What's the economic theory explanation as to why the price of US goods has not dropped by 25% or so in Canada?

Currently, cars, books, electronics and clothing are all far more expensive in Canada than in the United States. Much more so than can be explained by the 6% differential in currency.

It seems to me, that with imports from the USA accounting for half of Canada's economy, and the US dollar having dropped significantly, there should be serious price deflation in Canada.

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Originally posted by 500_Apples:

What's the economic theory explanation as to why the price of US goods has not dropped by 25% or so in Canada?

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Next month we are looking at lowering our prices in a bid to grab market share. The problem is that once we do this everyone else will follow. There is little incentive for businesses to begin charging less if they already have a decent market share. Often we will instead use the margin room to be more creative in our promotions. Manufacturer price increases are also a time for some exchange rate corrections.

In my previous employment we had a business plan for approaching Canadian dollar sellers of US produced product and pressure them to give us some of their larger margins. I don't see that happening much though, usually the pressure to lower prices only comes when the one of the sellers blinks (or grey market operators move in).

Also I should note that margins are a crazy thing. There may be an industry standard of 30% or 25% (and that is what is necessary to run the business) but individual items will range from 10% to 70% depending on the market forces. One usually doesn't have much choice on the 10% items and hopes that the 70% items make up the difference.

[ 02 August 2007: Message edited by: Pogo ]

[ 03 August 2007: Message edited by: Pogo ]

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Originally posted by 500_Apples:
It seems to me, that with imports from the USA accounting for half of Canada's economy, and the US dollar having dropped significantly, there should be serious price deflation in Canada.

Instead, Canada's inflation rate is at or higher than the American inflation rate.

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I think there is a big difference between gross exports and value-added exports. Pro-NAFTA traders like to fear monger and suggest we'd wither and die without the U.S as a trade partner and prefer to use gross export figures mostly. Our economy is not as reliant on international trade with the U.S. as they pretend we are.

It's instructive to look at when prices were kept low in Canada - when our dollar was hammered down to the 60¢ range by Mulroney's high-interest rate policies.

Though the dollar had dropped, our purchasing power remained far less affected, buying 75 to 80¢ worth of value on our side of the border.

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Originally posted by Fidel:

Cars may be several thousand dollars cheaper in the U.S., and I think it's because consumer spending is down across the States.

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Originally posted by Pogo:

Medical products are in general cheaper in Canada. I think this is because Canadian buying groups are pretty organized within provincial health authorities and are also buying in large quantities.

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I think our public system pays less for drugs because governments here have retained the right to bargain with pharmaceutical companies for lower prices. Europeans have also held firm on this competitive practice as well as banning the advertising of drugs to keep costs down.

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It's instructive to look at when prices were kept low in Canada - when our dollar was hammered down to the 60¢ range by Mulroney's high-interest rate policies.

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Because this is the opposite of economic theory, I decided to look it up.
http://tinyurl.com/ynoozc

In fact, when interest rates in Canada exceeded interest rates in the U.S in the early 1990s, the Canadian dollar was close to $0.90, not $.60.

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Originally posted by Adam T:
Actually, there is a great deal of empirical evidence that suggests coorelation between low inflation and high growth.

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China's average wages are up 15 percent, and personal savings rates are high. China's CPI inflation for July is expected to rise above 5 percent. That economy has grown at rates of six to 10 percent for 21 years in a row. That's unprecedented economic growth.

Meanwhile the BoC abandoned targets for zero inflation in the 1990's for political reasons, mainly due to the unpopularity of the worst job creation record since the 1930's and strangulation of economic growth in general.

Harvard economist, Robert Barro produced a report examining inflation rates in 100 countries over a 25 year period. He concluded that the beneficial effects of low inflation on economic growth were actually quite small.

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In one study, Robert Barro [1995] found that increasing inflation by 1.0 percentage point reduces economic growth by between 0.02 and 0.03 percentage points. Although Barro's estimate is lower than some others, it illustrates that the evidence on the costs of moderate inflation is mixed.

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[ 04 August 2007: Message edited by: Fidel ]

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Originally posted by Rogo:
However, Adam T also stated that there was correlation between low inflation and high growth and that statement doesn't seem to me to imply a causal relationship. To be honest I have no idea what you would find if you look at a cross-country analysis

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I'm guessing we would discover highest growth in Alberta fueled by the burgeoning oil export sector, and what were projected growth rates of 2.5 to 3.0 percent and higher for Ontario cut in half for the next two or three years.

