> Ed Weick then said:
> It's not an idea which appeals to me at all. The preamble of the Bank of
> Canada Act says that the role of the Bank "is to regulate credit and
> currency in the best interests of the economic life of the nation, to
> control and protect the external value of the national monetary unit and
to
> mitigate by its influence fluctuations in the general level of production,
> trade, prices and employment, so far as may be possible within the scope
of
> monetary action, and generally to promote the economic and financial
welfare
> of Canada..."
>
> REH Question:
> You seem to be saying that the only use for the bank is regulatory. Is
that
> the case?
Yes. Central banks, like the Bank of Canada and the Federal Reserve Board
were established back in the 1930s essentially to protect and preserve the
value of the currency. However, they are also powerful actors in the
economy, as the Fed under Greenspan has demonstrated recently.
> Does the Bank of Canada care about the people or the corporations? It
does
> not follow that the health of the wealthy means that the health of the
> common person will improve.
The Bank of Canada is not in the business of caring about people or
corporations.
> The issue here for me Ed is that I don't believe that your system is for
the
> development of all the people but for the moneyed class. I certainly
could
> be selling you short on that but on the one hand you seem to invest the
bank
> as a kind of Supreme Court of monetary issues but on the other hand the
> rules favor the wealthy and corporations as the keepers of the wealth of
the
> nation.
Central banks were established because of some very nasty things very
ordinary people had experienced with their money. My father was a young man
in Germany when that country experienced hyperinflation in the 1920s.
Prices escalated so rapidly that people simply couldn't keep up. Savings
accumulated over several years were wiped out overnight. It was situations
like that, and the awareness of the very vital role money plays in society,
that persuaded governments that a regulator of the money supply was needed.
>Believe me, you and your family will hate HMOs. If the common
> man or woman can choose to put the corporations or private banks in their
> place by giving their money to the bank of the Nation and if that would
then
> hurt the private banks then is it not possible that the private
institutions
> are simply wasteful and inefficient?
The Bank of Canada, like the Fed, was established to keep the value of our
currencies reasonably stable. It deals with private banks, determining how
much money can be loaned out at what rate of interest etc. It is not, and
should not be, an institution in which you and I can put my money. That
would simply make it part of the commercial banking system which it is
supposed to regulate. Nor should it be a supplier of government funds. If
it is to do its job, it has to arms length and neutral, favouring neither
rich nor poor.
Private citizens have plenty of options. I don't like dealing with banks,
so I deal with a cooperative.
Ed W
