CHP: Time To Rescue Canada From The Banks

If the government is going to shower ailing industries with billions of bailout money (up to $30B according to the recent news) - they better use the Bank of Canada to finance the economic stimulus, rather than borrowing from private investors at compound interest.

• First, the federal government apparently plans to use Bank-Created Money (BCM), which comes into the economy as interest-bearing debt, thus compounding and adding to the national debt.
  
  The CHP plan was for the Bank of Canada to create the funds—Government-Created Money (GCM)—which would not incur interest-bearing and -compounding debt. It is simply wrong to saddle future generations with more debt.
  
  What's the advantage of using BCM instead of GCM? Who benefits? Only the banks. And the children suffer.


• The CHP proposal was for the Bank of Canada to inject the money into the economy in the form of interest-free loans to provinces, municipalities and other local authorities. Local authorities know better what infrastructure is needed locally. And when the loans are repaid from the increased revenues generated by the economic stimulus, the funds created can be retired—or directed to other needs—so that the GCM does not have an inflationary effect.

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There's no point in Ottawa "renting" our money from the banks. That makes the banks richer, but it impoverishes future generations to do so. Perhaps its time the big banks were booted off the Board of the Bank of Canada. Clearly, they have far too much influence over the Minister of Finance and the Governor of the central bank.

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The Bank of Canada was established by the Conservative government of Richard Bennet, but it was the Liberal government of McKenzie King which nationalized the Bank of Canada and started using it to the full benefit of the country.

It helped getting the country out of the Great Depression. It helped financing the post-WW2 transition to a peace-time economy. By 1974 (when the government switched to all private borrowing,) almost 25% of Canada's public debt was held by the Bank of Canada, making that portion of the debt virtually interest-free. (All the interest was passed back to the government in the form of dividends.) Now that share is less than 5%.

Stephen Harper has a unique opportunity to come up with a budget that would provide money for fiscal stimulus, while avoiding deficits and keeping the taxes low. Or - he could recreate the 1979 scenario and go for another election campaign - right after presenting a deficit boosting, tax-hiking budget.