Canadian Federalist Party

Economic Sovereignty


The recent meltdown, (2007- 2009), of the over-leveraged global capital markets is only unique in it's scope and not in its' occurence. Excessive leveraging of capital has destabilized numerous national economies throughout the past 500 years. It has destabilized family wealth throughout history.

Canadians need to understand how to manage our economy in a global economic environment. We are blessed with abundant natural resources and highly qualified human resources that anchor our economic prosperity. However, with 60% of our economic activity in the hands of foreign entities, we have relegated our economic prosperity to others.

The CFP believes that the essence of Canadian prosperity will be found in our ability to foster new private enterprises and construct public infrastructures that will facillitate our global competitiveness. Our CFP economic and financial policies are designed to create an independent economic sovereignty for our nation.

Article 5: Principles Of The Party

5.1.19 We believe that the structure of global economics is rapidly changing. With the advent of sovereign wealth funds, global corporations and emerging mega-economies, Canada needs to assert its’ economic sovereignty and to focus and manage its’ economic resources and capabilities.

Politics vs. Capitalism

(Only elected Canadian politicians have the power and authority to improve Canada's capital investment resources. We must hold them accountable.)

Coincident with the 21st century’s commencement of the collapse of the leveraged infra-structure of the U.S. corporate financial hegemony, and the global independent banking system, it has become quite clear that independent economic sovereignty is a worthy goal and national imperative for Canada.

However, as the world continues to develop, it is also important to assess the role governments should play in a free-enterprise capitalistic economy. The historical experience has been that in many instances that political initiatives, i.e. military actions, have precipitated geo-political changes that led to increasing momentum in capitalistic endeavours. More simply, politics and capitalism have been active bed-fellows.

Also, history demonstrates that capitalists have had significant sway over political choices throughout most of recorded history. But… humanity has paid a severe price for this rule of capitalism.

Perhaps this price hasn’t been self-evident to the present generations of Canadians? Yet if one looks at the last fifty years, (The economic life-cycle of most Canadian families?), we have seen more than 5 million family bankruptcies and more than 350,000 business bankruptcies in Canada. Also, during this period, we have seen foreign corporations gain control of more than 60% of our economy. As global corporations expand their influence, we have every reason to foresee that this number will only increase. Thus, Canadians must ask themselves if corporate wage slavery is the best we can hope for?

The CFP believes that this trend should be reversed.

But, the other key issue is the degree to which government agencies should influence Canada’s economic development. Everyone recognizes the powerful motivational factor of the free capital market. Similarly, Canadians are also cognizant that close to 60% of every dollar earned by each one of us is recirculated through government coffers through an extensive system of apparent and hidden taxation.

On the one hand, foreign capital has provided a capacity to develop our resources, whilst on the other hand government growth has impaired the capacity for families to accumulate significant investment capital of their own. In situations where some capital was accumulated, the bankruptcies noted above tended to wipe out the capital within our banking oligopoly.

Canada has relented on a number of occasions and nationalized major industrial or infra-structure enterprises. These often didn’t last long as they were privatized as soon as they became economically viable again. The net effect was to have the public purse, (taxes of the ordinary workers), absorb the huge losses of these mismanaged enterprises, and then award these enterprises to individual capitalists as the balance sheets became restructured. Canadians benefited from fewer job losses, but the long-term gains were quickly directed into elite financial circles.

It would appear to the CFP that there should be a balance between government stimulation of capital development, financial elite capital development and small business capital development. Clearly, as one group ascends in influence over another, there is considerable turmoil within our nation’s economic development.

The CFP believes that the Canadian economy’s development must progress in the best interests of the Canadian people. The government, in its’ stewardship role, must have the authority, power and sovereignty to sustain an effective balance. Thus, extreme neo-conservative economic policies, or extreme neo-socialist policies, must be tempered in our economic policies and strategies.

Financial Capital Meltdown
(The "Millenium Meltdown" was inevitable in a monetary environment that ignored the demand for global monetary expansion.)

