Council of Canadians

Doug Henwood dhenwood at
Thu Apr 6 10:19:02 PDT 2000

kenneth.mackendrick at wrote:

>Just to note one, there is an organization
>in Toronto concerned about monetary reform - basically - they're arguing that
>instead of borrowing $$$ from private institutions, like the Bank of Montreal,
>the government should borrow $$$ from the Bank of Canada (which is
>legal). Any
>interest paid on the loan would then be going back into public coffers - and
>the Bank of Canada could set whatever loan rates they wanted. There are a
>series of arguments to follow about inflation and such. I believe the same
>kind of program is being promoted in the US - under the name of Sovereignty.
>I'm not an economist, but it sounds like the idea is worth talking about.

You must be talking about COMER, which is the Committee on Monetary Education & Reform, I think. I think this is basically crankery - manipulations in the monetary realm that avoid real battles over power and the distribution of resources. What does it mean for the government to borrow from its central bank? Would the money just be created out of thin air? Money is valuable only because it represents claims on real resources, i.e. products of human labor. Taxation and borrowing from rich people may look like movements of money, but they represent real resource transfers. Borrowing from a central bank doesn't - it's just funny money. People who believe in these schemes tend to believe "finance" is a kind of malignant growth on the productive sector, and not something intimately tied to capitalist production. But in a system where production is undertaken only if M'>M in the M-C-M' formula, it's impossible to separate money and production. So I think these sorts of ideas are worth talking about, but only to expose them as nonsense.


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