My Submission To Canada's Budget Consultations

Canada's new government is planning a fall budget. Here's my take, for what it's worth.

Diagnosing Canada’s Economic Woes - Private Debt Levels Pose an Existential Threat to Canada’s Economy & Financial System

Canadians are now facing a debt crisis - an insolvency crisis. It is not a “liquidity crisis” where banks need some quick cash on hand to prevent a bank run. It is an insolvency crisis. It is a financial problem that needs a financial solution, in order to provide real relief to citizens - not just in Canada, but around the world. The housing crisis is not limited to Canada - and neither is inflation.

I am writing to express my alarm at the announced plans for the Federal Budget 2025, many of which, in my view, are doomed to fail because they are operating from a purely ideological position that seriously misdiagnoses Canada’s economic woes, and pursues policy solutions that will backfire.

When the Minister François Phillippe Champagne says:

“Budget 2025 will catalyze investment and economic growth across Canada to build one united Canadian economy – all while spending less on the day-to-day operations of government.”

It means that certain vital decisions have already been made, which I believe to be fatally flawed. The diagnosis is wrong, and so is the cure.

Saying the government needed to “spend less, and invest more” is a superficial argument assumes that the problem with the economy is that it is being slowed down by an increase in government spending after the severe austerity of the last Conservative government, which shrank the Federal Government to its smallest size as a percentage of GDP since the 1930s, and reduced Canada’s defense spending to half of what it was in the 1970s.

These factors are being ignored in favour of a purely ideological assessment that totally misdiagnoses Canada’s severe economic troubles, doubling down on the same ineffective failed policies that have created the crisis in the first place.

Instead of engaging in a serious analysis of the Canadian economy, these are knee-jerk solutions based on ideological assumptions of trade barriers that do not exist, of taxes that are too high when they are already low, or of stifling regulations when oversight is often non-existent.

As it stands, the stated goal of creating a “fast-growing economy” through massive cuts to federal spending and federal deregulation and capital gains tax cuts are all doomed to fail, and will accelerate the erosion of the income and wealth of working and middle class Canadians, while further adding to the wealth of speculators.

• A massive increase in defense spending will be fine for the Canadian economy, but the benefits will be extremely concentrated.

• Massive cuts to spending are pointlessly destructive, and will have no benefits whatsoever: this should be self-evident based on the following statements of fact:

  • All spending is someone’s income

  • Governments spend into the private economy.

  • When a government spends more than it taxes - a deficit - it is a surplus for the private economy

  • Billions in spending cuts will directly result in billions of dollars in lost income for Canadians - not just public servants, but every single private business they

• Reversing the capital gains tax increase is completely unjustifiable. It amounts to reopening a loophole that a tiny fraction of ultra-high income earners were able to exploit, especially people who were speculating on real estate. It is a loophole that was fuelling housing unaffordability while doing nothing to advance any real innovation.

• The idea that Government can be “reimagined for the 21st century” with massive cuts and by replacing people with AI is drivel and baseless hype.

• There is no need for massive cuts to regulations at the federal level to supposedly speed development. There are ways to effectively speed development without cutting corners.

• There are no measurable provincial trade barriers, and trying to remove something that is not there will not result in $200-billion in gains from trade. There are about three areas where harmonization would be useful - finance and trucking are two. Everything else is a massive waste of everyone’s time.

Canada’s economy does have serious problems that need to be addressed.

That means directly addressing the major events over the last 15 years and more.

Reason #1 for Canada’s fouled-up economy: The Price of Oil

• “It’s the Price of Oil, Stupid” is from a reader’s comment, pointing out that problems with Canada’s economy are inevitably due to the price of oil, a global commodity with global prices.

• In October, 2014, OPEC and Saudi Arabia started a global oil price war. The price of oil sank faster and deeper than at any time in history.

• It had been over $100 a barrel for years, Alberta and Saskatchewan and Newfoundland and other energy producing provinces were rolling in money, then Saudi Arabia turned off the taps.

• This is 100% the cause of the crisis in Canada’s oil sector. Not the Federal Government. Not the carbon tax. Not regulations. Not taxes. Not pipelines. There was a massive boom in oil, followed by a massive bust. It was financial warfare. It affected countries around the world, including the U.S.

• THIS is the major reason for the loss in Canada’s GDP, loss of investment, and loss of income, employment.

Reason #2 for Canada’s fouled up economy: High personal debt from a colossal Real Estate bubble

• We are currently in a massive financial “superbubble” created by the incompetent and reckless policies of unelected central banks. Since the Global Financial Crisis of 2008 and before, Governments and Central Banks have been trying to fix the economy by lowering interest rates so that people go into more debt by driving up real estate prices.

• Instead of investing in productive “real economy” businesses, R & D and innovation, Canadians as individuals have added more than a trillion dollars in personal debt that has gone into driving up the price of real estate

• Commercial real estate is already in deep trouble.

• This relates DIRECTLY to economic misery in provinces like Alberta and Saskatchewan, where there were housing and mortgage debt booms along with the oil boom.

Reason #3 for Canada’s fouled up economy: A Global Pandemic, Especially Central Bank Responses

• The policy decision to address the Pandemic with monetary measures, where people were encouraged and expected to take on debt to keep themselves and the economy going has played the single greatest role in fouling up the economy. The trillions of dollars that were loaned out - on top of previous trillions - drove up the price of existing assets including real estate, stock, and meme stocks.
  It was not long-term investment in productive industry. It drove greater concentration of wealth, including considerable wealth based only on reckless speculation. That concentration also included mergers and acquisitions.
  This has created the economic trap that Canada, and the U.S. and countries around the world all face.
  Contrary to the market dictum for making money “buy low, sell high,” speculation fuelled by low-interest debt means people are paying top dollar for assets - including major investors.
  That leads to a self-evident market conundrum: the more you pay for an asset, the harder it is to get a return. This drives inflationary pressures, as companies have to hike rents and prices in order to keep achieving elevated returns.
  In response to inflation created by easy money, central banks then moved forward with some of the sharpest interest rate hikes in history. This mindless monetary response to a crisis of central banks’ own making has accelerated personal and small business defaults.
  If central banks were looking to emulate the “success” of Paul Volcker’s inflation-crushing 20% interest rates in the early 1980s, they didn’t bother to compare levels of debt in that era (very low) to today (very high). Add to that that in his first term (1980-84) Reagan reversed his initial tax cuts and brought in the largest tax increases in history, and ran huge deficits, grew government and had an economic stimulus larger than Obama did after the Global Financial Crisis of 2008.