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There are moderate inflation high growth countries like China, low inflation low growth Western nations , and disastrous growth hyperinflation economies ala Zimbabwe.

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Strangely, Zimbabwe's resource sector share values have soared in recent years.

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Perhaps the benefit of a fairly low inflation policy is that the Central Bank builds up a sort of trust such that people expect inflation to remain low even in recessions, giving the Bank the ability to unexpectedly push an inflationary policy (making that Phillips Curve hold in at least that period), decreasing unemployment and raising GDP.

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I'm tend to want to agree with Paul Krugman's articles on inflation and growth pointed to by babblers. I think there are no "speed limits" to growth, and that if we relied on growth from productivity alone, then the speed limits might well be a modest 2 percent. Reduction of unemployment from rates as high as 10 percent in the 1980's following on the heels of tight money policy aimed at flattening prices is no surprise, says Krugman, because there was plenty to make up for in slack labour markets. The speed limit is reached when full employment is achieved and output gap reduced to zero.

Higher interest rates and a higher dollar benefits money lenders and bond holders more than the unemployed.

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Meanwhile the BoC abandoned targets for zero inflation in the 1990's for political reasons, mainly due to the unpopularity of the worst job creation record since the 1930's and strangulation of economic growth in general.

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I don't know if there was ever an explicit policy of zero inflation. Bank Chair John Crow was persuing a policy of crushing inflation at all costs and the Liberals got elected.

Incoming Finance Minister Paul Martin disagreed with Crow's policy and a potential crisis loomed. Fortunately, Crow's term was coming to an end, and the crisis was averted when he announced that he did not wish a second term. Paul Martin and Jean Chretien replaced him with Gordon Thiessen who agreed with the government's policy of 1-3% inflation.

The Central Bank has persued this policy ever since, although they've apparently stated that they wish to keep inflation within a 1-2% band.

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China's average wages are up 15 percent, and personal savings rates are high. China's CPI inflation for July is expected to rise above 5 percent. That economy has grown at rates of six to 10 percent for 21 years in a row. That's unprecedented economic growth.

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Fair point, it would be more correct to say that there is a coorelation between price change stability and growth, meaning that if there is an inflation rate of around 5%, but if it doesn't change much year after year, growth might not be badly effected.

Of course, you've pointed out the inflation rate for one month, or one year and compared that with growth rates for 21 years. Hardly a full appraisal of evidence.

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However, Adam T also stated that there was correlation between low inflation and high growth and that statement doesn't seem to me to imply a causal relationship.

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I think it does apply some degree of a casual relationship. However, as I pointed out, it's actually the variability of inflation and growth that's more related.

If someone provides me the web space, I could post a graph from a textbook of mine that would highlight that.

I would note though, that Fidel left off that Mundel said "moderate inflation".

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Perhaps the benefit of a fairly low inflation policy is that the Central Bank builds up a sort of trust such that people expect inflation to remain low even in recessions, giving the Bank the ability to unexpectedly push an inflationary policy (making that Phillips Curve hold in at least that period), decreasing unemployment and raising GDP.

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Well, I'm not sure why the central bank needs to do that, usually inflation rates drops during recessions. Trust of controlling inflation is one of the main reasons, as it provides stability. The concerns are

1.that if investors and businesses are unsure what inflation will be in the future, they will be unable to properly judge return on investment and will be less likely to invest.

2.That inflation is usually either increasing or decreasing. If it is increasing, there is a fear that inflation will feed off itself and just keep increasing, as happened in the late 1970s. This is called the Inflation Expectation Hypothesis that Milton Friedman formulated to explain why an accomodating monetary policy was not leading to sustained economic growth during this period. Then, if inflation continues to rise, we move off that 'moderate inflation' level where Mundel said you could continue to have inflation without experiencing significant decreases in economic growth.

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The speed limit is reached when full employment is achieved and output gap reduced to zero.

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Which is why governments should focus on increasing long run potential output.

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And if I had the choice to borrow money for critical government programs spending at zero interest rate charges, or even two or three percent as opposed to 8 or 9 percent and higher from private banks, the choice would be easy

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I don't pretend to know what all the consequences of government doing this would be. The problem given the way that this is expressed is:
In social science you have what is known as general equilibrium and partial equilibrium. Partial equilibrium involves looking only at immediate feedback effects of an action, general equilibrium tries to look at all the feedback effects, and the feedback effects on the feedback effects.

I don't pretend to be an expert on the consequences of this, but the idea that there is some sort of free lunch, that governments could borrow at 0% interest without changing other things is ridiculous. I would think at a minimum, the interest rate for everbody else wanting to borrow money would increase.

