After Win Against Bank of Canada, Populists on Track to Ban Debt-Based Money?
By Staff News & Analysis - March 05, 2015

Amid Media Blackout, Canada Lawsuit Challenges Banker Rule: Outcome could decide if Canadians have monetary sovereignty … A landmark Canadian federal appellate-court ruling could conceivably lead to the cancellation of Canada's debt-based money system, and its repercussions are expected to be felt by central banks around the world. According to American monetary-reform author and filmmaker Bill Still—and Canadian activists with whom AFP has been in contact—Canada's mainstream media has been suppressing news that the three-judge panel on Jan. 26 ruled in favor of plaintiffs who filed suit to restore the Bank of Canada to its time-tested mandate of issuing debt-free money in the public interest. – UK

Dominant Social Theme: If we can just put people in jail for lending money at interest, the world will be a better place.

Free-Market Analysis: For us this is one of the most important elite memes of all. It is really an ongoing danger when there are so many other positive, freedom-oriented trends to support.


On Dec. 12 of 2011, COMER filed suit to try and legally restore the former arrangement wherein The Bank of Canada—which, unlike the U.S. Federal Reserve with respect to U.S. citizens, is owned by the people of Canada—would return to the monetary practices it followed from 1938 to 1974 under the Bank of Canada Act.

During those years, the Canadian government borrowed money free of interest from the public Bank of Canada and made significant national progress. "The bank was nationalized in 1938 to bring Canada out of the Great Depression," Still stated on his online program.

The article goes on to explain that the bank issued interest-free loans at all levels of the economy. It helped fund "Canada's universal health-care system, St. Lawrence Seaway development, the national pension system, airports, subways, and other projects deemed to be in the public interest." This funding took place between 1938 and 1974.

The most important point is voiced by Still himself, whom the article represents as pointing out that "there was no run-away inflation [like gold bugs fear], when contemplating so-called easy-money policies."

As recently as the early 1970s, we learn, a home in Canada could be purchased for under $20,000. Canada's national debt was $18 billion (in 1974) and it was only in 1977 that the damage began to mount as the system tilted toward Federal Reserve type management. "The Canadian national debt had risen 3,000%, to $588 billion," said Still. Housing prices advanced dramatically.

The idea, ultimately, is not that the state should issue debt-free money for public works but that the state should issue debt-free money directly to individuals. It is puzzling that avowed libertarians would support such radical government intervention into the marketplace.

In fact, sadly, we have even advanced an alternative theory that those who are advocating public banking and debt-free money are actually doing the work of the current banking establishment.

It seems clear that the private/public paradigm of central banking is on the way out. But so long as some sort of monetary centralization remains – and the state is continually involved in the business of creating money – then further objectives can yet be achieved.

If the current central banking model is destroyed, those who operate behind the scenes could simply attempt to take over the "populist" model that is supposed to replace it. So long as people advocate centralized monetary reform, the danger remains that the vehicle can be placed under the very control of those who populist supporters of public banking are supposedly confronting.

In fact, this seems to be EXACTLY what happened to Canada. The system that Canada has been sued to recreate is the very system that spiraled out of control after 1977 when Canada's debt began to soar. You see, those with the deepest pockets eventually come to control the public purse. It is self-defeating to advocate state-money because in doing so, one is rebuilding the mechanism for control all over again.

Many times free-market proponents will make the argument that debt-free monetary issuance will cause price inflation. This is surely true in the long-term, from what we can tell. Or at least this sort of issuance will cause other distortions in the marketplace. But in a sense it is a proverbial red herring.

The real and most dangerous issue is that as modern central banking likely slides into a well-deserved oblivion, the current populist monetary movement is simply going to build back up a centralized monetary system that can then be co-opted.

Far better to advocate for free-market money, the kind of system that worked well in the US before the Civil War. Let people themselves figure out what sort of money they want to use. Perhaps they will choose to dig it out of the ground, as has often happened in the past.

After Thoughts

We do not rejoice in a monetary victory that hands a different set of mandates to a centralized monetary power. The idea ought to be to do away with these centralizing facilities, not to rebrand them.

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