The Bolt

So you say the debt skyrocketed starting from 1983? What changed? Very high real interest rates were implemented as part of a right wing zero inflation strategy. The first part happened in concurrance with the Volcker Shock in the United States when that country did this so we can't really blame Trudeau really but it was under Mulroney's Bank governor John Crow that zero inflation became official policy. These policies caused massive new unemployment which meant less tax revenue and more expenditure to keep people alive. High real interest rates led to higher debt service charges. The creation of a large Reserve Army of Labour in an effort to suppress wages (ostensibly to kill inflation), to make the rich richer and the poor poorer, and the zero inflation strategy is what caused these problems. It's the Right that did it.

How is it possible for us to pay off our debt? From my understanding every dollar thrown into circulation is printed by the banks for our government through bank notes... If every dollar is printed with interest owed then how can we ever pay off our debt? With every dollar paid back is one less in circulation, which means more must be printed..? :S Can anyone explain cause I don't understand the concept here?:S

Mr Trudeau created the majority of our debt. Just go back another 20 years and you will see when the debt took flight around 1972. Oh what a mortgage we now have on our country. Whoever is in power please pay down the debt every year. We dont want to become a third world country. I remember times after the war when recessions lasted for a very short time because the goverment of the day had lots of credit to get projects and the economy moving again. Our present governments dont have that luxury.

Look at the graph that is above it shows the debt charges ( the interest) canada pays each year. About 35 billion as anaverage and we only knock off like 3 billion a year from the debt.

This debt is paid to private banks private investors foreign and international banks. They buy treasury bonds from our government (I.o.u's) I tried to figure out what banks by calling our government but they want me to send my question and $5 to ottawa.

I see no choice but to fight against the future debt and this present war. Thanks for listening spread my words if it makes sense to you.

To @Sherwin Buydens

40% is staggering. Let's put this into perspective. If I had $50 dollars back in 1970 I could buy alot of things with 50 dollars in 1970. Now it's 2009, I could not buy the same things I could buy back in 1970 due to the fact that the dollar has less value than it did back then.(*inflation de values paper money)

So if we were in debt by 40% in 1990, it's not the same as being in debt by 40% in 2009, Due to the fact that our dollar has less value than it did back then. If you took this current debt (2009)and matched it up to the debt 20 years ago, it would be almost 1/3 more (roughly about 13% more on top of the current 40%).

Plus if we were seriously Nationally debt free, we would not have high taxes or individual taxes at all.

Remember, taxes were introduced to Canadians to pay for the World wars. Just like the Sin # was introduced for the fellow man's work place to be there on a rainy day when he lost his job. Man things have changed so much.

Sick of getting lied to all the time by thieves that run this country.

Nice article BTW. Note:> The United States as a superpower are now over. They are finished. Nobody what's to lend them no more money that can't be possibly ever paided back. They owe 55 Trillion dollars, thats Trillions with a "t". If the federal reserve were to raise their interest by 2% The states will be Bankrupt. As it stands now, their debt's interest is about 2 billion US dollars per day. That's just interest!

I just hope Canada takes our pensions out of the stocks soon before they are lost forever. Come on they already lost 10 billion in pension funds already. Now here is the real questions.

How is our Government protecting us against a giant that is falling fast? Are we pulling our funding out of the states? One can not deny that our biggest trading partner is going broke. I hope we don't get caught with our pants down and have US currency that has no value.( Just like in Germany's time when their currency was crap and Hitler took over power and started mini wars that eventual broke out to a full world war)

What Is Canada doing to protect our interests?

@Hazen Quote".....the only thing that gets me is when we waste money on Quebec,...."

I have wondered that myself for years. Why we siphon billions into Quebec to keep Canada a country that is coast to coast Country.

And Can somebody explain to me why we still have a Group in Government that has only one common interests....Quebec and separation. Fook Separatists. All they say is "What about Quebec?, What about Quebec?"

If Quebec doesn't jump on board soon and become *Canadian*, we should strip them of their powers in Parliament. If I do remember right, If you lose a war, you don't dictate shit. French lost the war. Buh Bye.

@David

You clearly skimmed through my comment and your hyper-sensitive any criticism of Alberta is wrong mentality kicked in. I don't begrude Alberta's success. I think it's great for the country as well. However, it's a well established fact that oil forms a good chunk of the province's GDP and royalties form a rather disproportionate chunk of its government revenues.

Are my comments so asinine now that Alberta has just released its budget with a multi-billion dollar deficit? Conservative principles my butt. Alberta has been spending like a drunken sailor. Today, Alberta's provincial government spends more per capita than any other province. Care to explain how that's possible (hint: oil) or how that's conservative?