These three realities - which are indisputable, and based in evidence and facts, are the three major reasons for the overall problems with Canada’s economy.

• We have overpriced assets due to bad monetary policy whose prices must come down, but there is no non-destructive way to do that.

• We need to re-industrialize and Canadian entrepreneurs do not have adequate access to capital available to make that happen.

• We need to rebuild and invest in public infrastructure and services

• In extraordinary circumstances, the Government of Canada and the Bank of Canada have the capacity to address any crisis. Canada has monetary sovereignty and cannot default on debt in its own currency.

In 2008, the Global Financial Crisis resulted in a meltdown whose triggering event was the default of mortgages that were the basis of further investments. Private debt - in the form of mortgages secured against houses, a non-productive asset, resulted in the worst economic crash in decades.

Today, Canada and the world face another financial crash should asset prices revert even part of the way to their mean.

In 2022, Billionaire Investor Grantham wrote an article “Let the Wild Rumpus Begin” where he argued that we are in the one of the largest bubbles in history, and that it’s starting to unravel.

He also explains why we don’t see it: “In a bubble, no one wants to hear the bear case. It is the worst kind of party-pooping. For bubbles, especially superbubbles where we are now, are often the most exhilarating financial experiences of a lifetime.”

On January 2022 he wrote:

“This time last year it looked like we might have a standard bubble with resulting standard pain for the economy. But during the year, the bubble advanced to the category of superbubble, one of only three in modern times in U.S. equities, and the potential pain has increased accordingly. Even more dangerously for all of us, the equity bubble, which last year was already accompanied by extreme low interest rates and high bond prices, has now been joined by a bubble in housing and an incipient bubble in commodities.

One of the main reasons I deplore superbubbles – and resent the Fed and other financial authorities for allowing and facilitating them – is the underrecognized damage that bubbles cause as they deflate and mark down our wealth. As bubbles form, they give us a ludicrously overstated view of our real wealth, which encourages us to spend accordingly. Then, as bubbles break, they crush most of those dreams and accelerate the negative economic forces on the way down. To allow bubbles, let alone help them along, is simply bad economic policy.”

He continues:

“Today in the U.S. we are in the fourth superbubble of the last hundred years. Previous equity superbubbles had a series of distinct features that individually are rare and collectively are unique to these events. In each case, these shared characteristics have already occurred in this cycle.

The penultimate feature of these superbubbles was an acceleration in the rate of price advance to two or three times the average speed of the full bull market. In this cycle, the acceleration occurred in 2020 and ended in February 2021, during which time the NASDAQ rose 58% measured from the end of 2019 (and an astonishing 105% from the Covid-19 low!).

The final feature of the great superbubbles has been a sustained narrowing of the market and unique underperformance of speculative stocks, many of which fall as the blue chip market rises. This occurred in 1929, in 2000, and it is occurring now. A plausible reason for this effect would be that experienced professionals who know that the market is dangerously overpriced yet feel for commercial reasons they must keep dancing prefer at least to dance off the cliff with safer stocks. This is why at the end of the great bubbles it seems as if the confidence termites attack the most speculative and vulnerable first and work their way up, sometimes quite slowly, to the blue chips.

The most important and hardest to define quality of a late-stage bubble is in the touchy-feely characteristic of crazy investor behavior. But in the last two and a half years there can surely be no doubt that we have seen crazy investor behavior in spades – more even than in 2000 – especially in meme stocks and in EV-related stocks, in cryptocurrencies, and in NFTs.

This checklist for a superbubble running through its phases is now complete and the wild rumpus can begin at any time.

What is new this time, and only comparable to Japan in the 1980s, is the extraordinary danger of adding several bubbles together, as we see today with three and a half major asset classes bubbling simultaneously for the first time in history.

When pessimism returns to markets, we face the largest potential markdown of perceived wealth in U.S. history.”

Developed Countries and Canada are all mired in a private debt crisis that is the result of poor monetary and fiscal policy, especially during crises, that have resulted in a housing affordability crisis, and a massive asset bubble that is currently collapsing around the world.

In July 2022, Edward Chancellor warned “It will turn out to be largely impossible to normalize interest rates without collapsing the economy,”

– not because of the actions of elected governments and officials, but because of two decades of monetary policy pursued by the Bank of Canada and other central banks, which are independent and are supposed to be free from political influence.

Chancellor, who is a financial analyst and economic historian, said

“By aggressively pursuing an inflation target of 2% and constantly living in horror of even the mildest form of deflation, they not only gave us the ultra-low interest rates with their unintended consequences in terms of the Everything Bubble. They also facilitated a misallocation of capital of epic proportions, they created an over-financialization of the economy and a rise in indebtedness. Putting all this together, they created and abetted an environment of low productivity growth.”

That is the recommendation of economist William White, from August of this 2023:

“[S]timulative monetary policy has had a variety of unintended and unwelcome consequences that can only worsen; credit “booms and busts”, potential financial instability, fiscal unsustainability, a progressive loss of central bank “independence”, growing inequality of wealth and opportunity and a slower growth rate of potential output. Fourth, as the threat posed by these unintended problems have cumulated over time, “exit” and the “renormalization” of policy has become ever harder to achieve.

To sum up, the current monetary system has trapped us on a path we do not wish to follow because it leads inevitably to ever bigger problems. This is why fundamental reform is needed.”

White is a former Central Banker who worked at the Bank of England, Bank of Canada, there is arguably no one in the world who knows more about central banks than he does.

Currently a fellow at the C D Howe Institute, White was born in Kenora, Ontario in 1943. He worked “for various central banks for 39 years, most recently serving as chief economist for the central bank for all central bankers, the Bank for International Settlements (BIS)”. His time included working at the Bank of England and the Bank of Canada.

For several years, as economic advisor, White warned Alan Greenspan and other central bankers starting in 2003 - for five years - that there was a financial crisis coming.

White says central banks need to focus more on the financial system and debt, and not just on inflation targets. As he points out, because of the tools central banks are using - “solving today’s problems also makes tomorrow’s problems worse”

As White put it, “Financial bubbles have created ever larger bubbles which threaten future growth prospects.”

One of the defining features of a bubble – or a financial mania - is that the asset being traded can’t actually be used for its intended purpose anymore. This has been true for centuries for everything from Tulip Bulbs, to Beanie Babies to Baseball Cards to Crypto. And in housing, it means that homes and condos sit empty in a housing crisis.

