> What, you mean there are no savings accounts or certificates of deposit or
commercial paper in Canada? Hard to believe. When a bank makes a loan, it has
to get the money from somewhere. The COMER people go nuts about the absence of
reserve requirements (reserves that aren't lent out, but are kept in the vault
or with the central bank as a cushion in case of a run), but that still
doesn't eliminate the need for banks to fund their lending somehow.
Yeah, I thought the reserve requirements had been eliminated for Canadian banks...
> I hate to sound old fashioned, but you can't control prices forever,
especially if credit is growing like crazy: you're going to have shortages and
hoarding. If prices are fixed, then the adjustment has to be in volume.
Ok - what would the problem be for the Bank of Canada to buy up the loans from private institutions? Then the "public" debt would be owed to "public" bank? This is done for RRSP's (say, when you use your RRSP to purchase a house) - why can't a (theoretically democratic) national bank do the same thing? If the gov needs money, it's just stupid to go to a private institution.
somewhat perplexed, ken