governor of the Bank of Canada, Gerald Bouey, with no apparent government approval or resistance, simply announced that the bank was adopting monetarism. This followed the US example which had been engineered by a group of canny millionaires. What it means was that in the future, the government would have to borrow from the commercial banks and pay interest at market rates.
This fundamental change has cost Canada dearly. From 1974-2011, we paid one trillion, one hundred million dollars in interest on federal debt alone. Imagine what the figure must be to 2018! What could that much money have meant if it had been spent on useful purposes? It’s socialism for the wealthy!
And that is what the Fraser Institute is pushing. “Keep it Coming”, they are saying.
“And give us all of your power.”