The reason the Bank of Canada, and other central banks are doing this is because, despite the utter failure of neoclassical economics to detect, predict, or moderate these crises, in Canada in particular there has been no serious re-consideration of why.

In 2016, Paul Romer, who was then Chief Economist at the World Bank wrote “The Trouble with Macroeconomics” in which he eviscerated the current state of macroeconomics in the U.S. and around the world, writing that orthodox macroeconomics had been in “30 years of intellectual regress,” and was so disconnected from reality that it was “post-real”. Romer wrote his paper, inspired by a similar critique of “string theory” in physics.

“Lee Smolin begins The Trouble with Physics (Smolin 2007) by noting that his career spanned the only quarter-century in the history of physics when the field made no progress on its core problems. The trouble with macroeconomics is worse. I have observed more than three decades of intellectual regress.”

In 2003, Robert Lucas, who is one of the architects of the neoclassical revolution of the 1970s, delivered a lecture that the economics he had conceived had put an end to financial crises for good.

“My thesis in this lecture is that macroeconomics in this original sense has succeeded: Its central problem of depression prevention has been solved, for all practical purposes, and has in fact been solved for many decades.”

Romer’s comment on Lucas; hubris was:

“Using the worldwide loss of output as a metric, the financial crisis of 2008-9 shows that Lucas's prediction is far more serious failure than the prediction that the Keynesian models got wrong…. “In model after model the “identification” or cause is either assumed or imaginary.

In response to the observation that the shocks are imaginary, a standard defense invokes Milton Friedman's (1953) methodological assertion from unnamed authority that "the more significant the theory, the more unrealistic the assumptions (p.14)." More recently, "all models are false" seems to have become the universal hand-wave for dismissing any fact that does not conform to the model that is the current favorite.

The noncommittal relationship with the truth revealed by these methodological evasions and the "less than totally convinced.." dismissal of fact goes so far beyond post-modern irony that it deserves its own label. I suggest “post-real.”

The trouble for the Canadian economy is not government spending, or government debt, it is the absolutely colossal amounts of private debt that Canadians are living with. Canadians are among the most indebted people in the world.

Asset bubbles are created and become dangerous when people use debt to speculate on the price of existing assets. Contrary to the claims of Rogoff and Reinhart, it is not the threat of public debt that distorts the economy: financial crashes originate within the financial sector as a consequence of defaults on private debt - as with mortgages in the 2008 GFC

.Professor Steve Keen and other Post-Keynesian economists have recognized this threat and used it to identify threats. He writes:

“The coincidence of booms and busts in asset prices with macroeconomic booms and busts is thus no coincidence: the huge asset overvaluations of 1929, 2000, 2007 and the mid-2020s are driven by the same factors which caused the booms and busts of the macroeconomy itself. Asset price bubbles are driven by credit bubbles, which burst if for no other reason than their persistence depends on ever-accelerating levels of private debt. These asset price bubbles are damaging aspects of private money creation. While the debt-deflationary forces modelled in the previous chapters on their own explain economic collapses caused by excessive private debt, the fact that margin debt reached 8.9% of GDP in 1929, when margin loans allowed up to a factor of ten leverage, shows why the Great Crash of 1929 was so devastating.”

Keen cites Richard Vague’s observation that:

“The American philanthropist Richard Vague identified a significant empirical regularity that every economic crisis over the last 150 years has manifested: the combination of a private debt to GDP ratio of 150 per cent or more, and an increase in that ratio over a fiveyear period of 17 per cent or more (Vague, 2014).”

In his 2017 book, “Can We Avoid Another Financial Crisis?” Keen predicted that

“[Canada] will suffer a serious economic slowdown in the next few years, since the only way they can sustain their current growth rates is for debt to continue growing faster than GDP, as it is doing now: a 3.8 per cent annual growth rate for Canada… [Australia and Canada] countries are very likely to suffer a severe economic crisis before 2020 - and possibly as early as 2017. This crisis will be blamed on the incumbents and the economic policies they follow - and in Canada's case, it will mean that Trudeau's decision to run a government deficit, which he flagged during the electoral campaign, will be blamed for the crisis.

Far from being the cause of the crisis, Trudeau's deficit will in fact soften the blow of collapsing credit, when it comes.”

Keen’s predictions were coming true in 2019-2020. In September 2019, the U.S. Federal Reserve intervened in the overnight lending market, but there were signs of an unravelling. William White has argued the next significant downturn was prevented by the massive outpouring of quantitative easing and monetary stimulus suring the pandemic, in March 2020 .

In 2019, the Globe and Mail ran an important article “How Canada’s suburban dream became a debt-filled nightmare” It was published in the first days of the General Election, and didn’t get the attention it deserved.

It showed maps of Canadian cities, showing how much take-home income people were spending on mortgage interest. In many suburbs - especially around Vancouver and Toronto, but in other cities as well, people are paying up to 20% of their income on mortgage debt.

"Fifteen are on the fringes of Vancouver - places like Langley, Surrey, Coquitlam and Richmond. Two are in Calgary's northern outskirts, and four are in Edmonton, clustered south of the highway that rings the city. Just two are in a city's downtown core: one in Montreal and one in Vancouver.”

In 2023 Canadian Household debt hit $2.9-trillion.

As it stands, there is a housing crisis in Toronto, but insolvencies are rising in the U.S. and Canada as well.

These distortions were not caused by immigration, housing supply numbers, or by fiscal policies: they were caused by the Bank of Canada’s monetary stimulus and QE, that have made the crisis worse by flooding the economy with easy money that has gone entirely to driving up the price of assets.

Unwinding this insolvency crisis and softening the blow should be the single greatest priority of the Federal Government, and it the crisis will not be resolved until levels of private debt are brought to a manageable level.

What is required is a large-scale injection of public equity to displace debt:

Should a crisis occur, there must not be a repeat of the 2008 financial crisis or the 2020 pandemic, when the Bank of Canada created money to support investors banks for their bad risks, while the economic fallout was passed entirely to Canadian citizens through austerity.

These problems that have created a trap for the Canadian economy

• Too much personal private debt, which is keeping real-estate prices high, and is strangling the rest of the economy. This “sunk cost” of debt across the entire economy has created a sunk cost dead weight that is preventing us from moving forward.

• Not enough investment in productive businesses in the “real economy” or public investments to maintain or improve legacy infrastructure

This economic uncertainty is driving political turmoil, including separatism in Canada (in Quebec and Western Canada), as it has in the past. “Separatist” movements are routinely driven by economic deprivation, especially when people are living with the consequences of a market bubble that has burst, like Alberta’s oil bubble.

