mind your business

Friday, December 17, 2010

Kill the Penny, or Kill the Bank?

The Canadian Senate finance committee has recently set about determining whether to do away with the penny. The committee has determined that a century of inflation has eroded the value and usefulness of the penny. Since 1908 the coin has lost 95% of it's value according to the statistics of the Bank of Canada.

There seems to be overall support for abolishing the penny (and the Senate too). After all, why maintain a useless and expensive coinage?

But I will submit that this discussion and conclusion misses the point that inflation caused this devaluation of the penny. And who, pray tell. is the master and supreme arbiter of inflation in Canada? Why none other than Mark Carney and his Bank of Canada of course.

Inflation has in effect killed the penny, so how much longer will it be until the loonie (Canadian dollar) is "revalued" and considered useless and valueless? Will it be 30 years? 20 years? Perhaps 10 years or less?

Why should Canadian's idly watch their money lose it's purchasing power? Why should Canadians sit on their hands as their savings are eaten away drop by drop like water from a leaking swimming pool? The reasonable conclusion is that it is the Bank of Canada, not the penny, that has become "valueless and useless".

Let there be a call from across the whole country to abolish the central bank of Canada!

Let there be rallies in every province outside of every Bank of Canada office and building this coming March 11th, the day that Bank opened its doors in 1935.

The era of central banking is coming to an end. The rising scrutiny toward central banks, increased respect of the Austrian School of economics [1] [2] [3], and the disastrous financial crisis in Europe are indications that the next century may well belong to the free-market.

Eric Sharp
Regular Columnist, THL
Articles Author's Page