Summary
"While you don't want to have excessive expansion of the demand side, you certainly don't want it to collapse," [Bill Watson] says. "If people don't want to buy stuff and you stop producing, then you don't get your potential output."
"They are bonds that are issued by the Government of Canada where you have the coupon amount, but you also have a price adjustment that's tied to inflation," he says. "So as consumer price inflation increases over time, the value of the bond -- the principle that the government has to pay you at maturity -- increases.""If you knock on the door of the average university economist or bank economist, they are going to say, 'Oh, when the Bank of Canada creates money, that's inflationary.' Well, of course, it's inflationary, but how about when the banking system creates money?"See the full content of this document
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Making the Money Move
Why the Bank of Canada is doing what it's doing
44The bank's governor, Mark Carney, could really be talking in tongues for all most of us know or care.But for those who wonder just what it means to their financial outlook when the BoC cuts interest rates to historic lows, here's a rudimentary primer.The first thing to understand about monetary policy is the relationship between the target interest rate set by the BoC and inflation.For about the last 20 years, the BoC has been "an inflation hawk," says M...See the full content of this document
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