In their paper Politics in the Slump: Polarization and Extremism after Financial Crises, 1870-2014, Trebesch, Funke and Schularick studied how politics played out after financial crises. What they found was that politics tended to “take a hard right turn.”

“After a crisis, voters seem to be particularly attracted to the political rhetoric of the extreme right, which often attributes blame to minorities or foreigners. On average, extreme right-wing parties increase their vote share by 30% after a financial crisis… Both before and after World War II, we observe a significant increase of votes for far-right parties. In contrast, parties on the far left of the political spectrum did not have comparable electoral successes after crises. Second, we also find that political polarization increases substantially after financial crises as measured by weaker government majorities, a stronger opposition and a greater fractionalization of parliaments. These effects are considerably more pronounced after World War II than before”

What’s more, these very divisions paralyze governments and drag out crises.

“Increasing fractionalization and polarization of parliaments makes crisis resolution more difficult, reduces the chances of serious reform and leads to political conflict at a time when decisive political action may be needed most. A number of authors have linked political gridlock to slow recoveries from financial crises.”

At its core, these are financial problems, and they have financial solutions. Austerity is not an option. We need action now.

The two basic problems have two basic solutions, which are necessary and applicable whether we are trying to deflate the current debt and asset bubble, or whether it is post-crisis.

Solution 1: A Debt-for-equity swap to stabilize the economy, injecting new equity for Debt

Relief and Debt Restructuring, especially Personal Debt

Solution 2: Investment in New Jobs and New Business Creation

In practice, what we need to escape the trap is a multi-year, post-pandemic recovery plan, modelled on the same policies that Canada and the U.S. used to rebuild to recover from the Depression and the Second World War. Debt relief and investment is how the Marshall Plan and the reforms that created the conditions for greater shared prosperity and a properly functioning market in the 1940s & 1950s.

For those who are concerned this will cause “crowding out” - to the contrary, public investment can help “crowd in” public investment, because it increases certainty.

In order to minimize disruptions, the debt relief and the new investment go hand in hand. What is required to make it work is a “debt for equity” swap across the economy. This can be achieved in a number of positive ways.

There are positive interventions on a large scale that can and must be made now, and can be done by the Federal Government acting alone. Both the Government of Canada and the Bank of Canada have the capacity and authority to address this crisis in an emergency.

The goal of this program is to find ways to relieve debt and let people keep their property - keeping people in their homes, keeping owners in businesses, keeping farmers on farms.

It is about systematically and carefully relieving people of the excess debt they have taken on that is the result of crises and bad monetary policy. We are in an insolvency crisis.

What is required is progressive, populist policies that provide immediate relief, in addition to a massive stabilizing effort to ensure that people stay in their houses, that farmers stay on the farm, and that we avoid liquidations.

STEP ONE: RELIEF

The first focus of financial relief is for Canadians and their public institutions: governments, so they can provide better services and increase community investments in infrastructure

Once they are stabilized, the market and real economy businesses will benefit, as government investment in infrastructure will create jobs and new value.

Taking these actions pre-emptively will also defuse any potential financial crisis facing Canada’s banks.

Relief for Canadians by Reducing Government Pandemic Debt Burdens:

• An immediate payment of “Helicopter money” to all Canadians to cope with the current crisis. $1,000 per person, non taxable would amount to $40-billion, through a monetized deficit. Universal. Everyone gets it, so no one can complain that it’s unfair. Helicopter money can be treated as an experiment. By giving an equal amount to everyone it provides a precise amount going into the economy so you could measure the impact, which would provide data for where the impact was greatest.

• The Federal Government and the Bank of Canada should offer to take on or cancel the debt that provincial, municipalities and First Nations accrued during the pandemic as a result of emergency spending.

Yes, this requires the Bank of Canada to act, and politicians cannot compel it. The question for the Bank of Canada and other central banks is what positive steps they can take to address these economic crises.

Winston Churchill said that democracy cannot exist without accountability. That is the whole point of the system. Central banks have extraordinary power but they are still run by human beings as fallible and limited as any of us, which means that their extraordinary power can result in extraordinary mistakes. The real problem with central banks is that someone else always pays the price for those mistakes - taxpayers and citizens - which other constituencies are shielded.

This is a central cause of our current crisis. Central banks do have the capacity to act to provide relief.

Adair Turner Explains Helicopter Money

“It was Milton Friedman who explained most clearly why inadequate nominal demand is one problem to which there is always a possible solution. If an economy was suffering from deficient demand, he suggested, the government should print dollar bills and scatter them from a helicopter. People would pick them up and spend them: nominal GDP would increase; and some mix of higher inflation and higher real output would result.”

Note: there is an assumption here that creating new money is necessarily inflationary and would drive up prices. What this misses is that it such an injection of funds may be replacing money that has disappeared - often only partially. When people have lost income or are paying off debt, adding new money is not inflationary.

Turner continues:

“The precise impact of any given size of helicopter money drop would depend on how much people spent rather than saved their new-found financial wealth. But it would dearly be somewhat proportional to the value of bills printed and dropped. If they were only worth a few percentage points of current nominal GDP, the stimulus to either real growth or inflation would quite small. If they were worth many times nominal GDP, the effect would be large and primarily take the form of increased inflation, since the potential for real output growth is constrained by supply factors.

Thus while Friedman's example is very simple, it illustrates three crucial truths. We can always stimulate nominal demand by printing fiat money: if we print too much, we will generate harmful inflation; but if we print only a small amount, we will produce only small and potentially desirable effects.

The money drop from Friedman's helicopter is fiat money in currency note form-actual dollar bills. And as Chapter 7 [of Between Debt and the Devil] describes, there are historical examples of governments that used printed currency to stimulate nominal demand but without generating dangerously high inflation.

The Pennsylvania colony did so in the 1720s, and the Union government paid its soldiers with printed greenbacks in the American Civil War.

However most money today is held in bank deposit, not paper currency, form.

But the essential principle of the helicopter money drop can be applied in the modern environment. A government could, for instance, pay $1,000 to all citizens by electronic transfer to their commercial bank deposit accounts. (Alternatively, it could cut tax rates or increase public expenditure.) The commercial banks in turn would be credited with additional reserves at the central bank, and the central bank would be credited with a money asset—a perpetual non-interest-bearing bond due from the government. The "drop" is of electronic accounting entries rather than actual dollar bills, but the operation is in essence the same and so too would be the first round impact on nominal demand. Nominal demand would be stimulated, and the extent of that stimulus would be broadly proportional to the value of new money created”

He goes on:

“Three specific uses of overt money finance should be considered: Bernankes helicopter, one-off debt write-off, and radical bank recapitalization.