[ 05 August 2007: Message edited by: Adam T ]

Reduced inflation reduces interest rates. This makes a house more affordable. In particular it reduces the payment on the national and provincial debt and eases government finances. When there's inflation you pay the amount of inflation in higher interest rates and this is a payment on the priciple -- which is inflating.

[ 05 August 2007: Message edited by: bruce_the_vii ]

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Originally posted by Adam T:

I don't know if there was ever an explicit policy of zero inflation. Bank Chair John Crow was persuing a policy of crushing inflation at all costs and the Liberals got elected.

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And if I had the choice to borrow money for critical government programs spending at zero interest rate charges, or even two or three percent as opposed to 8 or 9 percent and higher from private banks, the choice would be easy. And yet our national debts at the federal, provincial, municipal and personal levels have skyrocketed since the remainder of Canada's money supply was privatized in 1991 in spite of an all-party banking subcommittee to prevent it from happening.

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This actually could not work. You are confusing the money supply and the monetary base.

The monetary base is basically the total amount of currency is circulation (there are a couple of other minor components to it). The money supply is the monetary base * the money expansion multiplier.

In order for the Bank of Canada to lend money directly to the government, it has to print money. This directly increases the monetary base, not money supply.

The Bank of Canada adds to the monetary base about $4 billion a year, which I suspect is nowhere near what you'd like the Government of Canada to borrow.

That $4 billion figure is easily confirmed by simple mathematics. Canada GDP is about $1 trillion and it grows at around 3% a year ($30 billion).

The m3 money multiplier is about 7.5

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Originally posted by Adam T:
In order for the Bank of Canada to lend money directly to the government, it has to print money. This directly increases the monetary base, not money supply.

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Nobody's talking about the BoC or anyone else increasing the monetary base. Sure, if the feds threw caution to the wind and began printing billions of dollars more and threw it in to circulation, then there would be inflation with too much money chasing too few goods. But that's not what we're talking about.

The remainder of the money supply was privatized in 1991 after Mulroney's government slid a bill through parliament with a minimum of debate. That amounted to a bail out for the banks after they suffered huge gambling losses on world stock markets leading up to the 90's. And national and provincial and personal debts have skyrocketed. Few countries with as much natural wealth as Canada has can lay claim to the several hundred billion dollar debts dinged up by various Liberal and Conservative governments over the last two and half decades.

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Today about 95 percent of the money supply is created by private banks as interest owing debt. What we're suggesting here is that BoC create a larger portion of the money supply as interest-free money. William Krehm writing for the Committee for Economic and Monetary Reform http://comer.org says the feds could free up about $15 billion a year for health care, education and other programs they've defunded over the years while our elected officials have pursued increasing powerlessness.

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Wheere would the Bank of Canada get the money to create this bank? The Bank of Canada controls the monetary base, not money supply.

They would need to take in deposits just like private banks do, and nobody is going to put money in a bank that lends out money at 0%.

In order for money supply expansion to happen, people have to put money back into the banks, which then get loaned out again, less reserves and currency drain. Nobody would put money into a hypothetical Government of Canada Bank unless it paid interest.

I find it interesting that nobody at that site you linked to listed their qualifications. It wouldn't surprise me if none of them were even trained economists.

Reading through the site, it's clear they don't understand the distinction between adding to the monetary base (which is what the Bank of Canada does) and adding to the money supply (which is what private banks do through the money expansion process). Indeed, I'm pretty positive the creators of that site are not economists.

[ 07 August 2007: Message edited by: Adam T ]

I can explain the process of money base creation and money supply expansion, and I can understand from that that the Bank of Canada has no money to loan to the government.

I can also understand that it might be a hard for you to accept that the people you get your ideas from are economic illiterates.

[ 07 August 2007: Message edited by: Adam T ]

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No, I'm pretty sure it's you who are confused, Adam.

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[ 07 August 2007: Message edited by: Lard Tunderin' Jeezus ]

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Originally posted by Adam T:

Wheere would the Bank of Canada get the money to create this bank? The Bank of Canada controls the monetary base, not money supply.

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You yourself said up there that the feds print so many billion a year. But they also loan money to themselves at 4-4.5 percent for things like student loans since 2000 and based on ten year Canadian bond yields.

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They would need to take in deposits just like private banks do, and nobody is going to put money in a bank that lends out money at 0%.

