Why are my taxes being given to the banks? ⇒
14 September 2007, early afternoon
Maybe some who knows something about money can explain.
This is a post from my link log: If you click the title of this post you will be taken the web page I am discussing.
I don’t think I really understand the question that is being asked.
by rishi on September 14 2007, 3:03 pm #
Can governments actually borrow from the bank of Canada at low (or no) interest to fund infrastructure and social programs, rather than borrowing from the private banks and crap like that. I’m just wondering if this lady is a crank.
Even if Toronto could borrow from the bank of Canada to fund whatever, we’d still presumably need to pay the bank back.
by Ramanan on September 14 2007, 3:48 pm #
Unlike private institutions, the Bank of Canada does not exist to leverage it’s ability to borrow and good rates and lend at bad rates, earning the spread.
As outlined here, one of the Bank’s main functions is debt management which primarily involves borrowing (due to our nation’s financial situation). If Canada was flush with cash, then it’s possible the Bank of Canada would also be involved in lending to the benefit of municipalities and maybe even private borrowers.
As far as I understand, the Bank of Canada is a representative of the Government of Canada, so for a province or city to borrow from them, means they are borrowing out of the federal budget. I’m not sure how this ends up being advantageous, since the federal government will then have to borrow from elsewhere to fill the gap. I suppose this sort of arrangement would allow for the cost of regional debt to be shared across the nation, but I can see people getting mad about that.
by rishi on September 14 2007, 5:36 pm #