Sunday, May 18, 2008

The era of bankster privateers

The Toronto Star on the amazing life of William Krehm:
"Born in Toronto to Russian and Ukrainian parents in 1914, the meanderings of this violinist-turned-revolutionary-cum-journalist-turned-businessman have made him a living relic.

He delivered hats off Wall Street during the Crash of '29, sipped coffee with George Orwell on Las Ramblas during the Spanish Civil War and stood guard over Trotsky's corpse in Mexico. He built homes in Toronto, edited his most recent book on economics a few months ago, and now spends his days practising his violin and readying for one final accomplishment."

"By 1934, he was a radical and formed the League for Revolutionary Worker's Party, a group of Trotsky-inspired Marxist youth in Toronto.

While on a visit to Brussels in fall 1936, the prospect of 'seeing revolution in the streets' drew Krehm over the Pyrenees to Barcelona, where like-minded Trostkyites were fighting Stalin-backed republicans and Nazi-backed nationalists.

He remembers standing atop Mount Tibidabo, watching planes from the German Condor Legion speed overhead on a bombing run, and fondly recalls meeting George Orwell, who was there supporting the Trotskyites.

'He was very approachable,' Krehm says of his encounters with the famed novelist at a downtown café. 'He wasn't puffed up at all. He was having a hell of a time in Spain.'

Because of his links to Trotsky, Krehm chose not to join the 1,500 radicalized Canadian volunteers fighting with the International Brigades under the direction of Moscow.

'They would have slit my throat in no time at all. Trotskyites were sneered at by Stalinists, you see,' he says.

Barcelona was raided by Stalinists in spring 1937. Krehm and other Trotskyites were rounded up.

'Anyone with direct links to Trotsky was never seen again,' says Krehm, who counts himself luckier than most of his colleagues (including Orwell who, having been shot through the neck, barely got out of Spain alive).

Krehm spent several months in a crowded, plywood prison before a hunger strike resulted in his transfer to hospital.

He recovered and was released, or rather, 'stripped of my belongings and dumped into France' by communist forces, now losing their war against the fascists"

". . . in Mexico he stayed, anchored by his political proclivities. Krehm tried to return to Canada to join the fight against fascism in Europe – World War II – but the United States would not permit him to cross its borders. He was stuck.

As it happens, he was there when his role model had his head run through with an ice pick. Feeling compelled to pay his respects to the man whose writings had influenced him, Krehm stood guard over Trotsky's body at his funeral.

Krehm soon landed a job with Time Magazine, covering a series of revolutions that broke out in Latin America during World War II.

But by 1947, with the Cold War heating up, his revolutionary past came back to haunt him.

'I ruffled some feathers,' he says, about his dispatches on American involvement in several coups in Latin America. He was fired by Time."

and (Committee on Monetary and Economic Reform site here):
". . . Krehm became an entrepreneur, founding a property management company, O'Shanter, now owned and operated by his sons, Adam and Jonathan.

He retired from O'Shanter in the early 1980s and began writing again, this time on economics.

As co-founder of the Committee on Monetary and Economic Reform, an economics-oriented publishing house in Toronto, Krehm has written several works arguing against the government practice of combating inflation by increasing interest rates.

He says this has not only been detrimental to society, it runs counter to the Bank of Canada Act, which has been on the books since 1934."

Krehm is going to court to challenge the Bank Of Canada's low-inflation/high-unemployment policies. As a conspiracy theorist, I've always found it amazing that one of the biggest swindles in Canadian history, the elimination of statutory reserve requirements on Canadian banks, passed by essentially unnoticed in the early 90s, although it represented one of the biggest transfers of wealth in Canadian history. As soon as the reserve requirements were eliminated, the Canadian government was no longer able to access the statutory reserve requirement funds held in the Bank of Canada, and thus had to turn for borrowing to private banks. The Canadian banks then started making the annual billion dollar profits to which they have become accustomed. Here's Krehm, advising Canadian socialists (the NDP, hardly socialist anymore) by referring to the nationalization of the Bank of Canada in 1938 (for even bigger conspiracies involving the Bank for International Settlements, see here and here and here):
"That nationalization made possible the financing of a major part of the federal government’s capital projects with the Bank of Canada on a virtual interest-free basis. The money paid to the BoC as interest on such loans came back to the federal government as dividends. An essential part of the mechanism that made this possible were the statutory reserves that required the banks to redeposit with the BoC some 8% to 12% of the deposits received by banks from the public in chequing accounts.

These statutory reserves served two vital purposes: (1) they provided more elbow room for the federal government to finance its capital projects from the BoC within the constraints in force on an interest-free basis; and (2) they offered an alternative to raising the benchmark rate of interest set by the BoC for overnight loans between chartered banks to help them meet their cheque clearing obligations. Once these reserves were phased out over a two-year period in the 1991 revision of the Bank Act, higher interest rates became 'the one blunt tool' for 'controlling inflation.' The result: by the mid-1970s the Bank of Canada had held well over 20% of the federal debt. Within a few years it was down to almost 5%.

We note that the NDP did include bringing back the statutory reserves among its policy options. More than that, it is an absolute necessity to reverse the trend of Canadian politics towards disaster bred by greedy privilege.

The NDP could reclaim the traditions of Tommy Douglas, by proposing a gradual reintroduction of the statutory reserves, say over a three-year period. Neither the UK nor the US ended reserves as Canada and New Zealand did. In Britain they were simply reduced to 0.35 of one percent but are still on the books; in the US they also remain but have been reduced to irrelevance by the shifting of deposits from reservable accounts to non-reservable accounts at the close of bank hours, and back to reservable accounts when the banks open their doors again. Bringing the reserves back in Canada to their former levels over a two or three-year period would give the banks an ample opportunity to readjust to the return to a statutory reserve regime. This is of particular importance since the Bank of Canada is in the process of pushing up interest rates again despite the limp state of the economy."

There has apparently been a plan - dare I say 'conspiracy'? - to enrich the Canadian elites through the low-inflation/high-unemployment policies of the Bank of Canada (low inflation benefits wealth holders, whose assets are eroded by inflation, while high unemployment reduces the relative value of labor) started in the late 80s as explicit Bank of Canada policy, followed by the elimination of the statutory reserve requirements on the Canadian banks in the early 90s, leaving the Bank of Canada with no levers on the Canadian economy other than the manipulation of interest rates (prior to the elimination of statutory reserves, the Bank of Canada could manipulate the availability of bank borrowing, and thus influence the Canadian economy, by changing the statutory reserve requirements). This plan has been treated by the disgusting Canadian media as if it was just a slip of an accountant's pencil, but has resulted in the transfer of billions of dollars from the common property of Canadians to a select few elites.

I'm not a fan of the American right-wing conspiracy theories that some secret cabal of (no doubt Jewish) financiers is stealing Americans blind due to their ownership of the Federal Reserve. This kind of nonsense simply obscures the real conspiracies whereby public wealth is turned over to private hands. The Canadian decision to eliminate the statutory reserves is an example of a real conspiracy, identifiable by the combination of its massive importance coupled with the fact you never read anything about it. Krehm writes about the real conspiracies, including the relationship of the sub-prime crisis to the increased pool of assets available to banks for lending - at a multiple of the value of the assets, of course - due to the elimination of the 'financial pillars' as part of deregulation, the role of the Bank For International Settlements in freeing the banks to go crazy in their lending practices, and the decision by national governments in Canada and the United States to ignore depreciation of national infrastructure in order to make their books look better to facilitate more national borrowing from private banks. We are truly in an era of bankster privateers, and you have to dig hard to read about it anywhere.