Basic central banking explained

12-year old Victoria Grant explains why her homeland, Canada, and most of the world, is in debt. April 27, 2012 at the Public Banking in America Conference, Philadelphia, PA. Here is a direct link.

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One Response to Basic central banking explained

  1. Kenny Drapale says:

    I am a follower of this website so that I can get a professionally biased education. Economic theory is meaningless to me, because, well, I never see it being followed. We never seem to have the option as savers to invest because there is never an “ALL clear” signal; a signal that should instantly materialize as easily as a Fed announcement & a sound policy implementation.
    Isn’t this girl’s understanding defective?
    Do the banks really get free money, or do they only make money off the central bank lending spread? If so, I can’t understand why they get her to speak.
    I believe the problem is actually deficit budgeting (curtailed in the ’90’s) & right now, the provinces are out of control more so than the feds – & I’m not sure if there is a terminal flaw in the system here, because unlimited government printing would result in hyper-inflation. Debt expansion simply saddles future generations with tax-driven deflation. Too much of either practice would seem to destabilize an economy as monetary expansion has to be tied to economic capacity for it. What we seem to have here in Canada is a seemingly silly way to capitalize or “pad” the banks via the taxpayer, if what she’s saying is correct. To me, however, her argument seems to be a essentially a “red herring” speech unless something did fundamentally change in the ’70’s like she remarked.
    The only thing I remember happening in the ’70’s was corporate tax cutting to goose the stock market resulting deficit financing at double digit interest rates. These rates were a tool used to kill inflation caused by what?
    The bank of Canada printing too much?
    Or the banks lending too much?
    There were probably some sort of bank influences but what fundamentally changed?

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