“Once a nation parts with the control of its currency and credit. It matters not who makes the nation’s laws. Usury once in control will wreck all nations.”

William Lyon Mackenzie King, Prime Minister of Canada, 1935.

The government of Canada devised its innovative system of state-bank-created credit in the 1930s, and drew freely from it for nearly four decades of unusual prosperity, growth and development. Then in the 1970s, Canada joined the Basel Committee of G10 countries at the Bank of International Settlements. A change of economic policy followed, which cut the government off from its own state bank funding, subjecting it to the punishing terms of private international credit markets. Canada is now struggling with debt and deficits along with most of the rest of the Western world.

Before 1935 the Canadian government did not have a central bank. It had to rely on private banks which failed the nation badly before and during the Great Depression. Many Canadian officials believed that the government needed a central bank to generate its own money. In 1933, a Royal Commission was put together to look into creating such a bank. A major debate then ensued over whether it should be public or private.

Prime Minister William Lyon Mackenzie King said, “ Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of sovereignty of Parliament and of democracy is idle and futile.”

For over three decades, the Bank of Canada used its lucrative credit creating tools for the benefit of the public. The Canadian government funded infrastructure and social programs simply by advancing the credit to accomplish them. The Bank of Canada funded the world’s longest road and the world’s longest inland waterway. Senior citizens and children under 15 received basic allowances. In 1957 Bank of Canada began funding the nation’s health care system. By 1984 all medically necessary care are free for the population of Canada.

From 1939 to 1974, Canada financed these projects largely through its government owned Central Bank without sparking price inflation or driving up national debt.

This four decade run of prosperity came to an end when Canada joined the Basel Committee of the Bank of International Settlements in 1974.  The Basel Committee discouraged governments from borrowing from their Central banks ostensibly because it will create inflation.

However it is a well known fact that in almost all nations an overwhelming majority of private bank loans goes to personal loans, credit cards, housing, commercial properties, and financial sector needs. Whereas public sector credits will go to national infrastructure and the real economy. Basic Economics 101 will tell us which one will create inflation.  But just like the Creature from Jekyll Island (i.e. the privately owned Central Bank of the US), when one do not question, the propensity to believe, and to be lied to, is inordinately strong.

Coming soon: Killing The Reserve Bank Of New Zealand

An Islamic Monetary Reformist’s Take cum Edited Excerpts from Ellen Brown’s From Austerity to Prosperity- The Public Bank Solution

Islamic Monetary Reformist

Muhammad Zahid Abdul Aziz

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