Saturday, October 17, 2020

A Very Serious Tiff Indeed


The tiff is over our climbing housing prices. There seems to be some sort of a serious difference of opinion between Tiff Macklem, who is the Governor of the Bank of Canada, and government policies, about whose responsibility it is to address the problem of soaring house prices. Macklem told a virtual audience at the Global Risk Institute last month that “The Bank of Canada is aware that its policies are inflating house prices, and it (the Bank of Canada) is going to keep an eye on the country’s heavily indebted households”. However, in a speech just a few days ago, he made it clear he plans to do nothing about it as the Bank of Canada would continue with its current policies “in place for a long time”. His parting shot...”But if too many Canadian households start to become dangerously over-leveraged, policy makers have several macroprudential tools they can use...”


What the heck even are macroprudential tools? Even without knowing about those, it’s clear we are being told to stop looking to the Bank of Canada for relief of sky high housing prices, and to look to the Trudeau government. I think we all may be forgiven for thinking that the Bank of Canada was part of the Canadian government. Our Bank of Canada that masquerades as a Crown institution is, in reality, a private bank. I’ve talked previously about how our current Prime Minister’s father, Pierre Trudeau, engineered it that way in consultation with the central banks of Europe. Even though it went totally against the charter for the Bank of Canada.


So our public bank that is supposed to watch out for the welfare of Canadians is in reality a private bank that pays out dividends to shareholders like regular banks do. Well, I am happy at least that Justin Trudeau cares enough, it seems, to be getting checks out to out of work Canadians that may suffer the most from the tiff between Tiff Macklem and the Trudeau government.


The bank shares in the Bank of Canada are now owned by private persons and money markets, some domestic and some foreign. But just try to find out exactly who the share owners are other than other banks and “large institutional investors”. Blank wall. And the weird thing is that the Bank of Canada is the only government institution that is authorized to print money. And how did the Bank of Canada get this much power? So much power that it seems to be almost totally independent of the government it is supposed to serve?


Trudeau can only spend from the tax base. He can’t just print more money like the Bank of Canada can. The Bank of Canada is not the only institution that create money in Canada. All of the chartered banks do it. When anybody goes in for a bank loan and is approved, the bank doesn’t give the borrower the money the bank already has from deposits. Oh, no. The bank just creates the new loan money out of thin air by simply clicking on a few computer numbers and opening a balance sheet for that much money. Then that thin air compound interest money is loaned out again, and again, and again with taxes on every movement. No wonder the banks, especially the central banks, get so rich, no matter what is happening to us, like paying most of our income for housing. How do we get our Bank of Canada - which propelled Canada into the 20th century with no interest - back into Canadian hands? Next time I will show how the Bank of Canada actually worked under its original public charter. And why we desperately need it now in these times of a second wave of Covid-19 which is threatening the Canadian people and their ability to have stable housing.

No comments:

Post a Comment