the short story on the infrastructure bank...

after the second world war, canada, like the other allies, found itself with an unemployment problem. one of the things that it did to fix the unemployment problem was that it invested heavily in roads. and, how did it pay for that? louis st. laurent used to brag that he balanced the budget, so it couldn't have been with too much bank debt.

in fact, money for infrastructure in canada - as well as in most places in the western world - was merely generated out of thin air, by the bank of canada. you need to be careful with the claims of people like paul hellyer and ellen brown as much of it is exaggerated, but it is legitimately true that the bank of canada printed almost all of the money it used for infrastructure.

this did not create meaningful debt because the money wasn't borrowed. it just came into being with the wave of a wand.

this changed in the early 70s, when an international agreement came into force that insisted that this kind of money generation was the cause of the inflation that countries in the west were experiencing.

today, we know that the theory of monetarism is false. it's questionable whether anybody should have ever taken it seriously, as the inflation was obviously tied to the opec embargo and the nixon shock. that is, there's a good argument that the banks pulled one over on us in getting people to accept the idea of monetarism in the first place - as they did with trickle down ten years later. but, canada was not able to push back against both nixon and heath at the same time and relented to a pledge to shift funding for government projects from public to private financing.

this was supposed to reduce inflation. but, canadians know that inflation increased in the 70s, and that debt ballooned in the 80s. trudeau figured out that the cause of the inflation was not public borrowing but the oil crisis, and created a national energy program to adjust to it. but, under international pressure to hold to monetarism, he never returned to public borrowing, and we today have a large national debt as a consequence of this.

in the 90s, we had to restructure dramatically to deal with the consequences of this debt, as the imf was threatening us with sanctions. and, in the 00s we faced a war of attrition by a government that wanted to destroy the country through the weapon of international finance.

i'm not here to rant about the debt. i don't have conservative values. i don't see the value in saving, or fiscal conservatism, in general. rather, i'll point out that the status quo debt/gdp ratio is manageable - so long as we don't have the need for any large scale spending, like we did in the 50s.

today, we do need this kind of large scale spending on infrastructure to adjust to the effects of the changing climate in front of us. and, given that the theory that led us to private financing is thoroughly debunked, we should be seriously contemplating the value of a return to public financing in order to do it.