Volume 22, Fall 2002
George H. Crowell
The Power of Monetary Policy
Ethical Insights from Canadian Experience
As Canadian experience back to the Great Depression reveals, monetary policy can have potent impact on social welfare. Although in recent years Canadian monetary policy has been managed—with little public understanding—for the benefit of wealthy interests, earlier Canadian federal governments, largely through the monetary powers of the Bank of Canada established in 1935, not only financed participation in World War II, but also in the post-war period created the nation's remarkable social programs. Changes in monetary policy beginning in the late 1970s have shifted control over the money system almost entirely to the private commercial banks, and have contributed substantially to severe erosion of those programs. Changes in current monetary policy, shown from past experience to be feasible, could play a key role in financing restoration and improvement of social programs. Some implications for the US and other nations are spelled out.