Sunday April 25, 2021

The federal budget is in. As presented by Finance Minister Christia Freeland last week, the budget expects to run a $354 billion -- yes, that’s billion -- deficit for the current fiscal year.

            Plus $152 billion next year.

            And $59 billion the year after.

            On top of somewhere over $400 billion thrown at the economy during the early months of the COVID-19 pandemic to reduce the carnage caused by closures, shutdowns, lockdowns, and travel restrictions.

            I have trouble thinking in billions. For that matter, I have trouble thinking in any figures larger than what I can carry in my wallet.

            I empathized with Parkinson’s Law, when the author imagined a village council meeting in which councillors argued for hours about the cost of a new broom for the janitor, but passed without debate a proposal to spend a million or so to attract a nuclear power plant.

            The late C.D. Howe gained notoriety when the Opposition in parliament challenged the precision of some figures he quoted. “What’s a million?” Howe shrugged.

            Or a billion, these days.

The burden of debt

            I won’t quarrel with the purposes of the federal deficit. Child care, a green economy, pandemic relief, increases to old age pensions -- I’m a small-l liberal. I support all of those.

            I’d support the funding for improving the health of indigenous communities too, but I’m skeptical about the ability of the former Indian Affairs Department to do anything beyond perpetuate its own bureaucracy.

            Still, the most common reaction I observe to the federal budget -- aside from eyes glazing -- is the cry, “We can’t afford that kind of debt!”

            I sympathize with that emotion too. Personally, I’m a fiscal conservative. I avoid debt. I’d rather pay cash up front than make monthly payments.

            But then I start asking, who’s in debt, to whom?

            Most discussions about national debt assume that other countries are lending us huge sum, for which they can assume control of large chunks of our economy. I gather that two-thirds of the world’s major container ports are now owned by China. Saudi Arabia owns the largest U.S. oil refinery. The Arab Emirates own six of the busiest U.S. ports.

            But we’re not borrowing those billions from other countries. Because they’re also running huge deficits as they react to the pandemic.

            No country has spare billions around to lend to Canada.

Borrowing from ourselves

            So, as near as I can tell, the federal deficit is borrowing from us. Or from our grandchildren’s future, as several friends remind me.

            Conventional wisdom requires that debts must be repaid.

            So let me see if I’ve got this straight.

            The federal government itself has no money. It operates on money it collects from us, in taxes. If it doesn’t have enough money on hand, it has to borrow from us, so that it can feed that money back to us, to get us through an economic crisis, and then we have to re-pay ourselves the money that was borrowed on our behalf from ourselves.

            Does that strike anyone else as somewhat circular?

            This makes as much sense to me as insisting that if I take $20 from my wallet to buy groceries (not that $20 will buy much anymore) I am now in debt to myself and must repay that debt to protect my credit rating.

Credit, not cash

            I wonder if the problem is that we think about money as a finite quantity. There’s only so much money around. For me to get some of it, I have to take it from you. If you loan me your money, I have to repay that to you. Eventually.

            That may have been true in the days of the gold standard, when national currencies reflected the amount of solid yellow metal stored in underground vaults, somewhere.

            But as a recent article hypothesized, we don’t work with gold anymore. Not even with cash. We work with credit.

            If you go to your bank to get a $5000 loan, the teller doesn’t go to some fortified vault somewhere and remove $5000 worth of gold. She doesn’t even count out $5000 in cash. She clicks some keys, stamps a piece of paper, and presto, she has added $5000 to the world’s money supply.

            Credit is not real money, I contend. It’s imaginary money. Therefore it is not finite anymore.

            The federal budget, in that sense, is about the government giving itself a line of credit.

            Since it is simultaneously banker, borrower, and beneficiary, it can presumably write off debts as easily as it can create them.

            I’m watching to see how economists will re-think their theories in this new world of universal debt.

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Copyright © 2021 by Jim Taylor. Non-profit use in congregations and study groups encouraged; links from other blogs welcomed; all other rights reserved.

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YOUR TURN

Okay, that was a depressing column last week, in which I suggested that we may never return to the “normal” we used to know, and that the “new normal” may resemble some of our present reality.

