It was the Great Depression that pushed the US government under Franklin D Roosevelt to constrain and regulate the banking elites that had caused the financial collapse. In Canada, government under Prime Minister McKenzie King implemented even more radical steps, first by nationalizing the Bank of Canada, and then, by using its money creation powers, to finance a golden period of public infrastructure growth in our country which lasted from 1938-1974.
As you can see from the graph below that golden period was financed with minimum debt load to the Canadian people. In fact, it was only when we abandoned using the money creation powers of the Bank of Canada that our national debt exploded.
What the Canadian government did would be called Quantitative Easing (QE) today. But it’s a form of Quantitative Easing very different from what governments are currently using to rescue and stimulate economies savaged by the Covid19 pandemic.
The current and prevailing Quantitative Easing model assumes that money injected into the financial system will trickle down to Main Street and the small businesses and workers that populate that economy. Except that it doesn’t. Research from Europe, the United States and Great Britain suggests that over the last 12 years of their experiment with QE, it has been the rich that have profited the most.
That kind of profiteering and self-interest is not what we need during the present crisis. Instead, we need a Quantitative Easing framework that serves the needs of ordinary people. Check out our YouTube explanation of how one could work.