Canada’s Fall economic update, or how to follow Alice through the looking glass

Fall economic Update by Minister of Finance for Canada in the Canadian House of Commons 1st November 2016

 At approximately 1524 in the update the Minister of Finance announced this, and I quote from Hansard:

“Our communities need to keep people and goods moving. Our most vulnerable citizens need housing. Our kids need and deserve clean air and clean water. Our country needs long-term economic growth.

To solve these challenges, we need to think even bigger. We need reliable partners. Canada’s pension funds and institutional investors around the world have world-leading expertise and they are eager to make big, long-term investments in Canada.

I am happy to announce that the Government of Canada is establishing a new Canada infrastructure bank, through which at least $35 billion will flow to help us undertake transformative projects that might not otherwise get built. This bank will allow us to create thousands of jobs, get more projects built, and attract $4 to $5 in private capital for every tax dollar invested. That is progress.”

Then at 1525 or so this:

“Decades from now, when my kids tell the story of when their dad was finance minister, I want them to be able to look back and see our government’s first year in office as the year Canada began on the path towards a new, modern economy. We are well on our way”.

Now I am a simple man, not a lawyer, not a financial expert nor an economist; I have worked hard all my life to provide for my families and sometimes even myself. I simply cannot understand how anyone who claims to listen to the Canadian people, who claims to have the best interests of Canadians uppermost in his mind, and is looking to get the approval of his own children, can be so blind to the economic reality facing him.  He is privatising the entire infrastructure of Canada, from the federal, provincial and indeed to the municipal level.  The profits will not come to Canada for the benefit of Canadians but will go instead into off shore bank accounts.

 IS THIS WHAT YOU VOTED FOR?

 This bank, as he so blatantly stated, will be a private bank, owned and financed by corporate interests and the pension funds.  These investors will expect a profit in the neighbourhood of 7% – 9% or they will not invest.  Who will be paying this profit?  Why the Canadian people of course, or lets correct that, it will be the middle and lower earning Canadians, as the top earners are the ones who will be investing in this bank for profit and no doubt will find loop holes and write-offs to eliminate their share of taxes which would otherwise help to pay for this gross mismanagement of Canada’s wealth.

There is another aspect to this and that is CETA should it ever actually become a reality, because this bank could in fact stop profits from European banks which might like to invest directly in some of our projects, or make loans to our municipal or provincial governments. Not being able to do so at profit will give them the opportunity to take Canada to a European court of doubtful jurisprudence which will then dictate our laws to us and of course fine us. Wonder how much money the Minister has allowed for that and where he will get it from.

 Canada is in the enviable position of owning its own bank already, a public bank called the Bank of Canada which was responsible for financing the greatest period of growth and prosperity Canada has ever know, from 1935 to 1974.  Look at the history of financing our part in WW2, having the largest merchant navy in the world, the St Lawrence Seaway, CPP, healthcare, what used to be called Unemployment Insurance, Trans Canada highway, railways, roads, bridges, hospitals, schools – the list is almost endless and after all that and with minimal inflation we had a national debt in 1974  of just $22 billion basically owed to ourselves!

 Today, according to the World National debt clock, our national debt is over $1 trillion and rising fast.  

 What does the Finance Minister have to say about using the Bank of Canada?  I quote from part of a letter sent to me by one of his staff in reply to my letter concerning the refusal of this government to use of the Bank of Canada, and querying how the infrastructure bank mentioned in one of the leaders’ debates in 2015 would be financed:

 “It is sometimes suggested that the Government of Canada should fund part or all of its debt by borrowing from then Bank of Canada, rather than by borrowing in private sector markets. The Government does not support this approach, as it would require the Bank to create new domestic currency, which does not create any additional wealth.

In fact, the experience of many nations has demonstrated that relying on domestic currency creation to finance government expenditures results in excessive inflation.

While some inflation is desirable to ensure price stability, too much inflation can adversely affect economic growth.  Furthermore, excessive spending and domestic currency creation often lead to a misallocation of scarce resources.”

There is so much inherently wrong with these two paragraphs, but I will simply ask how can anyone really understand the logic of turning a publicly owned bank from a mandated money supplier (Bank of Canada Act 1935) and even a dividend payer to the Minister of Finance, into a simple and toothless inflation watchdog?  The logic of this is beyond me and all I can think is that the current politicians, none of whom support the mandated use of the Bank of Canada, have somehow listened to the siren calls of the big international banks and investors, and believe their call over the needs of their constituents and indeed Canada.

 The fight to stop COMER from  taking the Bank of Canada, the Finance Minister and Government of Canada to court to force them to return to using the Bank of Canada continues, with appeal after appeal from the government in spite of overwhelming evidence that they are wrong.   How can they be right when we are heading further and further into an abyss since we stopped using the Bank of Canada.

 Now we know for sure that this Liberal Government is actually as bad as or even worse than the previous Harper regime, and although they claim to listen to the people of Canada, they do not.

 At least we knew that Harper wanted to destroy Canada as he said would in 2006, but this government is racing to out Harper Harper.

 Shame on them all, and shame on us for not fighting them tooth and nail. 

 Unlike the Minister’s wealthy children looking back in pride at their daddy’s perfidy, our children, grand children and great grand children will ask us the question: “Where were you when Canada was sold?”

 

Jeremy Arney

 

 

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