Printing money in its modern electronic form is thus without doubt a technically possible alternative to either pure fiscal or pure monetary policy. It is indeed essentially a fusion of the two. It entails monetary finance of an increased fiscal deficit, and it would stimulate demand more certainly and with less adverse side effects than either pure fiscal or pure monetary policy. Compared with funded fiscal stimulus, it is bound to be more stimulative, since there is no danger of either crowding out or Ricardian equivalence effects: as Ben Bernanke put it in 2003, if consumers and businesses received a money-financed tax cut, they would certainly spend some of their windfall gain, since "no current or future debt servicing burden has been created to imply future taxes." And compared with a pure monetary stimulus, it works through putting new spending power directly into the hands of a broad swath of households and businesses, rather than working through the indirect transmission mechanism of higher asset prices and induced private credit expansion.

It does not rely on regenerating potentially harmful private credit growth, nor does it commit us to maintaining ultralow interest rates for a sustained period of time. [Emphasis mine].

Our technical ability to stimulate nominal growth with money-financed deficits is not therefore in any doubt. A formal mathematical paper by Willem Buiter confirms the commonsense arguments of Friedman and Bernanke. His paper is titled "The Simple Analytics of Hellcopter Money: Why It Works—Always.”

The more realistic alternative involves negotiated debt write-downs and restructurings to reduce debts to sustainable levels, while avoiding the disruptive effect of bankruptcy and default. It can be applied to either private or public debts. But in neither sector can debt restructuring be sufficient alone to cope with the scale of today's debt overhang.

Atif Mian and Amir Suf argue that the United States should have implemented a large-scale program of coordinated mortgage debt restructuring after 2008. By cutting mortgage debts to affordable levels, this would have reduced the severity of the household consumption cuts that drove the country into recession. Even without such a coordinated program, household debt write-offs have been greater in the United States than elsewhere, helping achieve a more rapid pace of household sector deleveraging. But Mian and Suf are surely right to argue that a more extensive and officially mandated program of debt forgiveness would have spurred economic recovery.”

The Bank of Canada can directly buy provincial government bonds equal to the estimated excess debt that governments took on from March 2020 to March 2024 as a consequence of the pandemic.

This is comparable to the actions of the Federal Government after the Second World War, where the Depression-era debt of multiple provinces was eliminated.

Relief is also needed here - in Canada’s public institutions, instead of supporting the asset prices of private investors.

During the Global Financial Crisis, from 2008-2009, CHMC, the Bank of Canada, the Federal Reserve and the Government of Canada provided over $100-billion of support to Canadian banks, while the Conservative Government imposed federal and provincial cuts. In March 2020, The Bank of Canada spent over $50-billion in “Quantitative Easing” to support banks, and was supporting the overnight debt market with billions more per month. Around the world, Central Banks have printed about $8-trillion since 2020, all of it going to prop up the price of private assets instead of being invested in public benefits. In other words, the Bank of Canada has been able to create money from scratch, but not for the public benefit.

In its founding charter, The Bank of Canada has the capacity to create money for any and all social purpose. This is about the Bank of Canada functioning as it was intended, as an economic stabilizer, instead of an economic de-stabilizer, which is how it has been functioning for 40+ years.

Setting conditions for relief

In exchange for relief, Provinces and Municipalities should agree to use these funds strictly for the purpose of investment. It should not be used to cut taxes: rather, these investments are being used directly to grow the economy, including for the purpose of increasing prosperity and tax revenues for government.

It is not “excess money” that can be used to reduce taxes or run a surplus: this is money earmarked for investment.

• A condition of the swap is that funds “freed up” must be invested in new projects and infrastructure that help make cities, rural and northern areas, including Indigenous communities to make essential investments that will lower costs through environmental efficiency

• Transit

• Post-Secondary Education Funding to train Canadians

• Rail relocation and rail rationalization;

• Electrification & Energy Retrofits

• Essential investments in the public infrastructure that brings people together: community halls, recreation

• Upgraded roads and bridges

• University education & research

• Green restoration initiatives

• Housing, especially for veterans and seniors. The Federal Government & CMHC must step in and refinance seniors’ housing complexes so that they stay affordable.

• Downtown revitalization programs

Provinces and the federal government must also establish new and better rules for handing bankruptcies.

• The federal government should also consider allowing for forgiveness of CERB and CEBA loans, except in cases where funds were fraudulently obtained.

Provinces Must Agree to Mandatory Oversight and Enhanced Compliance

With this increased investment, to ensure integrity and fairness in procurement, and ensuring there is added oversight at every political level, one condition of receiving the funds would be that every province and territory:

• Establish strong and uniform conflict of interest laws, with independent ethics commissioners with the power of investigation and sanction.

• To combat money laundering and the facilitation of foreign interference through corporate channels, each province must create a free and publicly searchable registry of the beneficial owner of corporations registered at the provincial level. Much of the crime in Canada that is hidden in shell corporations are corporations incorporated only at the provincial level.

• Debt relief for individuals living in Canada

The Bank of Canada must work with banks, credit unions and other lenders, along with experts in debt relief and planning to provide relief, through the creation of legal Debt Compromise boards for individuals and farmers.

The goal is to reduce people’s monthly payments and bring them down to a manageable levels. It is essential to stress - this does not cost tax dollars. It is about giving borrowers the power to negotiate with lenders in order to significantly reduce their debt costs.

Debt compromise boards were legislated into existence in the 1930s, 40s and 50s and effectively reduced farmers’ debt by 50%.

STEP TWO - Investment & and National Industrial Plan

We need a five-year plan of continuous investment in restoring productive industry, and Canadian self-reliance. The focus must be on creating good Canadian jobs with strong Canadian businesses.

Local, Canadian ownership matters.

An Industrial Plan
Countries requires a sustained investment and industrial plan in productive industries.

These do not have to be publicly-owned or run, and in addition to ensuring that provincial and municipal governments are making essential investments in infractructure, education, and health care, Canadian entrepreneurs and businesses in the productive economy that need access to capital, especially “patient capital.” That is “equity” investment instead of loans.