You want an example of great decision making....the lack of a sales tax. Rather than encouraging a higher savings rate and working to prevent inflation by discouraging consumption the Albertan government thinks its great to let folks save on TVs and toasters....while making them pay income tax. Talk about a backwards tax policy.

As to your ignorance about Dubai...I've lived there and seen their development first hand. They are probably less dependent on oil today than Alberta is. They will run out of most commercially viable deposits within a decade or so and they are preparing to move on. What's Alberta's vision? Has it set aside anything to deal with the environmental catastrophe that the oil sands is (tailings ponds, scarred landscape, etc.)? Does it have a serious plan for dealing with its greenhouse gases now that a new US administration looks set to tackle climate change? Does Alberta have a plan for what to do when the world moves on from oil? Burying your head in the sand should not be the preferred method of government strategic planning.

Keith (posts on July 21). Are you an egghead or what? I love people who ramble on like you with no real sense of reality. To state that Alberta is lazy and relies only on oil is asinine. Sure, oil has definitely helped Alberta prosper but so what? All of Canada has benefited. The amount of money that comes from Alberta in equalization payments is no insignificant piece of change. Aside from that, Alberta is very prosperous in other areas such as technology and research so get your story straight. Then you mention Dubai and how it has diversified??? What in the world are you talking about. It is a city that is populated with ex-patriots and substantially funded by oil. Get a grip man! Sure, I am from Alberta so I may be biased. But I love this province and I love Canada. To knock Alberta for recent prosperity is simply stupid as a Canadian. Our country as a whole is wonderful, beautiful, and great. Every province plays a role in that so where do you get off knocking any of them?

And Ambidextrous (Sep 15), Alberta is debt free. Talking about infrastructure and health care is not an Alberta issue - it's a national and intenational issue. Seriously, if you realized how many roads and bridges in the US were considered sub-par (from and engineering perspective) and how many billions need to be invested to brings things up to standard, it would be staggering. Why not take some time to appreciate that what we do have is not that bad. And if you think it is, go move to a developing country where you would probably really enjoy your standard of living....

To those saying that Alberta is debt free and in a wonderful situation because of it: Alberta is not debt free. The Klien government's policies (which, yes DID get rid of the paper debt) left a huge infrastructure debt and things like health care are in shambles.

Seriously, have you people been here lately? Have you driven on our roads (both municipal and provincial)? Have you looked at our public buildings? Before I even went there, my high school was supposed to have been totally rebuilt. Parts of it have since been condemned, demolished, and/or lit on fire and it's still being used! Why? Because the only things around that are in better shape are trailer farms. That's almost 10 years (just that I'm aware of) of the Alberta government postponing necessary spending. And I'm not even going to into detail on the roads and the limping health care system.

Buying a house and then not putting in the maintenance is not sound financial planning. There are some things more important than removing the paper debt.

@Hazen
The provinces of Canada are like brothers and sisters. They are in essence like a large family. Each is very distinct, like our very own children, they have strengths and weaknesses. There should not be envy, strife or hate among siblings. These kind of feelings do not bring benefit but only destruction and suffering within families. I love Canada as a whole, not in parts.

@Keith - "salt was once a strategic resource too and we moved on from that...bet most people don't even know that today!"

Thanks Keith for many of your comments, Canadians should get moving on a greater concern about fresh water reserves. This is a global strategic resource that most do not even discuss, yet is the most basic part of our lives, and those of the future generations of Canadians, our children, our grandchildren.

Here's a concept.

If Alberta has money to spare why don't they give it to the Canadian Government to help pay off some debt. That'll benefit everyone.

Alberta is part of Canada and they are taking oil out of Canada's ground. Albertan's have a right to what's in the ground but they also have an obligation to Canada, just like every province.

Perhaps Alberta taxpayers should get an extra tax break for using that money to help national debt. We all pay for the federal debt, even Alberta. Wouldn't it make sense to everyone if we all paid less?

It would be nice if everyone worked cooperatively to make this great country even better.

With regards to our debt/gdp ratio there are a number of other issues that we should consider....

The Fraser Institute has pointed out that the growth of other liabilities and unfunded commitments has been astronomical. Its no use getting our debt under control if the balance sheet is still severely threatened.

And while I agree that reducing debt is a good thing...it's way over due that we had some kind of national strategy for this country with regards to fiscal management. What good is it, if the federal debt is declining while the provinces and municipalities are struggling? Robbing Peter to pay Paul should not be a national fiscal strategy. And why are we paying down debt when the economy is struggling (it is...in Ontario)? This kind of policy runs counter to good economic management. We should be paying down tons of debt when times are good (the Liberals did do that) and we should be cushioning the blow when times are bad (the Conservatives haven't found their Keynesian economics textbook yet).

This ridiculous notion that the NEP was responsible for all of Alberta's ills in the 70s/80s has to stop. While the NEP contributed its own share of turbulence, the reality was that a global drop in oil prices made Alberta's difficult to extract oil economically useless.

