Bank of Canada RISKS.

The C. D. Howe Institute bills itself as Canada’s top think tank for sound public policy advice, but it always features institutional insiders who cannot think outside of an institutional framework.

FROM THE REPORT…

Central banks around the world, including the Bank of Canada, are dealing with a hangover from the quantitative easing (QE) policies undertaken during the pandemic, notes the author. Ensuing inflation and interest rate hikes have created balance sheet mismatches and net interest losses. As an example, the interest rate the Bank of Canada earns on its bond portfolio is lower than the interest rate it owes on settlement balances financial institutions hold at the Bank. The result has been a negative equity position on the Bank’s balance sheet.

“Given these circumstances, concerns have arisen about the ability of central banks to carry out their monetary policy mandates. Reputation and independence issues have come to the forefront. Questions have also emerged regarding the implications for public finances with the cessation of profit transfers to governments,” says Janet Cosier, former Chief Risk Officer and Chief Financial Officer at the Bank of Canada.

EXCERPT from “Losses, Risks and Reputation: Bolstering the Bank of Canada for the Road Ahead”. https://www.cdhowe.org/media-release/bolstering-bank-canada-risks-ahead

A Better Approach.

Libertarians have always lamented the day when all of the world’s currencies, particularly the American Dollar in August 1971, became “fiat” currencies that were no longer backed by gold or any other “hard” asset. The collateral backing those currencies became us, the citizens of national governments who could be taxed or debt-financed to make good on the cost of all government obligations, programs and operating expenses.

That ship has sailed.

We can’t change history. No amount of Central Planning will enable Canadian debtors to roll back the debts that all levels of government have imposed on them.

New Zealand learned the hard way when no one would buy their government bonds. A national bankruptcy resulted in the mid 1980s. Today, its fiscal house is in order and annual government deficits are not allowed.

Will Canada face bankruptcy too, or will the long-running Ponzi scheme perpetrated by the Canadian Treasury, the Bank of Canada, and the fractional reserve banking system be allowed to carry on for a least a few more years?

This C. D. Howe report is pathetic.

Janet Cozier offers suggestions that will not address the root causes of our inevitable financial crisis. Instead, she offers suggestions that amount to re-arranging the deck chairs on the Titanic as a giant iceberg begins to show its presence on the horizon directly in its path.

Nothing short of following New Zealand’s lead will address the “risk elephants” that sit patiently in the living rooms of every Canadian household. Canada must reign in government excesses in order to “live within our means” if has any hope of avoiding a fiscal iceberg.

Janet is just like every bureaucrat. She can’t think outside of the walls of the institutions that have shaped her life lens throughout the many years of her career. Tunnel vision is her limitation and it will continue to be our albatross.