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At one time the private banks were required to carry deposits on loans at a certain ratio. Since 1991 the ratio has ballooned from about 9:1 in the 1980's to what is it now, about 400 to 1.

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In order for money supply expansion to happen, people have to put money back into the banks, which then get loaned out again, less reserves and currency drain. Nobody would put money into a hypothetical Government of Canada Bank unless it paid interest.

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Go and read comer and understand they are not talking about increasing the money supply. No need to confuse the issue further.

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I find it interesting that nobody at that site you linked to listed their qualifications. It wouldn't surprise me if none of them were even trained economists.

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No, I'm pretty sure it's you who are confused, Adam.
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Less confused than religiously faithful to neo-liberal dogma.
[ 07 August 2007: Message edited by: Lard Tunderin' Jeezus ]

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Actually, in this case I'm just following how a process works. There is no theory here.

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Originally posted by Adam T:
Then explain to me where you the Bank of Canada would get the money to loan to the government without printing the money.

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Through increasing the chartered banks deposits with the BoC to ratios that were used previously in the last half of the last century without causing runaway inflation or the sky to fall.

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I can also understand that it might be a hard for you to accept that the people you get your ideas from are economic illiterates.

[ 07 August 2007: Message edited by: Adam T ]

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And I don't think you're even trying to sound naive.

[ 07 August 2007: Message edited by: Fidel ]

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You yourself said up there that the feds print so many billion a year. But they also loan money to themselves at 4-4.5 percent for things like student loans since 2000 and based on ten year Canadian bond yields.

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Yes, I said the Bank of Canada, not the 'feds' print about $4 billion a year.

They receive money from the public by selling bonds.

2.

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At one time the private banks were required to carry deposits on loans at a certain ratio. Since 1991 the ratio has ballooned from about 9:1 in the 1980's to what is it now, about 400 to 1.

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These are called reserve requirements. The government did away with mandating the ratio because the effects were too big on money supply creation whenever they made a change. There was no big 'conspiracy theory' in doing away with these requirements. As we've seen in the 15 or so years since it happened, there hasn't been a banking crisis. The current ratio I believe is about 60:1, not 400:1.

This money could not be used by the Bank of Canada to loan to the government of Canada because it is needed as reserves. It has to be kept on hand.

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Go and read comer and understand they are not talking about increasing the money supply. No need to confuse the issue further.

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Anytime money is loaned by a bank, it adds to the money supply. The Bank of Canada does not control the money supply.

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Hotson, for one, was a professor of economics at Waterloo University up until a few years ago.

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Through increasing the chartered banks deposits with the BoC to ratios that were used previously in the last half of the last century without causing runaway inflation or the sky to fall.

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Except as I said, that money has to be kept on hand in case it's needed. That's why it's called a reserve.

If they were somehow to do this without changing anything else (ceterus parabus), it would necessarily involve an increase in the money supply or a decrease of the share of the money supply spent by private citizens.

In reality though, there would be no way to do that without causing major disruptions in the economy. The banks would need to either sell a massive amount of bonds or call in a large number of loans to suddenly get the currency they'd need to put into the central bank.

As what I said earlier, the simplest way to have the government spend more of the money supply, and private citizens spend less, is simply to raise taxes. There is no need to fiddle around with banking reserves and other complicated instruments.

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Originally posted by Adam T:
As we've seen in the 15 or so years since it happened, there hasn't been a banking crisis. The current ratio I believe is about 60:1, not 400:1.

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Not since the taxpayers bailed them out, no. But Canada's banks have since provided billions of dollars to U.S. and other foreign corporations to scoop up and own more and more of Canada's important crown corporations and valuable assets since Brian Baloney's time in the sun. That's how they reward us for allowing them to load up with federal debt without putting up a penny of their own money.

And there are actually no set reserve requirements for Canada's big six, only what they refer to as a "preferred ratio."

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This money could not be used by the Bank of Canada to loan to the government of Canada because it is needed as reserves. It has to be kept on hand.

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They can do anything they want. It's our central bank. The banks should bail themselves out next time they fall into a pile of shit, like CIBC's shady dealings with ENRONg.

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It's not mentioned on the website, and it's pretty clear from him signing on to junk like that site that he has no knowledge of finance or banking.

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Monetary base expansion: the Bank of Canada gets new money printed and buys a bond from a private bank. (assume $10,000 with a 5% bank reserve)

Private bank 1
With the new $10,000, the bank loans out the money to person A. Person A buys something from person B with the money.

