Raise the Hammer

>> Most important, after almost two decades of tax cuts that mostly favoured the wealthy, we're not adding new taxes to help share the responsibility to balance the books.

These numbers are the net lending/borrowing(-) OR surpluses/deficits of the four main sectors of Canada's economy (billions of dollars).

They reflect who is going into debt and who is accumulating savings.

http://www.statcan.gc.ca/pub/13-020-x/2011004/tab-eng.htm


Gov't(s) Households Foreign Corporate Discrepancy

2000 31,705 -988 -40,340 11,121 -1498

2006 23,780 -39,502 -24,902 42,142 1518
2007 21,551 -54,182 -12,332 43,449 1514
2008 -6,317 -43,047 -7,811 56,816 359
2009 -74,724 -18,773 48,399 44,676 422
2010 -90,244 -28,662 56,647 62,670 -411
2011 -78,178 -37,031 51,266 62,300 1643

As you can see, households continue to pile on debt, while foreigners and corporations grow their cash savings.

>> The cuts introduced by the Harper government since 2006 amount to $13 billion a year in lost revenue, creating a structural deficit that serves mainly to justify real cuts in program spending.

The feds have a printing press called the Bank of Canada. This is from the Bank of Canada's website...

"The Bank of Canada was created to be the sole issuer of bank notes and to facilitate management of the country's financial system.

Having an independent monetary institution allows for the separation of the power to spend money from the power to create money.

Separating the central bank from the political process enables it to adopt the medium- and long-term perspectives essential to conducting effective monetary policy."

So, technically the feds don't create money. Instead, they get the Bank of Canada to create money and then that created money is deposited into their bank account at the Bank of Canada...

The reason they issue debt is to control interest rates...

"In contrast to a fiscal surplus, a fiscal deficit results in an influx of cash into the private economy since the government injects more money through its spending than it collects in taxes. This added liquidity – in the absence of any intervention by the Bank of Canada or the Government of Canada – would create an imbalance in the form of surplus liquidity in the private economy that would drive the overnight rate lower. It is the Bank’s role to neutralize, on a daily basis, this injection of liquidity with a corresponding withdrawal of cash from the private economy."

It does this by swapping treasury bills for cash. Of course, the cash used to buy the federal debt was created by the Bank of Canada in the first place.