Why drill in sub-zero temperatures through permafrost with costs of 30 bucks a barrel when you can drill through sand in a sunny Saudi desert for a buck a barrel?

The ensuing collapse in oil prices and the recession that followed were global phenomena. Alberta may have oil but its no exception to the laws of economics.

Stop blaming the NEP for your laziness on relying on just one economic sector. If Albertans had any sense they would be working overtime to diversify their economy like the gulf states...ever been to Dubai? Someday that black gold is going to run out and Albertans are going to wake up to smelly, toxic tailings ponds with nobody to foot the bill for cleanup.

The sad part is that Albertan elites are now preaching its economic orthodoxy to other provinces discovering oil. Boy are we going to be in trouble when the world moves on from oil. And they will....salt was once a strategic resource too and we moved on from that...bet most people don't even know that today!

Just a quick comment. Where does Alberta buy most of their equipment, trucks etc to get the oil out of the ground? Ontario. That means the whole country is getting rewarded and not just Alberta gets the wealth , they are sharing by buying goods from the rest of this great country to do their job.

More on Alberta:

A strong Alberta economy IS good for the whole country. Just remember Alberta back in the 80's. During the high oil prices and energy crisis of the 70's (hmm... are we heading back there again?? Think $100+ per barrel oil), then Prime Minister Trudeau enacted the infamous National Energy Program (NEP) in 1980. Thus crushing the Alberta economy with a double-taxation mechanism on oil and gas that did not apply to other commodities.

The intent of the NEP was to keep domestic oil below world market prices, forcing Alberta to subsidize all Canadian consumers of fuel across the country. Sounds fair right? at face value you'd think it would be generous to give Canadians a deal on oil & gas.
BUT!...
Alberta lost between $50 billion and $100 billion during those years. Alberta's economy took a serious blow during the 6 years of the NEP. We've scrimped and saved by cutting public services and finally got ourselves out of debt.

Our achievement is something we paid for and now I think we should be rewarded for being fiscally responsible. An Alberta surplus should be reinvested into the education and health system here that is currently below other provinces.

You may hate Alberta for it's oil, but until we have an alternate energy solution, everyone needs to visit the gas pump. Would you rather a foreign country made all that money? or would you rather a Canadian province prospered so that we could share the wealth? I'm all for Canadians helping Canadians and every Albertan I know feels the same way. We're glad to return the favour and help other provinces!

As for Alberta (canada's Texas): History of Oil

I'll say this once, Alberta sold it's soul to the fed for a pittance. It's in the article above, Alberta has no provinical tax due to the royalties that they collect on Oil harvested from the tar sands, however Oil harvesting is only profitable when Oil is above $65 / barrel, if you track the commodity prices it only really became profitable during the 1970's and again recently, however if you follow the news you'll note that the "Current Administration" of Alberta recently hiked the royalties causing a whole slew of projects to be stopped after which the administration apologized, this equates to "We don't know what we are doing, and we are sorry your not going to create more jobs from our oil".
Protests against Royalties

Some times we are lucky and we have people like Vic Toes helping our economy, other times we end up with complete morons that tax trusts as they tax capitol gains, which are in essence sur-taxes and in any good free market economy sur-taxes kill growth.

Alberta has money because of Oil royalties, that's it, many provinces in Canada are poor, however to develop them sustainably we often take the money we make selling oil, wheat and uranium and use it to subsidize politics and developments in other provinces, the only thing that gets me is when we waste money on Quebec, they want to separate, let them and stop wasting money on a province that does not want to be part of Canada, in fact let them seperate then ask for all the federal expenditures back. (ie: roads, health care, public institutions)....

If you wish to learn more about good free market economies I suggest reading "The Road to Serfdom" by Hayek, it's a manual on how a free market economy will prevent your government from subjugating you.

Now for the rest of the country?
I guess the rest of us weren't smart like the ancient Albertans who gathered every dead dinosaur they could find and buried them in pits because they were so smart and were planning for their future and Canada's future millions of years later.

Guess the rest of us just spaced out on that.
Way to go those of you in Alberta that feel the rest of the country owes you for your contribution to YOUR country!

It's you who have shaped Canada into the country it is, not eastern Canada at all. Maye when the oil runs out, or we change our dependence on it, or when the whole world is eying you up with daggers under their cloaks, we can pay you good folks back by sticking by YOU as as fellow countrymen.

We'll pay you back soon, promise!

