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Bank of Canada injects more cash

HEATHER SCOFFIELD

Globe and Mail Update

Latest comment posted at 8:02 PM EST 01/10/07

Central bank continues campaign to defend target interest rate; cash infusion brings total to about $3-billion since last Thursday ...Read the full article

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  1. OZZY RULES THE WORLD! from Canada writes: Hey kids can you say "Hyper Inflation"? Don't think it can happen? Wait till the US and Canada are basically forced out of the middle east and the American dollar goes down the hole. All the so called "economists" never call it like it is..inflation but they use the word luqidity. We are being robbed every time they do this, time to buy silver and gold and only use paper to pay bills. (Thats assuming it continues to have any value at all).

    Let the companies fall and compensate the people who are NOT at fault who will suffer. A least people can use the monopoly money to buy gold/silver.
  2. OZZY RULES THE WORLD! from Canada writes: BTW if you convert todays stock market value to the value the dollars were back in 2000 you will probably see we are worst off than we are now...its inflation folks...thats all.
  3. OZZY RULES THE WORLD! from Canada writes: Correction

    probably see we are worst now than we were then. Its all inflation.
  4. Dan LeRoy from Lethbridge, writes: Cash infusion of $3 billion .... into whose pocket?? Not mine. This works out to about $94 for every man, woman and child in Canada. How does this legalized counterfeiting improve anything? It is decidedly counterproductive and it he clearest and most example of how to create inflation -- which always and everywhere the result of printing more money.
  5. Tax me! I'm Canadian! I'll roll over : from Canada writes: Hey Ozzy, Check this article out by Antal Fekete. He proposes a very interesting theory. I have not really analyzed it all that closely other than a quick pass, but I plan to really did into this soon: http://preview.tinyurl.com/2cgfg4
  6. Tax me! I'm Canadian! I'll roll over : from Canada writes: :
    I love it. Ho hum. Another day, another market intervention, another day of devaluing my savings via inflation.

    Hmmm.... I wonder what Britney Spears is up to...

    La de da de da...
  7. N N from Toronto, Canada writes: "Dan LeRoy from Lethbridge, writes: Cash infusion of $3 billion .... into whose pocket?? Not mine. This works out to about $94 for every man, woman and child in Canada. How does this legalized counterfeiting improve anything? It is decidedly counterproductive and it he clearest and most example of how to create inflation -- which always and everywhere the result of printing more money."

    This is not a permanent injection of cash into the banking system, it is temporary. Would you prefer that the central banks all cit on their hands and allow the financial markets to implode? That would be rather counterproductive.

    These are not gifts to the banking system, they are simply short term (overnight usually) loans to provide necessarily liquidity.
  8. al ceste from vancouver, Canada writes: Are they cazy?? With the stocks sky high? The bank of Canada is sold to the financial plot to make spaeculators more and more rich!
  9. Tax me! I'm Canadian! I'll roll over : from Canada writes: :
    N N from Toronto, Canada writes: "Dan LeRoy from Lethbridge, writes: Cash infusion of $3 billion .... into whose pocket?? Not mine. This works out to about $94 for every man, woman and child in Canada. How does this legalized counterfeiting improve anything? It is decidedly counterproductive and it he clearest and most example of how to create inflation -- which always and everywhere the result of printing more money."

    This is not a permanent injection of cash into the banking system, it is temporary. Would you prefer that the central banks all cit on their hands and allow the financial markets to implode? That would be rather counterproductive.

    These are not gifts to the banking system, they are simply short term (overnight usually) loans to provide necessarily liquidity.

    ------

    I would rather private institutions not have the right to infinite amount of bad credit for folks lined up at the loan window, based on the interest rates our illustrious BoC creates, then these tools need bailing out by the BoC, which ultimately I pay for. Counter-productive? Depends on which side of the fleecing your on.
  10. Yvonne Wackernagel from Woodville, Canada writes: I hate all this 'cloak and dagger' business deals. Let the chips fall where they may, let them fall on their swords, stop propping up the housing market with 40 year amortization periods; stop keeping interest rates low so that the people who struggled to save for their retirement cannot not have a decent return on their savings. What is going on? The ordinary man will eventually have to suffer again!
  11. b mac from Canada writes: The Banks has got to come clean and explain why? and who? is getting all this money. An interest rate cut, accross the board, would have be a more honest solution imho.
  12. J Billins from Toronto, Canada writes: Following this logic we should be providing free herion to junkies.
  13. Dan LeRoy from Lethbridge, writes: NN from Toronto wrote: "This is not a permanent injection of cash into the banking system, it is temporary. Would you prefer that the central banks all cit on their hands and allow the financial markets to implode? That would be rather counterproductive. These are not gifts to the banking system, they are simply short term (overnight usually) loans to provide necessarily liquidity. "

    My preferences are beside the point. What is going on is an egregious manipulation of the money supply, which like every other instance of interventionist policy, produces outcomes that are worse than those which they were intended to remedy. The current problematic situation is precisely result of the kind of government interference in credit markets which you advocate as a solution. Have a read of Rothbard's "What has Government Done to Our Money" for a clear analysis.
  14. Hugh Campbell from Canada writes: Dan LeRoy from Lethbridge, writes: "The current problematic situation is precisely result of the kind of government interference in credit markets which you advocate as a solution."