Food security (food production and especially added-value processing for export

• Energy security - Given the massive volatility of oil prices and their effect on every part of the economy, we need to continue to develop bank-up systems that we can count on to

• Health & medical supply chain security

• Climate Security - Investing in measures that mitigate climate change

In addition, the Federal Government should do the following:

• Promote Canadian entrepreneurship and innovation with improved access to Capital:
  
  Overhaul the Business Development Bank of Canada (BDC) to Improve Access to Capital for Entrepreneurs. BDC is like a regular bank and charges 17% interest to entrepreneurs. BDC should focus on providing equity investments (not loans), and ensure that micro-financing is available. There is a large pool of entrepreneurs in Canada who want to start businesses and can’t because they cannot access capital.

Invest in Canada’s Defense, especially in cybersecurity across Canada’s security and defense, including DND, CSIS and the RCMP

For Individuals & Working people - Better jobs with a Federal Job Guarantee
The federal job guarantee is modelled on the successful program run under Franklin Delano Roosevelt.

• Direct job creation through a federal job guarantee that provides “a job, at non-poverty wages, for all citizens above the age of 18 that sought one,” which can be administered by provinces, “in conjunction with municipalities, localities, and community groups,” and First Nations. The purpose is to ensure that people can work. It is not a private-sector subsidy, and can be used by “social enterprises”.
  
  This would immediately reduce unemployment and poverty across Canada.

• Enforcement of intellectual property rights and modern royalties for Canadian innovators, inventors and creators.
  Owners of Canadian copyright and patents are not being well-served by the current regime. Innovators who spend years developing and patenting an invention may have their patent violated or thet cannot collect royalties. The same is true of Canadian creators (music, film and TV).
  There needs to be robust enforcement and collection of money owed, especially from internet companies (Spotify, Youtube, Google, Facebook) and AI companies.

• More competition through breaking up monopolies, and allowing for more domestic competition. Canada needs more and stronger domestically owned, run and operated businesses.

It also has to be said, that two further policies will have no, or neglible beneficial effects, and need should be reconsidered or re-examined.

• The documents supporting significant benefits from Internal Free Trade in Canada have serious shortcomings. The literature clearly states that Canada has no measurable free trade barriers.

• Restoring the Capital Gains Tax exemptions is fiscally irresponsible and disproportionately rewards speculators, not investors.

Canada’s Internal Free Trade is Already As Free as It can get

1. Canada has no tariffs. In fact, it has no trade barriers that can be measured, at all.

The papers themselves state:

• “Measuring internal trade costs directly is not feasible.”
  (Page 8 of the IMF report on estimating the internal trade barriers).

• The 2016 paper said “explicit tariffs do not exist”. (Albrecht and Tombe).

These claims are made by creating a mathematical model of a Canada with no trade between provinces.

2. The Benefits are Estimated by Creating a Fictional Mathematical Model of Canada

Because Canada has internal trade barriers that can be measures, they have to be “inferred” and this is done by creating a mathematical model.

This is from Albrecht and Tombe’s May 2015 Internal Trade, Productivity, and Interconnected Industries: A Quantitative Analysis.

“We first ask: Who gains from trade in Canada? This is a common experiment in the international trade literature and involves comparing initial welfare to the counterfactual level of welfare when trade is prohibited.

• “Counterfactual” in this context means creating an imaginary model of the Canadian economy.

• In this imaginary model, the economists try to calculate what Canada’s economy would be if there was no trade between provinces, and each province was somehow totally self-sufficient. That’s called an “autarky” - where a jurisdiction is closed off and trades only with itself.

“Aggregate welfare” calculates benefits for the whole population, and this is important. It doesn’t mean the entire population benefits. In fact, it can - and often does - mean that some sectors of the population will lose out. How those benefits are distributed doesn’t matter. If 50% of the population loses $10-billion, but 1% gain $20-billion, it’s the total that matters.

“We find aggregate welfare is 18.3% higher than in autarky. Compared to the case of no interprovincial trade, but allowing for international trade, aggregate welfare is 4.4% higher. For internal trade costs, reducing them by 10% increases aggregate welfare by roughly 0.9% (equivalent to a real GDP increase of $17 billion). Eliminating trade cost asymmetries, aggregate gains are over 3%; removing trade costs unrelated to distance, gains are nearly 7%. These estimates suggest reducing internal trade barriers could add $50-$130 billion to Canada’s GDP. If inter-provincial trade costs were completely eliminated, an implausible but illustrative experiment, aggregate gains for Canada exceed 50%. Moreover, we consistently find poor regions gain more from liberalization than rich regions.”

Now, I’ll the point again that these initial estimates improvements of between $50-billion and $130-billion. That is a wide range. By 2020, in the IMF paper had increased it to $200-billion.

They have no empirical validity, and there is an acceptance of sources that can only be described as promotional material. It’s only the top number that is cited. The $200-billion figure should be described as being a “best-case scenario”, but it’s not.

So, the point here is that this is an extremely mathematically sophisticated back-of-the-envelope calculation that makes some colossal assumptions that don’t have facts to back them up.

The claim that poor regions (Manitoba, Prince Edward Island) gain more is a powerful part of the sales pitch.

3. Trade is assumed to be the problem, when real-world economic context is ignored.

The entire basis of Tombe’s exercise is based on the assumption that trade barriers are a problem, even when they can’t be measured.

Having spent decdes in public policy research, in the private sector and the public sector, and having been a legislator and spoken to many entrepreneurs, the problem is not a lack of trade barriers, it is a lack of access to capital.

Canada has experienced massive economic shocks in the last 25 years - a dot.com crisis, China joining global trade, the Global Financial Crisis, the 2014 oil crash, and the 2020 pandemic. During that time, hundreds of thousands of manufacturing jobs were lost, oil jobs were created and lost, and during every crisis, the Bank of Canada dropped interest rates to goose borrowing and investment, which mostly drove up the real estate market and helped create a housing and affordability crisis. In addition, we have hyperconcentration of wealth and ownership.

The challenges around productivity in Canada are related to a lack of capital investment into innovative “real economy businesses” because banks and financial institutions and governments alike keep inflating the prices of existing assets (real estate + mergers and acquisitions). This results in inflated asset prices, not the creation of new value.

The result of all this consolidation, and investment in inflating asset prices, is an less-productive economy with less competition. It has directly constributed to inequality, lack of opportunity - and a lack of economic growth.

What is actually required in Canada is access to Canadian Capital to focus on the creation and scale-up of Canadian owned and operated businesses, because if Canada and its provinces don’t, no one will.

The idea that is always repeated is the idea that jobs, businesses and investment must all be imported, when there are Canadians who could use new or better jobs, entrepreneurs with marketable ideas who need capital, and the only place Canadian dollars are used or made is in Canada.

