For those of you who don’t know, retired Harper Cabinet minister Stockwell Day now has two jobs: political “counseling” and journalism. Mr. Day has taken a position as occasional contributing columnist to CBC. This is presumably yet more evidence of the far-left agenda in our national media.
Today, Mr. Day has published a half-baked column filled with some extraordinary untruths. By untruths, I don’t just mean ideological statements that I don’t agree with. I just mean some incredibly obvious, basic, errors that someone with a course or two in economics really I don’t think would make. Which is where it gets kind of disturbing. We don’t have many retired Cabinet ministers kicking around, so it’s tough to generalize, but if this is the intellectual calibre of the people running our country, I don’t mind telling you, it’s a little bit worrying.
The main complaint from Day — and this is the hypocrite part — is that Barack Obama and Justin Trudeau both support fiscal policies which would keep their countries mired in budget deficits. Uh, hello? You know what party you were in, right? You remember the budgets you voted for? Or maybe you just slept through all those votes. The hypocrisy is extraordinary here. Our right-wing budget deficits are necessary responsible investments. Their left-wing budget deficits are unsustainable giveaways. I agree with Day that budget deficits are a problem. I’m just not sure he agrees with himself.
But, as I say, my concern is not with political grandstanding or ideology. It’s with things like this:
Don’t be fooled by high-sounding terminology such as “quantitative easing.” Although QE, as it is known, may have a regal tone, I can assure you there is nothing majestic about it. It simply means that public debt is being heaped upon the shoulders of this and the next generation. It is a fleeting fix to a problem that cannot be fixed with compound interest rates.
I don’t know where the compound interest rates come in, but the main point is — and now we’ve arrived at the ignoramus part — quantitative easing has nothing to do with debt. It doesn’t even have anything to do with government fiscal policy. Quantitative easing is a monetary policy of the central banks, which involves printing money and giving it to the private banks to “stimulate” the economy. This adds nothing to the bottom line of the annual budget. There isn’t even an authorization to do it coming from the White House. In both Canada and the United States, the central banks are run independent of government policy, and the money they give to the banks does not come from taxpayers.
Now that we have the proper definition for this, it’s worth pointing out — gasp, the horror! — that the sort of policy that underlies quantitative easing not only doesn’t lead to public debt, but it was also eagerly set in place by conservative governments, not liberal ones. It was the Bush administration that got this ball rolling in the United States. Our central bank has given out certainly tens of billions and very possibly hundreds of billions to the banks in a similar manner.
You may legitimately ask yourself — and me — how it’s possible for trillions of dollars to be pushed around the table without the public purse taking a hit from it. The answers are complicated. (The simple answer is: because most money is fake money.) But the question of whether “quantitative easing,” as it’s now known, is intelligent public policy isn’t at issue here. What is at issue is that, at least from what he has to say here, it’s not clear that one of this country’s most accomplished recent Cabinet ministers, admittedly now retired, has a sound grasp of basic monetary and economic policy.
And we haven’t even gotten to the best part of it, mostly because it requires a short lecture in macroeconomics: quantitative easing on a large scale would actually reduce government deficits, not increase them. Because, as I said before, most money is fake money.
It’s not just Day’s fault here either. Are there editors at CBC, or do they just let people put up any old thing on their website now? Surely the job of somebody at CBC is to save both their columnists and their organization from the embarrassment of publishing factually incorrect information.Tweet