    The current problematic situation is precisely the result of the lack of market regulation, which has allowed the unfettered creation of pyramid loan schemes.
  15. Clark Edwins from Canada writes: Adding liquidity is also dangerous, cause it is going to backfire even further. Bank of Canada is helping the chartered banks temporairly, while the chartered banks are making billions in profit.

    Yet these chartered banks, CIBC, BMO, BNS, BMO, TD & NATIONAL BANK, make huge profits but are asking the central bank to bail them out in this liquidity crisis. Who made the mistakes? The banks!!! Why should they be bailed out? Put the CEO's in jail! Ain't gonna happen, they just keep getting huge bonuses!!!

    National Bank is the only chartered bank to be in a JAM with 3rd party ABCP, for $2 billion, thus it is their problem, not the public or the central bank. Too effing bad!!! Lower profits, stock drops, no bonuses for execs just some serious JAIL TIME & FIRINGS!!!!
  16. T Mac from Vancouver, Canada writes: What kind of interest rate are the banks paying on these "overnight loans" from the central bank?

    Why can't banks in this country be allowed to "take a hit" for making high risk lending decisions? Despite having a decent income, I can't afford a house because banks have been lending money at artificially low rates to speculators and flippers, who use assets for collateral, not income. Now the banks are starting to retract.

    Interest rates should have risen years ago. This would have slowed the housing price bubble. Somebody has to pay for this stupidity. It should be the banks. Not taxpayers.
  17. Sebastian Lombardo from Canada writes: My question is , where does the BANK of CANADA get the money? It prints this money out of thin air, magically creates it and then charges you and me interest on it. Not a bad scam. If I were to go to my printer and just print out the cash that I needed to fund my bank account I would be put in jail. I would not pass go, I would not collect $200.00. And what is the goverment doing? Nothing ( Considering they have the power to print the money at no charge to the taxpayer because they use the entire country of Canada as collateral). They know they can just go to the BANK of CANADA and therefore bypass the taxpayer for funds and then tell us we are running a defecit and our taxes will have to be raised to pay for it. That leaves me with one thought. The BANK of CANADA can make you or break you
  18. Libertarian Capitalist from Calgary, Canada writes: Tax me! I'm Canadian! I'll roll over : from Canada writes: : I love it. Ho hum. Another day, another market intervention, another day of devaluing my savings via inflation. ================== Tax me!: I thought you had somehow moderated your harsh stance of "re-crucifying Humanity on the Cross of Gold"??? You know the BoC is fighting to defend its set policy rate that it hopes will ease the emerging credit crunch. When an economy is tending to suffering from a credit cruch, creditors will be setting up higher interest rates then what we all have to fear more is deflation and not so much of your permanent inflation angust. And how are you doing with Fredrick Mishkin's (US FED's Banking expert) arguments? Gave him some consideration, eh? How about Walter Bagehot's ideas of Central Banks as the Lenders of Last Resort that behooves us all? Haven't you seen the Bank Run in England a la 1920s, lately? And that is because Mervyn King, head of UK CB, had slamed the Money Brakes too hard. Now the talk centers on when, not whether, King will be forced to resigned. He Lost all credibility, and other C. Bankers will learn a great deal from it, right? See? CBs are nor really that far from the indirectly moderate control of our elected representatives and they are there to serve the sensible will of the public. Mostly, eh! LOL.
  19. Paul, Bytown, from Canada writes: During good times, proponents of the "market" say that government should stay out of their business and let markets do what they do best, make money.

    During bad times, proponents of the "market" say that government needs to intervene and bail their sorry a$$es out so they can do what they do best, make money.

    It's just a matter of time before it blows out of control and the bail out comes to an end. The markets will do what they do best, make money for the rich at the expense of the regular guy.