Capitalism Needs Capital

Many of the basic arguments around trade have not changed in 200 years, despite drastic changes in every aspect of our economy and technology. David Ricardo argued that free trade works due to comparative advantage: countries can benefit by specializing in what they are best at, so they aren’t actually competing head-to-head.

This is not the reality. In Canada, the complaint people are making is that they want to compete with other companies. You might ask what the problem is, and the answer is that means the benefits from comparative advantage aren’t there. That means the gains aren’t there. It is just a zero sum game.

As Professor Steve Keen noted,

“Since cap­i­tal is destroyed when trade is lib­er­alised, the water­tight argu­ment that trade nec­es­sar­i­ly improves mate­r­i­al wel­fare springs a leak. If eco­nom­ics were a real sci­ence, this real-world com­pli­ca­tion to Ricar­do’s argu­ment would be con­sid­ered, but it has nev­er been seri­ous­ly addressed.”

Ricardo’s theory assumes constant output per worker, which isn’t true.

The other thing that really matters is that Ricardo’s theories are based in a the idea that technology won’t change. It is based on the idea that certain countries should just “specialize in what they are good at” when what they are “good at” can and does change with training and new technology.

In his book Economics: A User’s Guide, Ha-Joon Chang wrote a critique of the assumptions of free trade, and its more modern iteration, the Heckscher-Ohlin-Samuelson version of the theory of comparative advantage. These are the international free trade models and assumptions on which Tombe’s formulas are based.

“Since Ricardo invented it in the early nineteenth century, the theory of comparative advantage has provided a powerful argument in favour of free trade and trade liberalization, that is, reduction in government restrictions on trade.

The logic is impeccable - that is, insofar as we accept its underlying assumptions. Once we question those assumptions, its validity becomes much more limited. Let me explain this, focusing on two key assumptions behind the Heckscher-Ohlin-Samuelson version of the theory of comparative advantage (henceforth HOS), as lying at the heart of the modern argument for free trade?

HOS structurally rules out the most important form of beneficial protectionism by assuming that all countries are equally capable

The most important assumption underlying HOS is that all countries have equal productive capabilities - that is, they can use any technology they want…. This totally unrealistic assumption rules out a priori the most important form of beneficial protectionism, namely, infant industry protection, whose key role in the historical development of today's rich countries we discussed in detail throughout the book.

HOS is overly positive about trade liberalization because it assumes that capital and labour can be remoulded for use in any sector at no cost

In HOS, not only is free trade good for the country but moving towards it in countries that have not practised it produces no casualties… the reality is that most capitalists and workers in the industry that has lost protection remain hurt.

Factors of production - capital and labour - are often fixed in their physical qualities; there are few 'general-use' machines or workers with a 'general skill' that can be employed across industries. Blast furnaces from a bankrupt steel mill simply cannot be remoulded into a machine that makes micro-chips and thus may have to be sold as scrap metal. When it comes to the workers, how many steel workers do you know who have retrained to work in the semiconductor industry or, even more unlikely, in investment banking?

HOS can present such a positive view of trade liberalization because it assumes that all capital and labour are the same ('homogeneous' is the technical term) and thus can be readily redeployed in any activity (technically this is known as the assumption of perfect factor mobility). 4

Even the use of the compensation principle cannot quite hide the fact that a lot of people get hurt by trade liberalization

Even when they acknowledge that trade liberalization may produce losers, free-trade economists justify trade liberalization by invoking the 'compensation principle' (see Chapter 4). They argue that, as trade liberalization makes the whole better off, the losers from the process can be fully compensated and the winners still have additional income left.

In the rich countries, there is partial - but only partial - compensation through the welfare state, which provides unemployment insurance and access to basic social services, such as education and (except in the US) health care. But in most developing countries the welfare state is very weak and has patchy coverage, so the resulting compensation is minimal, if not non-existent.

If the compensation is not made, invoking the compensation principle to justify a policy that hurts some people, such as trade liberalization, is tantamount to demanding that some people make a sacrifice for the 'greater good' - a demand that used to be made of people by the government in socialist countries, which free-trade economists so heavily criti-cize.

International trade is essential, especially for developing countries, but that is not to say that free trade is the best.

When they hear someone criticizing free trade, free-trade economists tend to accuse the critic of being 'anti-trade. But criticizing free trade is not to oppose trade.”

These are the baked-in assumptions of the benefits of free trade in Tombe’s models.

• That everyone in Canada has access to the same technology

• That if a business goes under and everyone loses their job, both the capital from the bankrupt business and the workers will just flow into a new business.

• That even if there there losers, the gains for the winners will be so great that you can tax and redistribute winners’ gains to compensate, and everyone will be better off.

None of these are accurate, and none of these happen.

• Access to new technology requires both capital and the energy, transportaion and communications infrastructure to support it.

• When businesses go bankrupt, their capital value dies with them.

• When people who are highly trained in one industry lose their job, they cannot immediately re-skill and get a new job at a comparable wage

As for compensation, where it does happen, in Canada it is the only thing that has prevented the stagnation of wages at 1970s levels.

Canadian companies need access to capital - especially in the form of equity.

In 2014, Larry Summers, a former advisor to Presidents Obama and Clinton wrote the “classical era of Free Trade deals is over”. The new trade agreements have nothing to do with free trade at all, because (as in Canada right now) there were no tariffs. Instead they are about “regulatory harmonization” and “investor protection.”

That “regulatory harmonization” essentially handcuffing democratically elected governments and putting a prohibition on capacity to act, because it puts the rights of investors from outside of juridiction ahead of voters, citizens and taxpayers.

By ‘investor protection” it means that if a foreign corporation (or, in Canada out-of-province corporation) can sue governments if they want to support businesses within their jurisdiction, or even if they try to protect the environment or support Indigenous entrepreneurs, taxpayers are on the hook for it.

The civil and political unrest we are seeing right are a result of the economic consequences of these policies - fiscal, trade, monetary and more - over the last decades, which have all been neoliberal.

They have succeeded in creating unimaginable wealth, but did not keep its promise that it would be shared through everyone.

This is not a failing of governments: it is a consequence of a market economy where the huge gains for a few that were made possible by deregulation, bailouts, ultra-low interest rates, offshoring, and investor protection have left everyone else behind.

That’s because these free-market ideas, while appealing, have themselves never, ever been true. No rich country ever became rich through free trade.

Every rich country in the world became rich through protectionism: the UK, the US, Canada, South Korea, Japan, Germany, and now China. They turn to free trade after developing wealth.

