| | | I think the Canadian government did the right thing by simply creating the 400 million they needed. Much more honest than "borrowing"....
The "borrowing" that govts do by issuing bonds was an 18th century modification of the timeless tradition of rulers/nobility/gentry taxing the peasantry. Growth of modernity was accelerating, what with science, invention, manufacturing, new banking practices, growing merchant activity, workers leaving/driven from the countryside , parliamentary sovereignity, and constitutional government.
But the nobility and rich still owned the government and didn't much care for paying it taxes to pay for the army, navy and war, and to protect them from the poor.
So, instead of them paying taxes, a wheeze was developed: that they would lend the govt money, (buy its bonds), and the government would pay them back principal and interest out of the taxes collected from merchants and poor. Same old, same old. A racket.
During 19th and early 20th centuries central banking was developed and, cruel twist of fate, within the first two decades of the 20th century everybody had the vote. And the rabble, (in modern terms, "the deplorables"), owned the government. So, now, the government has not only to protect the rich from the poor, but the poor from the rich. Not quite same old, same old.
And the deplorables now own the central bank. Isn't that something to conjure with!
When Donald ... no, lets not go there! Libtard and conservtard heads will explode everywhere. Very messy.
Given human adaptability some time in early 19th century govt bonds were used to squirrel away pension, endowment, and trust money and they were no longer just a rich person's tax dodge. The principal was safe and they had an income stream. (How safe depended on which government and inflation, and as we've seen recently, deflation). But they've sort of become part of the social contract and also a damn nuisance.
It's the continuation of the 18th century racket for bankers.
I think the Canadian government did the right thing by simply creating the 400 million they needed. Much more honest than "borrowing" the funds, and dumpling the debt on the grandchildren -- what the heck, let 'em deal with it, and by then we may be dead anyway.
Actually, they did borrow the money, interest free. But that's another story.
I'm not worried about private debt - if it implodes, assets will change hands at much lower prices, and life will go on. It's the public debt that is the danger.
Private debt has imploded and the economy has stagnated for 8 years, your real unemployment rate is around 15%, made life truly miserable for millions of people and assets are not at much lower prices but the contrary, are higher and for long before Trump was elected.
I haven't noticed public debt having such an effect.
You should worry about private credit formation. It's expansion or shrinkage is what drives economic growth or decline. |
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