Our Alberta Treasury Branch

By Len Skowronski

The mainstream media will no doubt attack the idea of a provincially owned bank, helping create the money supply for Alberta. However, the arguments about inflation, how government will abuse the system for political reasons and so on are not valid arguments. Safeguards can easily be put in place, and indeed, have been put in place for such a bank south of the border. Lawyer and monetary reformer Ellen Brown describes what would result from an ATB that got more involved with money creation. She writes:

While 49 state treasuries were submerged in red ink after the 2008 financial crash, one state’s bank outperformed all others and actually launched an economy-shifting new industry.  So reports the Wall Street Journal this week, discussing the Bank of North Dakota (BND) and its striking success in the midst of a national financial collapse led by the major banks. Chester Dawson begins his November 16th article:

It is more profitable than Goldman Sachs Group Inc., has a better credit rating than J.P. Morgan Chase& Co. and hasn’t seen profit growth drop since 2003. Meet Bank of North Dakota, theU.S.’s lone state-owned bank [emphasis added], which has one branch, no automated teller machines and not a single investment banker.

He backs this up with comparative data on the BND’s performance:

[I]ts total assets have more than doubled, to $6.9 billion last year from $2.8 billion in 2007. By contrast, assets of the much bigger Bank of America Corp. have grown much more slowly, to $2.1 trillion from $1.7 trillion in that period.

. . . Return on equity, a measure of profitability, is 18.56%, about 70% higher than those at Goldman Sachs and J.P. Morgan. . . .

Standard & Poor’s Ratings Services last month reaffirmed its double-A-minus rating of the bank, whose deposits are guaranteed by the state of North Dakota. That is above the rating for both Goldman Sachs and J.P. Morgan and among U.S. financial institutions, second only to the Federal Home Loan Banks, rated double-A-plus.

There you have it. The Albertan owned ATB could give out more loans, and create more of our money. As well, the infrastructure is in place where our bank could do more than the Bank of North Dakota by providing retail banking services. Service charges could also be minimized.

It is important to remember that money does not have any value on its own.  You can have trillions in gold and dollars, yet if you are on a desert island, you would still not be able to buy enough to prevent yourself from starving to death. Money is really a means of helping people trade goods and services.  It only has value when it is traded for goods or services.  In modern economies, enough money must be available to facilitate the transactions needed to provide the people in a community the goods and services they need for a good standard of living. 

The amount of money needed to achieve this goal must be determined and supplied by a central source that has the good of the whole community as its mandate.  This money should be provided to the members of the community with a small surcharge for this service.  No additional funds (profit) should be expected for this service, for it does not provide any of the goods and essential services that the community needs.

The Bank of Canada was established to be this central source in Canada.  Unfortunately, the creation and distribution of money has slipped to the private banks.  Individuals and the federal, provincial and municipal governments are paying billions of dollars in interest to these banks for a service that deserves only a small surcharge.  These banks are making huge profits, even during our recession, which are distributed to their shareholders, many of whom are not even Canadian.

The Bank of Canada should recover its control of the money supply.  It should allow the private banks to function as distribution utilities with regulated service charges and profit margins.

Unfortunately, vested interests in the eastern-controlled banks make achieving this goal highly unlikely.  But we Albertans can lead the way!  We can return the Alberta Treasury Branch (ATB) to the mandate given by the Social Credit government of 1935 – 1971: Provide the capital needed by Albertans to establish a thriving economy.  It can function as the “Bank of Alberta”, giving us economic independence! Just as the Bank of North Dakota is enriching that U.S. state.

We should make the ATB the economic engine of Alberta’s economy.  By statute, the Bank of Canada (B of C) is required to give no-interest loans to the provinces.  We will demand this service even though none of the provinces are receiving this advantage over the private banks.  If we are not able to convince the federal government and the B of C to take this step then the ATB will take loans from the B of C at the prime rate, as do the private banks.  This will still give Albertans a huge competitive advantage for they will only be paying prime and a small operations surcharge as opposed to the private banks’ prime plus many percentage points.  These “prime plus rates” always provide for large shareholder dividends and huge executive salaries and bonuses.