Raise the Hammer

I shouldn't pass myself off as an expert on the North Dakota bank so here's an excerpt from the linked article:

We also provide a dividend back to the state. Probably this year we’ll make somewhere north of $60 million, and we will turn over about half of our profits back to the state general fund. And so over the last 10, 12 years, we’ve turned back a third of a billion dollars just to the general fund to offset taxes or to aid in funding public sector types of needs.

MJ: Not bad for a state with a population of 600,000.

EH: Right. And here’s another thing: Back in 2001, 2002, when we went through the dot com bust, all the states suffered some sort of budget shortfall, including the state of North Dakota. At that time our budget shortfall was fairly insignificant--$40 some million. And so it was quite easy to overcome that. The governor just simply said alright, we’re going to turn back 1 percent of all general fund agencies, and the Bank of North Dakota, you will declare another dividend to make up the balance. And so we did that. Our capital was in a fine position to go ahead and do that. So in some cases we’ve acted as a rainy day fund.

On your wartime question, the dollar peg and how the BOC can be used are two different things. But I do suppose pegging could be a supplement to our BOC's ability to control our destiny.

I'm not quite sure what you mean about the USD having crumbled. You ain't seen nuttin' yet - the crumbling has only just begun. We will soon have to make a decision about whether to save Ontario manufacturing by lowering interest rates to keep CAD close to par - which risks much more inflation. Alternatively, we can let the loonie rise and kill manufacturing to keep inflation in check. Mackenzie King understood this kind of choice when he designed the BOC system.

We in Ontario would prefer the former choice but it begs the question, if we allow US profligacy to trash our loonie, what will bondholders who buy our debt be thinking? Do they want to be paid back with a shadow of the present dollar? I believe bondholders, especially China, etc. will soon shun all western currencies and demand payment in some kind of the alternative currencies you suggest - rubles, yuan, gold or whatever. While MSM ignores this issue, the blogosphere is a-buzzing! MSM is useless.

All the worries you have expressed about CAP, I suggest are exactly what the present system (banking and otherwise) is in the process of delivering to Canadians - hyperinflation, crumbling currency, lost jobs, depressed wages, temp jobs for many while corporations enjoy record profits, widening wealth gap, super bonuses, tax haven loopholes galore. We're being bled dry while the MSM says all is well.

Wouldn't Canadians be far better off with more tools in the toolchest and our hands were not tied in using them? Using the BOC as it was intended by Mackenzie King is a fabulous tool that, as North Dakota has found, has turned interest lost into profits that are plowed back to the people's country. Sounds like a better deal to me.

PS. I wonder how narrow this column will become? <;-)