The restructuring of capital markets that began following the demonetization of gold in 1970 has released the limits on the expansion of global capital. This has enabled the creation of potentially viable new economies all around the world.

However, aside from some opportunistic IMF bailouts, there has been less constraint on capital creation than ever before in history. As huge capital pools were assembled, opportunities for investment became scarce as mega-mergers consolidated industry after industry in a mad rush for global dominance.

In fact, since the social revolution of the 1960’s, it was apparent that the undeveloped nations represented massive economic potential in the near history approaching the millennium. What wasn’t well understood was how this needed capital would be created and distributed.

Since WWII, the US economy attracted a disproportionate amount of global capital and thus US wealth gradually translated into the American dollar becoming the global currency. Following the slowdown of 1989 to 1996, monetary expansion took off as new investment mediums were created to spread financial risks all across the global financial capital system. Since risk could be almost eliminated, then further leveraging of accounts became obscured in a massive array of “legal tender”.

Similarly, the quest for liquid capital and short-term gain, led many enterprises to sell off their hard assets and trade them for leaseback debt commitments. Consequently, intrinsic value in business assets was traded for cash and debt. Stock values were then marketed against future cash flows and future earnings. Just as gold was abandoned as a hard asset convertible into currencies, land, buildings and equipment were abandoned for cash. Thus, stock markets made the almost complete transition into speculative markets.

In fact, due to rapid obsolescence due to the technological revolution, this transition by enterprises may not have been a bad thing for economic growth and development. The replacement of lower productivity by higher productivity assets led to higher industrial productivity which was needed to bring along the under-developed nations.

However, the structural flaw in the global financial capital system occurred within the heart of the financial system… within the banking sector.

The role of the banking sector has always been to convert hard assets into liquid cash. But with the rapid increase in productivity and growth in earnings from speculative investments, the banks were drawn out of their traditional business models. In fact, they acquired stock brokerages, investment banks, insurance companies and even hedge funds.

But by branching out into these speculative ventures, they assumed less individual risk whilst taking on massive broad risks. Also, the global competition mania justified throwing out their historical accounting controls and validated new reporting frameworks. Consequently, the banks themselves became massively larger entities carrying proportionately larger risks. The balloon had no “gold” tether as it was merely attached to the American dollar’s vaporous value.

Of course, there are many more infrastructures involved in the “Millennium Meltdown”, but it is most relevant to recognize these major creative factors and forces to be able to discern how to restructure the financial capital of Canada, and the globe for that matter.

Financial Capital Restructuring Strategies

(Canada is ideally equipped and qualified to create adequate capital to finance the economic growth capacity of our nation.)

With close to 2/3 rds. of Canada’s assets being “soft” financial assets, ($11 trillion), we need to isolate the processes for creating this wealth. Also, we need to isolate the speculative “soft asset” institutional entities from the “hard asset” institutional entities in order to create a firm financial capital economic infrastructure.

Similarly, Canada needs to ensure that the growth and development of our resource and industrial sectors that produce “hard assets”, are linked to financial capital entities that can readily assume the inherent risks as our economy moves forward to supply domestic and surplus foreign needs for our products and services..

Since Canada is such a small financial entity compared to the massive economies of other nations, we have the advantage of not posing a threat to other economies that depend upon large capital in-flows and out-flows. Thus, our domestic financial capital policies may be managed in a relatively independent manner.

The historical independent manner in which tiny Switzerland maintained the value of its' currency has some lessons for Canada. Their assets have been perceived as massive foreign currency holdings in "secret" bank accounts. This unknown pool of assets has provided a sense of stability and value to their financial system.

Canada, on the other hand, has a massive asset pool in her natural resources and well educated human capital pool. We too have hidden reserves that will support independent management of our economic growth. Canada only needs the political will of the CFP to function and operate with economic sovereignty.

Canada's vast reserves of natural resources and large pool of highly educated human capital provides the means to establish economic sovereignty.

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