Total money supply increase:
$10,000

Person B then puts the money in private bank 2.
Private bank 2 loans out the $10,000 less a 5% ($9,500 lent out) reserve to person C.

Totaly money supply increase:
$19,500

This process continues so on down the line.

The final total money supply is $10,000/0.05 or $200,000.

As we see, the Bank of Canada controls the monetary base through printing money, and Private Banks control the money supply by lending money and keeping reserves.

If the government of Canada were to order an increase in bank reserves it would necessarily destroy a great deal of money creation.

If you changed the reserve from 5% to 10%, total money creation would be:

$10,000/.1 = $100,000 instead of $200,000.

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They can do anything they want. It's our central bank. The banks should bail themselves out next time they fall into a pile of shit, like CIBC's shady dealings with ENRON.

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Yes, the usual name calling from Fidel once he finds himself dealing with a person who is actually knowledgable on a subject and doesn't fall for his nonsense.

A bank bailout is different from bank reserves.

Usually when a bank is bailed out, it involves the government forcing other banks to lend money to the bank in question. There are positives and negatives of bailouts, but they have nothing to do with bank reserves.

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But in the meantime, nobody but you here is talking about "expanding the monetary base" or increasing the money supply. Do-you-un-der-stand ?.

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Except you are. There is no way the Bank of Canada can loan money to the Government of Canada without increasing the monetary base.

Or, by going through the ridiculous and completely impractical process you suggested and having the government spend a higher proportion of the monetary supply.

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Or, by going through the ridiculous and completely impractical process you suggested and having the government spend a higher proportion of the monetary supply.

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In reality though, there would be no way to do that without causing major disruptions in the economy. The banks would need to either sell a massive amount of bonds or call in a large number of loans to suddenly get the currency they'd need to put into the central bank.

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Spend a few marketing dollars to engage the public, and I'm rather certain they're onboard with their democratic government.

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Originally posted by Adam T:

Yes, the usual name calling from Fidel once he finds himself dealing with a person who is actually knowledgable on a subject and doesn't fall for his nonsense.

A bank bailout is different from bank reserves.

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The bailout of the banks occurred in 1991 when the feds allowed private banks to place smaller reserve deposits with the BoC and allowing them to create a larger share of the money supply as interest-owing debt, about 95 percent of the money supply today. The feds have effectively allowed the banks to load up with federal debt through the bond market without putting up any of their own money from cash or other reserves.

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As to the reserves, indeed you are sugesting a transfer of the reserves from the bank (who are actually the owners of the reserve) to the government. Again, why have anything so complicated. You could do that much easier by merely proposing to increase taxes on the banks.

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It is complicated. But if it was too complicated, then that bonehead Brian Baloney and his stoogeocrats wouldn't have made changes to the Banking Act in 1991. And perhaps you wouldn't be offering us tutorials we didn't ask for.

They are federally-regulated banks, and no private entity does anything they want to without being granted specific rights and obligations by the federal government, the elected/annointed ones in all of this. PB's make money in areas of the economy which wasn't typical of private banks leading up to privatization of the remainder of the money supply.

[ 07 August 2007: Message edited by: Fidel ]

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In a word, no.
Spend a few marketing dollars to engage the public, and I'm rather certain they're onboard with their democratic government.

They buy those ridiculous RRSP things, don't they?

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Just six percent of Canada's national debt was due to programs spending - 94% was interest which resulted from the government borrowing from the private sector instead of from the BoC. And besides Canada's new federal debt - which is unparalleled in colonial world history - provincial and municipal governments racked up another $400 billion dollars worth of debt because of the Liberal and Conservative privatization of the remainder of Canada's money supply.

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Originally posted by Adam T:
So, I see we've learned nothing from this discussion other than we have more confirmation that Fidel is an idiot.

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How can you allow yourself to be completely out-argued by Fidel is beyond me. He has reduced you to cheap-shot school boy ridicule, and he comes off as an intellectual powerhouse by your grace.

But you are right to keep your missives short, as it is apparent that any attempt by you to venture into the deep end of the pool will only reveal that you can not swim at all.

[ 07 August 2007: Message edited by: Cueball ]

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Originally posted by Adam T:
So, I see we've learned nothing from this discussion other than we have more confirmation that Fidel is an idiot.

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Originally posted by Cueball:

How can you allow yourself to be completely out-argued by Fidel is beyond me. He has reduced you to cheap-shot school boy ridicule, and he comes off as an intellectual powerhouse by your grace.

