Appraising fiscal health

A monetarily sovereign government is not like a firm or household and can never run out of its own “money” — its own IOUs. The only meaningful way to appraise the fiscal position of the Canadian government is to assess the state of the economy in real terms: do we have full employment, environmental stewardship, and first- class education and health infrastructure? Re: Feds plan to reduce deficit in long term, Morneau says, Jan. 13

History demonstrates that government deficits and debt ratios alone tell us little. For example, as a result of substantial WWII deficit spending, our peak federal debt- to- GNP ratio of 106 per cent occurred in 1946, yet the postwar era was the golden age of capitalism when the Canadian economy expanded dramatically and many social programs were introduced.

So- called “fiscal anchors” instituted in peacetime are simply ideological vehicles intended to limit government spending, much as medieval monks recommended flagellation as a means of curbing unwanted desires. Larry Kazdan, Vancouver