“Since I don't like to read dystopian literature, I don't like to contemplate a world that remains as it is currently,” Tom Watson wrote. “It's a close to dystopian as I want to get. Continuing to live a prolonged time without being able to see my family and friends is in no sense a soul-comforting thought. On the positive side, I do believe that we will find a way out of this, just the same as people of the 1918 generation found their way out of their time.”

Don Sandin argued that “We become what with think about”. He went on to suggest that we think too much about Covid-19.

            “A year ago the message began that millions could die. We were faced with a ‘pandemic’. And this message went across the world in a month and the world was locked down and panic swept the world. And sure enough, people began to get sick and people died.

            I am aware that people have gotten sick and died. Nor am I minimizing the seriousness of the illness. But I wonder who is presenting all the negative information and why. Someone is playing psychological games with us. Face coverings. Stay six feet apart. Wash hands regularly (minimum 30 seconds.) No church, no concerts, no parties, no movies, three people on an elevator, no visitors in hospitals. Alternative treatments are blackballed or removed from publications.

            Every day the local newspaper has at least one article on Covid-19 and reports on the latest statistics for the state and the nation. What they don't tell is that less than 2% of those who get the virus die from it; 98% of those who get it, live!

            Every day we are given the data that promotes fear, anxiety, worry, isolation and separation from family People are seriously affected by their inability to live normal lives. ‘They’ have created a population of depressed people. Sad.

Laurna Tallman would agree, in part at least. She wrote about her son’s depression, and her husband’s constant listening to bad news on TV.

            “I blew up at [husband] Dick a few days ago, telling him I felt as though our family room had become filled with gloom and horror and despair. I started to sing vehemently that Sunday School song, ‘I’ve got that joy, joy, joy, joy down in my heart ...’. I could hear [son] Daniel muttering in the kitchen. I continued singing as I walked into that room. I was afraid I had upset him. But he threw his arms around me in an awkward embrace like a drowning man. I realized suddenly how much of the horror and sorrow I feel from the TV news has been soaked up by him, too. We have starved him of hope with that endless tale of the world’s evil. It hasn’t done us any good, either.

            “Dick has agreed to use the mute button. I have resolved to bring love, joy, praise, and peace back into these rooms. I am going to become the change I seek.”

Bob Rollwagen looked at what the “new normal” might entail: “You hit the nail on the head when suggesting trust would take on a great role. We each need to insure we do nothing to impact another in way that limits their idea of freedom, and they should make sure that their action does not impact me.  Hold out your arm. This the size of the space that you should control. Beyond it, you need permission. Trust needs to come from a common agreement on the rules of society. This can start once those that want to return to our past routine realize those habits were learned and can be changed. Now we can create the new normal.”

Cliff Boldt: “I think your speculations are right on the money.  When COVID is a bad memory, we will be doing a lot of things differently. Church, public education, local travel in communities, housing, climate change -- the list is long.”

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TECHNICAL STUFF

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PROMOTION STUFF…

To use the links in this section, you’ll have to insert the necessary symbols. (This is to circumvent filters that think some of these links are spam.)

            Wayne Irwin's “Churchweb Canada,” is an inexpensive service for any congregation wanting to develop a web presence, with free consultation. http://wwwDOTchurchwebcanadaDOTca. He set up my webpage, and he doesn’t charge enough.

            I recommend Isabel Gibson’s thoughtful and well-written blog, wwwDOTtraditionaliconoclastDOTcom. She also runs beautiful pictures. Her Thanksgiving presentation on the old hymn, For the Beauty of the Earth, Is, well, beautiful -- https://www.traditionaliconoclast.com/2019/10/13/for/

            Tom Watson writes a weekly blog called “The View from Grandpa Tom’s Balcony” -- ruminations on various subjects, and feedback from Tom’s readers. Write him at tomwatsoATgmailDOTcom (NB that’s “watso” not “watson”)

ALVA WOOD ARCHIVE

            The late Alva Wood’s collection of satiric and sometimes wildly funny columns about a mythical village’s misadventures now have an archive (don’t ask how this happened) on my website: http://quixotic.ca/Alva-Wood-Archive. Feel free to browse all 550 columns