The “gains from trade” often have nothing to do with local job creation or growth.

The argument is that Canadians will gain from greater efficiency, but the efficiency is defined strictly as the ability of a company to generate more profit with less costs, particularly when private companies are selling to provincial governments.

What that means for citizens, is that while taxpayers are being told they will save money by contracting to an out-of-province company, instead of those taxes being recycled back into the local community, the government is sending out tax dollars out of province. And whether it’s private contractors or public employees, if the government wants local procurement, companies from other provinces can sue and taxpayers will be on the hook for that too.

This is almost always a disadvantage to small- and medium-sized companies.

It’s mostly about large, existing companies from one province operating in another. For the residents of that province, that means the taxes they are paying to government are leaving the province, but that it is supposed to be better because they get lower costs. It’s much more about outsourcing public services and selling off public assets and putting them in private hands (like provincial alcohol monopolies and Crown corporations).

So it is not about growth, it is not about productivity, it will not grow the GDP. It may sound old-fashioned to say, but capitalism requires capital, and the reason for laws and regulations (especially after the New Deal) was because of the abuse of monopoly power.

Restoring the Capital Gains Tax loophole will have no benefits for the economy or for innovation

Asset ownership in Canada is highly concentrated. We still measure income and wealth in “quintiles” - we split the population into five equal groups of 20%, which colossally distorts who owns what and who earns what. Sometimes it is broken down into “deciles” which still doesn’t improve it, because income and assets tend to be concentrated according to a “power law”. It’s not a steadily rising slope, it’s not a bell curve.

For the vast majority of the population, it’s a slowly increasing slope, then at the very top, the amount of income and property that a very small group of people owns increases exponentially.

In the individual incomes graph, the actual highest income was many times higher than will fit in this graph for income (below left).

There is an important point here, which is related to debt, ownership and rent - and Canada’s massive housing bubble, which one strategist has described as “the biggest housing bubble of all time.”

“As recently as ten years ago property speculators were a minority amongst Ontario’s home buyers. Investors now surpass first-time buyers as well as the total number of people moving between homes. According to a recent report, between January and August of last year investors were responsible for a quarter of house purchases in the province.”

Property speculators are not building new buildings or housing. That is why we have a housing and rental shortage. Instead, these speculators use low-interest debt to finance large loans to drive up the price of existing buildings. They may make minor improvement and evict current tenants (through renovictions) and raise the rent, in order to make it more attractive for resale, to the next investor who has an even larger loan.

This has created Canada’s housing and affordability and debt crisis - and it is happening in other countries like the UK, US and elsewhere, for exactly the same reason.

It’s not based on the creation of new value or innovation - it is all financial engineering. Real estate and debt are not new businesses. This is not good business: it’s absolutely terrible for everyone, and one of the reasons it has been possible is that our capital gains tax system allows for it.

The “Canadian Council of Innovators” has compiled a list of signatories who don’t want the federal government to proceed with the capital gains changes.

I’ll start with what is a reasonable comment from that article.

“Ali Asaria, founder and chair of Tulip, said those arguing against the changes are “a tiny minority” of who will be impacted and that the criticism creates distraction and polarizes the conversation.

“I’m a bit afraid of speaking out on this issue just because I know that there are investors who are very mad that I said anything [on Twitter],” Asaria said in an interview. “I wouldn’t recommend an entrepreneur try to optimize for capital gains exemption when they’re starting a company—there’s so many more things to worry about.”

Jack Mintz, a professor of finance, wrote a piece arguing against the Capital Gains Increase which is also inaccurate.

He writes:

“I analysed the reach of the tax change by estimating the number of tax filers who would be affected over their lifetime. The key finding was that it would affect far more Canadians than the government seemed to anticipate. On a lifetime basis, I estimated that 1.26 million Canadians (almost 5 percent of taxpayers) will be affected by the increase in the capital gain tax on individuals, half of whom earn less than $117,000 per year. [Emphasis mine]

That last sentence has an undefined period of time (a lifetime) two different types of population (Canadians and taxpayers) and two types of taxes - capital gains, and income from earning.”

Is the argument here just that, if you look at who pays this tax for 50 years, it’s a lot more people than pay in just one? Are people earning less than $117,000 a year in capital gains, or in income from work?

Mintz draws his data from this table - which tells an important story when you turn it into a chart.

What you see is that from 2011-2021 while the total number of tax filers has followed something close to a straight line, something happened to both capital gains filers and capital gains over $250,000 a year. The capital gains filers spiked up - and the gains over $250,000 a year spiked even higher and faster.

That spike is directly related to the spike in housing prices that started at the same time. These are the people who have been profiting from inflating the cost of housing, because they borrowing to speculate on real estate.

The capital they are investing is not going to create jobs or build factories. It is going into driving up the price of an existing asset, without increasing its productive value.

These are the people who have been profiting from the affordable housing crisis.

Its not money that’s been saved up. It’s borrowed. These are not long-term investments with a view to ongoing returns. They’re short term, and they investing in a property and selling it again.

In 2020, there were 51,900 people declaring over $250,000 in capital gains. The next year, 2021, there were 90,700, an increase of 75%. (!)

SUMMARY

Evidence shows that Canada and Canadians are facing an insolvency crisis and a collapsing asset bubble, and that Canada’s economy is being held back, not by government spending, but by excess private debt that is the direct result of decades of monetary policy, including multiple crisis interventions that have fuelled bubbles and speculation in unproductive investments - real estate and existing shares.

The worst possible path to pursue is austerity and cutting spending, which will not only trigger the “paradox of thrift” but billions of dollars in cuts means billions of dollars in lost revenue and income for Canadians and the Canadian economy.

Whether the government acts now or later, and whether they are acting to prevent a crisis or to react to one, the Government of Canada and the Bank of Canada and other agencies all have the fiscal and monetary capacity to cope with a crisis, and prevent economic harm as well as the possibility of an extended recession or Depression.

Canada is facing unprecedented times and unprecedented attacks from opponents who are seeking to destabilize our country, our economy, and our democracy, as we try to escape from the damage and trauma wreaked by the pandemic.

The current plans for austerity, deregulation are not based in economic reality, and will weaken and undermine an already fragile middle class.

What is required for Canada to move forward, heal, build and prosper - while defending our sovereingty is a combined Marshall Plan / New Deal that clears away and restructures the burden of old debts that are largely the result of Bank of Canada policy failures, while injecting new equity to create new value, and new Canadian businesses.

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