Finance Minister Jim Flaherty spoke at the G7 meeting suggesting that the other G8 nations need to stay the course with the austerity measures. The Financial Post is quoted him as saying “Big countries’ weakening resolve to cut debt is a mistake”. Meanwhile, many European nations are enveloped in a deep recession. His comments smack of all the callousness of a man of privilege railing against the disadvantaged. Frankly, Mr. Flaherty should keep quiet and stop going around the world bragging about Canada’s great economy; something that he himself should not take credit for.
No one can accuse me of being a Liberal, so I’ll say it, I remember that it was Paul Martin, the Finance Minister that brought down Canada’s debt before the Conservatives came to power, and when Finance Minister Flaherty took the reigns he became an extravagant spender compared to Martin. The Flaherty’s saving grace is that Canada is a resource based economy and the only reason Canada doesn’t sink like a stone in the red is that the States buy so much oil from Canada and they pumps so much money into the economy and into government as taxes.
How does Flaherty expect nations, like Spain, with 28% unemployment to pay down debt, when auserity means even higher interest on their debt. And despite the higher debt their revenue, via taxes are way down and at the same time as their social cost for programs for the poor are way up. Plus to keep the unemployment at such levels for many years will create a problem with the youth, that have no jobs, growing up with no skills to work in the future.
Most of all, Flaherty should keep his ignorance to himself. He is saying that these nations should play by old rules of going to financial institutions to borrow money when all sovereign nations already have the right to create their own wealth, in other words, not being saddled for debt. Mr. Flaherty’s little speech should be a reminder to Canadians that he borrows from financial institutions for Canada when the Bank of Canada was nationalized in 1934 for the expressed purpose of creating money for the governments within Canada. If Canada has debt is only because governments since Trudeau have decided not to ask the Bank of Canada for money to fund government projects.
Outrageous? Absurd? When did Canada’s debt begin? In the late 1970’s after Trudeau changed this policy. If anything is outrageous and absurd it is that Canada changed to a debt system in preference to a debt-free one.
Note: on this chart it splits the years that the Government was funded by the Bank of Canada and the years that the Government was funded by Private Banks. Note that at the date of change was where Canada’s debt began and exploded.
ADDED FEATURE: For audio interviews on a CBC Radio show, The Current click on the link below. It is the growing case against austerity set out by the economists’ plan Reinhart and Rogoff, that started the austerity policy rocking much of the Western World. It is truely enlightening. The Link for the CBC audio is http://www.cbc.ca/thecurrent/episode/2013/05/09/is-the-case-for-austerity-crumbling/
The person in the interview is Robert Pollin , a professor of economics and co-director of the Political Economy Research Institute at the University of Massachusetts in Amherst. He is also the co-author of Does High Public Debt Consistently Stifle Economic Growth? A critique of Reinhart and Rogoff.
Highlights of the interview: Pollin at the 7:30 min. point of the interview says”Austerity policies are not working. 7:42 point of interview states that “Economists are not doing good work and haven’t for a long time. If we were doing good work we won’t have had a financial crisis to begin with.
The next person on the interview was Mark Blyth. He has done a lot of hard thinking about austerity. He is a professor of International Political Economy at Brown University and the author of the book Austerity: The History of a Dangerous Idea.
The third person on the interview against austerity is Heritage Foundation, J.D. Foster . He is not convinced the world’s belts are tight enough. J.D. Foster was the Associate Director for Economic Policy in the White House Office of Management and Budget. He’s now a Senior Fellow with the Heritage Foundation in Washington D.C.
Also from CBC, I got a link to a news article about the student that found the error in the Reinhart and Rogoff study. Here is the link to that article:
For more information on debt-free money for Canada, please read https://pushinback.wordpress.com/2012/09/23/571/