Survival of our economic system
Dear Editor:
Canada and other western nations have pumped billions of additional money into their economies, a grand humanitarian effort to help cushion the virus disrupted of millions.
Presently the billions are circulating as a replacement for normal groceries, rents, business supports and other gestures.
But, as we regain full economic activities, these additional billions are excess to Canada’s money supply, circulation and consumerism requirements.
The federal government has several innovative options to reduce the volume and velocity of money in circulation and thus maintain faith in the purchasing power of Canada’s money and in daily life.
Too much money chasing too few products result in inflation, an old fiscal principal.
Without quick monetary actions, housing could double in inflated price and many of us would be poor dire Canadians.
Options to reduce Canada’s money supply:
1. Have the federal government issue longterm (20-30 years) cashable low-interest recovery bonds.
With the federal government withholding the many billions garnered from circulation.
1. Officially set interest rate high enough to discourage borrowing from Charter banks.
2. Federal government withholds some taxation spending
3. Raise Charter Bank fraction reserves to sufficient reduce Charter Bank money creation and lending.
4. Stop or reduce adding more money supply by deficit stimulus spending.
5. Increase productivity and foreign trade, increase population, innovate and create brand new products all meant to broaden money the usage and absorb excess much of the excess money supply.
Any of the suggested options are terribly upsetting. Whatever the federal government does along with the cooperation of the provinces to control future runaway inflation is paramount to the survival of our economic system.
The federal government can continue its humanitarian efforts and at the same time immediately issue bonds and withhold the funds from circulation.
All the foregoing will help to maintain faith in the well being of our economy.
Bruce Alton McGillis
Penticton