Isn't growth
coming from government deficits?
Furthermore, the interest charged for those loans does not even exist in aggregate unless it is lent into existence too, leading to ever increasing private debt or if the interest
comes from government deficit spending, ever increasing government debt (under the current system).
Not exact matches
But with provincial
deficits swelling
from coast to coast this year, and rising health care costs expected to ravage provincial coffers in the
coming decades, federal figures are starting to paint an increasingly misleading portrait of Canada's
government debt situation.
Friedman himself argued back in the 1950s that all expansion of the money supply should
come from central bank financed
government deficits rather than
from new credit creation by the banking system.
The credit either can
come from governments running a budget
deficit and pumping money into the economy, or it can
come from bank lending.
 The Harper
government's decision last year to write off every penny of the auto aid and thus build it all into last year's
deficit calculation (which I questioned at the time as curious and even misleading) has already been proven wrong. Since the money was already «written off» by Ottawa as a loss (on grounds that they had little confidence it would be repaid — contradicting their own assurances at the same time that it was an «investment,» not a bail - out), any repayment will
come as a gain that can be recorded in the budget on the revenue side. Jim Flaherty has learned
from past Finance Ministers (especially Paul Martin) that it's always politically better to make the budget situation look worse than it is (even when the bottom has fallen out of the balance), thus positioning yourself to triumphantly announce «surprising good news» (due, no doubt, to «careful fiscal management») down the road. The auto package could thus generate as much as $ 10 billion in «surprising good news» for Ottawa in the years to
come (depending on the ultimate worth of the public equity share).
From there, for instance,
comes their insistence on the importance of a central bank legally and totally independent of all
governments or again on the inscription in the constitution of the prohibition of any budgetary
deficit.
With
governments already running
deficits, where will that money
come from?
And when you look at the current
deficit and the fact that social security is dwindling you have to wonder where
government revenue will
come from if things aren't reigned in.
It's possible the
government could go
from a $ 1.1 trillion
deficit this fiscal year to a surplus by fiscal year 2015, which would ease the give - and - take on tax and other issues as lawmakers
come to agreement on reform.