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

Benefit dance being held for Qualicum Beach woman critically injured in crash near Lantzville

June 1 dance will help support 23-year-old Lydia Blackwell and her family

‘Why is it important for our voices to be heard?’

Parksville student details reasoning behind Climate Change Walkout

‘Chesapeake Shores’ crew makes donation to Parksville’s SOS Thrift Shop

TV show producers say they are happy to support local programs

Parksville soliciting offers to purchase eight parcels of land; minimum price $2.5M

Council may choose to proceed with any or none of the offers

Parksville council supports applications for four new non-medical retail cannabis shops

Business licences won’t be issued without provincial government approval

Police say it’s “impressive” no arrests were made after Raptors celebrations

Toronto will play the Western Conference champion Golden State Warriors next

So, they found ‘Dave from Vancouver Island’

Dave Tryon, now 72, will reunite with long-ago travelling friends in Monterey, Calif.

Social media giants in hot seat as politicians consider regulations in Ottawa

Committee members will also grill representatives from Facebook, Twitter

Wildfire crews watching for dangerous wind shift in High Level, Alta.

The Chuckegg Creek fire is raging out of control about three kilometres southwest of the town

UN urges Canada to take more vulnerable Mexican migrants from Central America

The request comes as the United States takes a harder line on its Mexican border

Mistrial declared in Jamie Bacon murder plot trial

Bacon was on trial for counselling to commit the murder of Person X

B.C. VIEWS: Money-laundering melodrama made for TV

Public inquiry staged to point fingers before 2021 election

Canadian homebuyers escaping high housing costs by moving to secondary cities

In British Columbia, exurbs have grown in the Hope Valley and Kamloops

Most Read