Debt and growth

I refer to Bill Wilson’s letter ‘Debt and the Wealthy’ (May 26, The NEWS) questioning the reason for privatization of the public debt.

I refer to Bill Wilson’s letter ‘Debt and the Wealthy’ (May 26, The NEWS) questioning the reason for privatization of the public debt.

If one accepts the maxim that the creation of huge sums of money in excess of any increase in the gross national product is inflationary, this provides the answer.

In the late ’60s and early ’70s, the government embarked on a path of huge deficits and debt. In endeavouring to handle the debt, the bank allowed inflation to climb to nearly 13 per cent and it became obvious in 1974 that it could not continue without worsening the problem. The answer was privatization, which has kept inflation low.

Admiration for debt-free North Dakota and its state banking system may be misplaced. In the 75 years following 1930, the state’s economy was relatively flat, with only modest growth in real terms. During this period, the small population of 780,000 gradually declined to 742,000. With this dwindling population, funding infrastructure was minimal and placed little strain on budgets.

To make a comparison with our own financial situation is unreasonable. For example, British Columbia’s population at the same time was smaller at 500,000. Strong growth in the economy over this period saw a population increase of 700 per cent. The financial burden of infrastructure to service this growing population, spread over an area six times the size of North Dakota, has been heavy.

Now with the discovery of the Bakken oil field, and the exploitation of this resource, the North Dakota government suddenly finds itself awash in revenue. Since 2000, the state has gone from the second worst economic performance in the U.S. to best. All supporting a resident population smaller than it was in 1930.

We should be so lucky.

Colin BartlettParksville

Just Posted

Winds of up to 90 km/hr forecasted to hit Vancouver Island

Environment Canada is warning that loose objects may cause damage

Parksville Qualicum Beach drivers reminded to be aware of possible icy road conditions

Shaded areas, bridge decks and corners are common areas where slippery conditions can occur

Multiple Parksville resorts report stolen Christmas decorations

Oceanside RCMP say three thefts likely occurred on same night

Tidesmen awash with festive tunes for Parksville performance

Male chorus bringing classics, and 21st century holiday love song to Knox

VIU researches importance of French Creek Estuary area

Estuary not currently included in any protected areas

Lawyer for Chinese exec detained by Canada says it’s ‘inconceivable’ she would flee

Meng Wanzhou was detained at the request of the U.S. during a layover at the Vancouver airport

BCHL player lifts Canada West to second win at World Junior A Challenge

Chilliwack Chiefs player has a three-point performance

Well-known B.C. snowmobile guide killed in rollover accident

Shuswap sledding communty mourns loss of experienced Sicamous snowmobiler

B.C.’s skyrocketing real estate market will ‘correct’ in 2019: analyst

Housing prices in Vancouver are set to rise just 0.6 per cent

Trapped humpback whale freed from salmon farm near Tofino

“All of these problems could be solved by the farms moving onto land and getting out of the ocean.”

In depth: Simple falls causing serious injuries to people over 65

Kelowna’s high population of seniors puts it in the spotlight for how it deals with seniors’ issues

Time magazine’s 2018 person of the year

The group is made up of four journalists and are the “guardians and the war on truth”

Majority of Nanaimo’s Discontent City residents moved into supportive housing sites

A few spaces remain at Terminal Avenue and Labieux Road locations

Most Read