Canada’s central bank chief says that running deficits is the most effective way to restart a stalled economy.
…Citing the late British economist John Maynard Keynes, the central bank chief reminded his audience that when interest rates are already low, fiscal policy (the willingness of governments to spend more than they take in) is always more powerful than monetary policy (attempts by central banks to promote investment).
In effect, he was telling Prime Minister Justin Trudeau and Finance Minister Bill Morneau to go for it — to run deficits if necessary in order to get the country working again……
….The most effective method, as Poloz has pointed out, is not to engage in arcane central bank practices.
It is to have the federal government keep running deficits.