[ 07 August 2007: Message edited by: Cueball ]

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Ya! What Cueball said. I've kind of missed Cueball's scathing rebukes and lessons in history.
Anyway, it's been fun again. No hard feelings, it's only cyber-jawing anyway eh.

[ 07 August 2007: Message edited by: Fidel ]

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How can you allow yourself to be completely out-argued by Fidel is beyond me. He has reduced you to cheap-shot school boy ridicule, and he comes off as an intellectual powerhouse by your grace.

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Wow, being insulted by Cueball. That's like math where if you multiply a negative by a negative, it ends up a positive.

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Originally posted by Adam T:

Wow, being insulted by Cueball. That's like math where if you multiply a negative by a negative, it ends up a positive.

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Now-now! There's no reason for anyone to resort to insults. Cueball was funnin' wiz us both, and he did it in a tactful way.

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Adam, you're very knowledgable about economics and this topic in particular. I won't pretend I'm an authority on money or banking because, as you've said, it's a very complicated subject. But if we leave it to the majority of politicians themselves who have only a vague understanding, and our appointed bank governors, then when do the people begin to understand it at even an elementary level? Should money and banking ever be fully democratized ?. Or should we leave it to the bankers, the Bay Street bond salesmen, actuaries with hairy degrees and politicos in their hire ?.

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Did Michelle make you write that?

These things should be a mandatory course in high school.

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Originally posted by Cueball:
Why do you bother? Richmond is a big town. There are plenty of things to do out there. Why not go down to the corner and wait for old ladies to come by and trip them up for laughs?

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Originally posted by duncan cameron:
A missing concept is that of high-powered money which I prefer to what is sometimes called the monetary base. Monetary policy affects the monetary base because the Bank of Canada can manipulate the monetary base through open market operations, the buying and selling of government bonds. or interest rate changes which have secondary effects on the monetary base and affect the lending policies of the banks.
When the Bank of Canada buys bonds issued from the government it creates high powered money. Krehm and co. have documented the fall in the holdings of government debt by the Bank of Canada and deduced that the Bank of Canada is not interested in financing government spending through credit creation i.e. buying bonds.

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The governmnent pays interest on the bonds held by the bank of canada to the bank of canada. The government owns the bank and receives the profits of the bank including its interest income. So the government pays interest to itself. This process of buying new government bonds by the Bank of Canada is the way money is created.

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When private banks make loans they create deposits. This also creates money but their ability to make loans is limited by the amount of reserves they hold.
Unitil Mulroney private banks had to maintain reserves on deposit with the Bank of Canada. This limited their income since these reserves could not be lent out. With reserve requirements eliminated, private banks made windfall profits.

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Under John Crow monetary policy had the bank of canada either withdrawing government deposits from the private banks or adding deposits depending on whether it wanted to expand or contract lending. Under Dodge the Bank mainly fiddles with the interest rate.

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In my opinion the Bank of Canada is only willing to hold government debt in the amount about equal to the demand for bank notes or currency in circulation. Anything above that is supposed to be inflationary.

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What the Bank has totally missed is the asset inflation going on all around us as the price of stocks, houses, paintings and commodities gets bid up out of sight by private banks creating credit. The meltdown in the U.S. sub-prime and the defaults of the mortgage companies is one result of this.

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It is because governments can create money that socialism is a viable economic policy. In order to disprove socialism you first have to deny that credit is a collective undertaking that can be harnessed by the people through their elected representatives, and pretend that public credit creates inflation while private credit does not.

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Originally posted by Stephen Gordon:
Huh? Inflation is driven by money supply growth. The share of high-powered money in the money supply doesn't matter.

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I thought Milton Friedman said it doesn't matter who creates the money supply. Or did tiltin' Milton suggest that money creation should be privatized as it was in Canada beneath Brian Baloney's nose without his conservative government's knowledge ?. We knew they were totally out to lunch then, so anything's possible.

According to COMER, Milton Friedman advocated for 100 percent money. Why, then, were central banks and Conservative/Liberal politicians as selective with Friedman's theories and so careful not to adopt this particular Friedmanism?. Canada's big six banks are doing real swell since the Mulroney bailouts and after being handed a windfall gift for creation of remainder of the money supply. But homelessness is persistent across Canada as is child poverty. There were no food banks in Canada in 1974. And accessing post-secondary didn't translate into indentured servitude then. Those were the good old days when gross national debt was below $20 billion not a whopping trillion dollars. For a country so rich in natural resources, the feds have no business carrying that much debt to prop up the private banking industry.

[ 11 August 2007: Message edited by: Fidel ]