Re: Feds monitoring weak economy, could take action as early as fall: Morneau, The Canadian Press, September 26, 2016
Our Bank of Canada does not have vaults filled with electronic cash. As remarkable as it may seem, the Bank (owned 100% by the federal government) simply creates money whenever needed by computer entry. It follows that the federal government can never run out of Canadian dollars. This explains how immediately after the 2008 financial crisis the Harper government without raising taxes was able to bail out big institutional lenders by replenishing their coffers through a $200 billion “Extraordinary Financing Framework”.
The federal government can either spend too much causing inflation, or spend too little allowing mass unemployment. Since currently there are 1.3 million Canadians looking for work, it is clear that the federal government is nowhere near expending enough. Increased infrastructure renewal should be supplemented by creation of community-level jobs so that all skill levels can be put back to work as soon as possible. As John Maynard Keynes once noted,
“Look after the unemployment, and the Budget will look after itself.”