I do not entirely agree with Feb 28th comment that free market and conservative policy rid Alberta of its debt. True it helps!! I also believe in Social programs. I am a cross between Conservatism and Liberalism. I believe that Oil helped and payed down the debt as it brought in great royalties. Remember though Alberta was not to be debt free as quickly as it did. I lived in Alberta and they had several years left to pay down the debt. Hospitals and schools are in disarray. They were negrected as a result of Klein. If Conservatism is the be all and end all then United States would be debt free and not incur further debt. Under both Bush's and Reagan, the debt really incresed. It is becasue of their policies that put the country in its situation. people cannot afford health care. They have a quota as to the number of people they have to turn away to make money. People are a commodity. I agree agressiveness and oil as well as Klein all helped bring down the debt. I do not agree that Conservative policy did though. I look for comments on my remark and will gladly read your views.

To Jeff:
I'm sorry but have to respond to your comments. Alberta is not prosperous because of Conservative Policies, it was oil. If you recall prior to Alberta finding oil it was quite poor, and conservative policy ran things then too. You guys were even receiving help from other poor provinces like Newfoundland.

But I understand you guys don't want to remember your history; Don't want to feel like you owe anyone anything.

Alberta is debt free because of Conservative policy.

The Free Market built prosperity in Alberta. Not oil.

@Andrew:

I think that's actually the problem in the USA, that they're not spending enough of each tax dollar to pay down their debt. I'm thankful that we're spending as much as we are! I'm quite interested in reducing Canada's federal debt.

While the Canadian debt to GDP numbers are quite favorable in comparison to the USA if you look at Interest paid on the debt in relation to Tax Receipts a different story is told. Currently every 9.5 cents of Tax revenue dollar the USA brings in goes to paying interest while I think the latest figures from the Canadian Federal government has it at just over 14 cents of every tax revenue dollar that Canada brings in. That's about 60% worse than the US.

Isn't the net interest/tax receipts ratio much more significant? Interesting that these two ratios differ so dramatically with respect to country comparison.

The US National debt never stopped increasing during ALL of the 1990s much less stayed at one level. Clinton's surplus was a myth. The public debt was paid down somewhat but was never paid off. However this public debt was paid down by borrowing money from the inter-govermental holdings of the national debt. This part of the debt continued to skyrocket. So "debt principle" was never paid down.

As a Canuck living in the US for 25 yrs and married to an Yanky (southern type) she concluded last year that we should move to the great white north and we are the process. Why: fear of the falling $$, high medical costs and a country (Canada) that gives a hoot about the welfare of it citizens. The US debt numbers do not factor in Social Security etc and really looks bad when factored in. As for the university comment, didn't go, wife did. Got technical training in the CDN armed forces and have always made more than her. Why fund schools? To have a well educated population is necessary for a rich country, but a free ride is not the answer. We would just have a lot of degrees in Applied Basket Weaving. If students understand that the cost of education is part of the choice for their career then they might pick a different field of study. Have a niece that took Greek history in school and now works as a waitress. Nothing wrong with that but it doesn't require a $50K degree. Great study and comment on your part.

@ Scott

I don't see how financing University (Thus placing a very false importance on the value of a University Education) is going to help Canadian finances. Universities are private institutions. They are not 'owned' by the Government. If there's a guarantee of money being thrown their way, the volume of University grads will increase, and the quality of the education will decrease.

Right now, a Plumber can easily make $80,000 a year. More with a lot of overtime. Compare that to your average recent University Grad, who will probably take another 5-10 years to reach that salary (if they every do), and you can see that one can be just as 'successful' financially providing a skilled trade.

However, your proposition of financing university even further, just to keep the STUDENT from going into debt, speaks volumes about your opinion of people who don't attend university. You feel that they should directly finance an expensive education for other people.

Perchance Scott, are you a University student right now?

As for the Oil Comment... You need to spend within your means. Remember that a lot of royalties go to the Federal government, and not the provincial one. Alberta had their books in order well before the recent oil boom, and have been paying other provinces their surplus because of it. It's back to the old and rediculous mantra of Rewarding Failure, and Punishing Success.

A small update.

http://www.fin.gc.ca/FISCMON/2007-01e.html

In the late 1980's, 40 cents of every dollar of tax revenue went toward interest! We're bound to hit high interest again, so paying down debt is very wise!

At the current rate of paying down the federal debt ($3 billion/year) it will take 160 years to get debt-free! The federal government should either commit a more substantial amount (say, $10 billion a year) or spend the money to grow the economy, and so reduce the debt/GDP ratio. Or reduce university tuitions, so another generation of Canadians doesn't end up with huge student loan debt.
By the way, it's not just the U.S. that has its head in the sand- Canada is the only major economy in the world that isn't running a deficit budget, besides Australia.
As for Alberta being debt-free: gee, wouldn't it be nice if we all had oil?

A debt ratio of nearly 40 per cent is still vastly higher than it should be. What ever happened to the idea of 0 per cent debt. Alberta is the place to be, no provincial debt. Now for the rest of the country!