Even the Bank governor is saying publicly government can\u0027t relying on monetary policy
the U.S. Federal Reserve concocted it as an experimental way to boost the U.S. economy out of the Great Recession when Congress couldn’t act effectively during the Tea Party years. There was no forthcoming fiscal policy at the time, so the Fed felt it had to step up with solutions to fill the gap.
“For monetary policy, the best thing we can do is to get us back to more normal price increases, with inflation expectations clearly anchored on two per cent. That kind of normal environment is the best thing the Bank of Canada can do for prosperity,” he said. “And then I think there’s a range of government and business policies that need to address these other issues, whether it’s climate change, geopolitical tensions, trade. These are all important issues for Canada.
Unfortunately, from the Liberals’ perspective, to effectively act on many of these issues would require having tough conversations with, if not upsetting, key voter and donor groups. So rather than lead, they hide behind the BoC. This, much like how too-loose monetary policy grew systemic risk, increases the chances the bank will error and over-tighten into a large recession.Article content
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