Introduction
Bank of Canada
Monetarism
Unbelievable!
Believe It!
Ideology
Article 18
Ex. 1/Ex. 2
A Vision
Conclusion

Global Changes in Monetary Policy

“Until the late 1960s central banks held inflation in check by one or a combination of several tools: (1) by raising rates for overnight loans to the chartered banks to help them meet their net cheque-clearance or other obligations; (2) by raising the statutory reserve requirement - the percentage of deposits made with the banks by the public that the banks had to redeposit with the BoC to back their chequing and other short-term accounts - such redeposits had earned the banks no interest; (3) by “jaw-boning), i.e. Advising the banks of regions or industries where they did not want bank credit increased or even maintained at its present level.

In the 70s the monetary policy of Monetarism was adopted; further, central banks worldwide began attempting to control inflation by reigning in the money supply without regard for the inevitable effects on interest rates.(Monetarists hold that the money supply alone determines price- and just about everything else!)

In mid-1991 a bill was slipped through parliament without debate or press release phasing out the statutory reserves over a two-year period (subsection 457 of Chapter 46 of the Statutes of Canada.) That left higher interest rates the only means of “fighting inflation.”


Interest rates, however happen to be the revenue of money- lenders as the sole way of fighting price rise which conventional economists identify with “inflation”. ( see - the social lien section). At the same time a campaign was launched to enshrine (1) the independence of the central bank from the government, though the BoC Act sets forth that all shares are owned by the federal government; that in the event of a disagreement on broad policy between the governor of the BoC and the Minister of Finance, the latter shall have the right, after thirty days written notice to conform, to dismiss the Governor. If that does not add up to the good old capitalistic definition of ownership, i.e. non-independence, what does?; (2) “zero inflation” a perfectly flat price level was proclaimed essential. Most of Canada’s federal debt was run up in the attempt to enforce these provisions, which contradicted the BoC’s charter. Such contradictions, however, did not deter Mr. Crow, and subsequent BoC Governors, from pursuing like policies to this day!

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