Quote:
Originally Posted by mikey_the_redneck
Try part 5 and 6...
|
Okay, I can't watch anymore. This guy has no clue what he is talking about. He seems to think that the Bank of Canada, creating a fixed sum of money and then simply recirculating that same sum over and over again is going to drive the economy.
Suppose there is $100 of Canadian currency for everyone to use. Obviously the value of a Canadian dollar would be extremely high in this situation, but another thing it would do is stagnate the economy. Banks need to be regulated to a certain degree so that people aren't able to finance themselves into bankruptcy so easily. Getting rid of banks altogether is asinine.
Look at it this way: Say you need $100,000 to buy a house. Under this proposed idea, you would go to the government, who would issue bonds worth $100,000 to the Bank of Canada. The Bank of Canada would then print and hand over $100,000 in Canadian currency to you. You would then, repay the government the $100,000 at no interest. There are several reasons that this would not work:
1. It does nothing to take into consideration the time value of money. $1 today is worth more than $1 tomorrow, and this is because of inflation. Part of interest compensates for inflation. If it takes you 20 years to pay off your debt of $100,000, you would, in effect, be paying back a significantly lower amount to the government. You may be thinking that without interest rates, there would be no inflation, but you would be wrong. Which brings me to the next point.
2. Inflation is caused by several things, one of which is a money supply that grows faster than the economy. The more money that is in circulation, the more the value of the dollar will decrease, just as in the scenario where only $100 in circulation increases the value of a dollar.
3. Another issue is that these bonds are not charging any interest, which means that foreign investors have no incentive to invest in the Canadian dollar, which further devalues the Canadian dollar relative to foreign currency. This means that when we import goods, it would require more of our money to purchase foreign goods, which drives up their prices and further increases inflation.
What really bothers me about this documentary is that, from what I have watched, this person hasn't bothered to talk to a single economist or anyone that actually understands how the economy works. Sure, he asks a bunch of unprepared politicians and only shows you the parts where they stumble for an answer before cutting to his own oversimplified nonsense, but what does that prove? How does that help anyone understand how things work? I find it really disappointing when I read the comments posted below that video and seem to only find people saying that they agree with this person's view. Makes me really scared about the day when these kids will be old enough to vote.