    Tic Toc Tic Toc
  20. Tax me! I'm Canadian! I'll roll over : from Canada writes: :
    Libertarian Capitalist from Calgary, Canada writes: Tax me! I'm Canadian! I'll roll over : from Canada writes: : I love it. Ho hum. Another day, another market intervention, another day of devaluing my savings via inflation. ================== Tax me!: I thought you had somehow moderated your harsh stance of "re-crucifying Humanity on the Cross of Gold"??? You know the BoC is fighting to defend its set policy rate that it hopes will ease the emerging credit crunch. When an economy is tending to suffering from a credit cruch, creditors will be setting up higher interest rates then what we all have to fear more is deflation and not so much of your permanent inflation angust. And how are you doing with Fredrick Mishkin's (US FED's Banking expert) arguments? Gave him some consideration, eh? How about Walter Bagehot's ideas of Central Banks as the Lenders of Last Resort that behooves us all? Haven't you seen the Bank Run in England a la 1920s, lately? And that is because Mervyn King, head of UK CB, had slamed the Money Brakes too hard. Now the talk centers on when, not whether, King will be forced to resigned. He Lost all credibility, and other C. Bankers will learn a great deal from it, right? See? CBs are nor really that far from the indirectly moderate control of our elected representatives and they are there to serve the sensible will of the public. Mostly, eh! LOL.

    ----

    You know, I like a debate as much as anyone, but you keep chasing me around these boards, with a tone of smirking, throwing out Bagehot, Mishkin, and the Taylor equation (which is good for modeling past behaviour, but not much good for real time analysis - I checked.).

    I am in the process of reviewing your references, but tell me, care to tell me what a viable monetary solution is that serves the interest of all people fairly within a given economy? What are your thoughts?
  21. Z Z from Canada writes: Lenders who made imprudent decisions should be punished by natural market forces. However, ordinary Canadians completely unrelated to these lenders should not be punished for it too. What the BoC is doing may not be elegant but it's the best it can do to minimize the damage to ordinary Canadians while still punishing the imprudent lenders (though not as heavily).

    Monetary policy is the management of the money supply. There are many ways to do it but very few ways of doing it well. In the past, people had no good understanding of what monetary policy should be. They left it up to things like gold (someone finds a large mine and inflation happens, a ship laden with gold sinks and you get recession), or to many separate banks each with their own money supply. The policy we currently follow in Canada is a combination of Keynesian and classical. There are weaknesses and challenges with it but it's the best that we currently know of. I'm interested if someone can come up with a better one. Two often stated alternatives is the historical gold standard and Friedman's system. Gold standard resulted in the Great Depression so I'm not interested in it. Friedman's system is interesting, not yet convinced it is better than the current status quo but he has some good ideas.

    The BoC owned by the government and is responsible for monetary policy in Canada. Yes it can create or destroy money at will, infinitely. I recommend reading the Keynesian model to find out when, how, and why they do that.
  22. Tax me! I'm Canadian! I'll roll over : from Canada writes: :
    Z Z from Canada writes:

    "They left it up to things like gold (someone finds a large mine and inflation happens, a ship laden with gold sinks and you get recession), or to many separate banks each with their own money supply."

    - Yes that happened in the past, but it is not likely that new hoards are not easily discovered, nor is it likely that hoards will be lost, with the advents of technology. All the gold above surface is gone, the gold panned from the river is almost non-existent. We have global markets and widespread communication technology, not Mayan or Incan people waiting to be plundered by Spanish Conquistadores.

    "Gold standard resulted in the Great Depression so I'm not interested in it."

    - Of all the hallucinations perpetrated by the anti-gold arguments, this one takes the cake. Z Z, I have seen your posts before, I know you are an intelligent person. You are not alone in this viewpoint. Gold was abandoned as it restricted and hampered the ability of governments and banking institutions to create infinite paper currency or credit, backed by nothing tangible. Remember that vairous societies prospered (and had hard times) for hundreds of years prior to the introduction of a central bank - just like now -with a central bank. Remember that the Great Depression happened AFTER the Federal Reserve was established in 1914. The Gold standard did NOT cause the Great Depression - it was caused by the private banks refusing to issue new credit and calling in old loans, causing the money supply to contract by 30 percent or so. Ben Bernanke admitted the Fed stood by and did nothing to replace the lost credit.

    Bankers and the government hate a gold standard. They did their best to remove it and ensure the populace did not understand why.

    I too wish to seek a better monetary system. I am pretty sure that one will not be forthcoming that would remove the power of the amoral monetary scientists.
  23. Paul B from Canada writes: I'm glad to see everyone has educated themselves on how the markets work. They crash you loose. They do well you win. Everything that happens on the stock market has an effect on the average Joe. The problem right now is that there is a lack of money. If the banks were to pay the price you would have to pay the price because the banks would loose your money. PS folks, the banks make money off money and most of it is not your money but some of it is yours. Retail Banking is a VERY small part of what they do. So next time you want to make a blanket statement educate yourself on it.

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