Re: Canada Committed to Lower Debt Ratio, Morneau Says Before Budget, 2017-03-20
After the 2008 financial crisis, central banks created trillions of dollars to bail out big banks and corporations. Under Canada’s Economic Action Plan, our government stepped up with a $200 billion package for troubled lenders – the Extraordinary Financing Framework.
In normal times, however, bankers don’t like it when governments create money. For example, the more the government uses its own central bank to fund infrastructure, the less the financial institutions can create their own monies and lend them for the same purpose at market rates of interest.
When Finance Minister Bill Morneau tells his ministers “the cupboard is bare”, he is misleading the Canadian people and serving the interests of finance capital who profit most when extracting the maximum from the Canadian public.
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1. How the Bank of Canada Creates Money for the Federal Government: Operational and Legal Aspects, Library of Parliament
“…..there is no external limit to the total amount of money that the Bank of Canada may create for the federal government.”
2. Why Deficits Hurt Banking Profits
The aim of neoliberals is to prevent governments from spending money to revive growth by running deficits. Their argument is: “If a government can’t run a deficit, then it can’t spend money on roads, schools and other infrastructure. They’ll have to privatize these assets – and banks can create their own credit to let investors buy these assets and run them as rent-extracting monopolies.”
“Elites obviously don’t want to completely tank the economy. But it certainly works for them if it stays modestly stagnant, maximizing the growth of the pie while minimizing worker bargaining power.”